# HealthLynked Corp: Form 10-Q for the period ended Jun 30, 2022

- Company: [HealthLynked Corp](/companies/hlyk.md) (CIK 1680139)
- Form: 10-Q
- Filed: 2022-08-15
- Accepted by EDGAR: Aug 15, 2022, 16:35 ET
- Period: 2022-06-30
- Accession: 0001213900-22-048070
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1680139/000121390022048070/f10q0622_healthlynked.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1680139/000121390022048070/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-04-01 to 2022-06-30 | $1.6m | us-gaap:Revenues |
| Revenue | 6 months, 2022-01-01 to 2022-06-30 | $3.3m | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2022-04-01 to 2022-06-30 | $1.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2022-01-01 to 2022-06-30 | $2.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-04-01 to 2022-06-30 | −$1.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2022-01-01 to 2022-06-30 | −$3.3m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2022-04-01 to 2022-06-30 | −$1.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2022-01-01 to 2022-06-30 | −$2.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-04-01 to 2022-06-30 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2022-01-01 to 2022-06-30 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-04-01 to 2022-06-30 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2022-01-01 to 2022-06-30 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-04-01 to 2022-06-30 | 238,595,764 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2022-01-01 to 2022-06-30 | 238,304,228 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2022-01-01 to 2022-06-30 | −$2.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2022-01-01 to 2022-06-30 | $23.6k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2022-06-30 | $251.1k | us-gaap:Cash |
| Current assets | at 2022-06-30 | $598.8k | us-gaap:AssetsCurrent |
| Total assets | at 2022-06-30 | $7.9m | us-gaap:Assets |
| Current liabilities | at 2022-06-30 | $2.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-06-30 | $3.1m | us-gaap:Liabilities |
| Long-term debt | at 2022-06-30 | $101.3k | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2022-06-30 | $4.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 30,949 characters.

### Forward-Looking Statements

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

### Overview

HealthLynked Corp. (the “Company,” “we,” “our,” or “us”) was incorporated in the State of Nevada on August 4, 2014. We currently operate in four distinct divisions: the Health Services Division, the Digital Healthcare Division, the ACO/MSO (Accountable Care Organization / Managed Service Organization) Division, and the Medical Distribution Division. Our Health Services division is comprised of the operations of (i) Naples Women’s Center (“NWC”), a multi-specialty medical group including OB/GYN (both Obstetrics and Gynecology) and General Practice, (ii) Naples Center for Functional Medicine (“NCFM”), a Functional Medical Practice engaged in improving the health of its patients through individualized and integrative health care, and (iii) Bridging the Gap Physical Therapy (“BTG”), a physical therapy practice in Bonita Springs, FL that provides hands-on functional manual therapy techniques to speed patients’ recovery and manage pain without pain medication or surgery. Our Digital Healthcare division develops and operates an online personal medical information and record archive system, the “HealthLynked Network,” which enables patients and doctors to keep track of medical information via the Internet in a cloud-based system. Our ACO/MSO Division is comprised of the operations of Cura Health Management LLC (“CHM”) and its subsidiary ACO Health Partners LLC (“AHP”), which were acquired by the Company on May 18, 2020. CHM and AHP operate an Accountable Care Organization (“ACO”) and Managed Service Organization (“MSO”) that assists physician practices in providing coordinated and more efficient care to patients via the Medicare Shared Savings Program (“MSSP”) as administered by the Centers for Medicare and Medicaid Services (the “CMS”), which rewards providers for efficiency in patient care. Our Medical Distribution Division is comprised of the operations of MedOffice Direct LLC (“MOD”), a virtual distributor of discounted medical supplies selling to both consumers and medical practices throughout the United States we acquired on October 19, 2020.

### Critical accounting policies and significant judgments and estimates

For a discussion of our critical accounting policies, see Note 2, “*Significant Accounting Policies,”* in the Notes to consolidated Financial Statements.

### Results of Operations

#### Comparison of Three Months Ended June 30, 2022 and 2021

The following table summarizes the changes in our results of operations for the three months ended June 30, 2022 compared with the three months ended June 30, 2021:

|  | Three Months Ended June 30, 2022 | 2021 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Patient service revenue, net | $1,431,776 | $1,470,550 | $(38,774) | -3% |
| Subscription, consulting and event revenue | 86,296 | 71,864 | 14,432 | 20% |
| Product revenue | 130,459 | 168,206 | (37,747) | -22% |
| Total revenue | 1,648,531 | 1,710,620 | (62,089) | -4% |
| **Operating Expenses and Costs** |  |  |  |  |
| Practice salaries and benefits | 816,398 | 903,032 | (86,634) | -10% |
| Other practice operating expenses | 639,119 | 511,004 | 128,115 | 25% |
| Medicare shared savings expenses | 237,149 | 197,463 | 39,686 | 20% |
| Cost of product revenue | 170,543 | 159,998 | 10,545 | 7% |
| Selling, general and administrative expenses | 1,255,511 | 1,147,478 | 108,033 | 9% |
| Depreciation and amortization | 208,912 | 206,469 | 2,443 | 1% |
| Loss from operations | (1,679,101) | (1,414,824) | (264,277) | 19% |
| **Other Income (Expenses)** |  |  |  |  |
| Gain on extinguishment of debt | — | 632,826 | (632,826) | -100% |
| Change in fair value of contingent acquisition consideration | 93,768 | 274,611 | (180,843) | -66% |
| Interest expense | (4,488) | 1,623 | (6,111) | -377% |
| Total other income | 89,280 | 909,060 | (819,780) | -90% |
| **Net loss** | $(1,589,821) | $(505,764) | $(1,084,057) | 214% |

#### Revenue

Patient service revenue in the three months ended June 30, 2022 decreased by $38,774, or 3% year-over-year, to $1,431,776, primarily as a result of decreased patient service revenue at our NWC practice of $200,442 due to the departure of a physician and a decrease at BTG of $17,529, offset by a year-over-year increase at our NCFM practice of $142,797 and the addition of AEU revenue following its acquisition.

Subscription, consulting and event revenue in the three months ended June 30, 2022 increased by $14,432, or 20% year-over-year, to $86,296. Consulting revenue of $84,657 was earned by the ACO/MSO Division in 2022, compared to $70,893 in the three months ended June 30, 2021. Subscription and event revenue of $1,638 and $972 in 2022 and 2021, respectively, was earned from Digital Healthcare division subscription revenues.

Product revenue was $130,459 in the three months ended June 30, 2022, compared to $168,206 in the three months ended June 30, 2021, a decrease of $37,747, or 22%. Product revenue was earned by the Medical Distribution Division, comprised of the operations of MOD.

#### Operating Expenses and Costs

Practice salaries and benefits decreased by $86,634, or 10%, to $816,398 in the three months ended June 30, 2022, primarily as a result of cost-cutting measures at our NWC facility, offset by increased staffing at our NCFM facility corresponding to an increase in patient visits and revenue in 2022.

Other practice operating costs increased by $128,115, or 25%, to $639,119 in the three months ended June 30, 2022, primarily corresponding to an increase in NCFM patient visits and revenue in 2022 as well as the addition of costs associated with AEU following acquisition.

Medicare shared savings expenses increased by $39,686, or 20% to $237,149 in the three months ended June 30, 2022. Medicare shared savings expenses represent costs incurred to deliver Medicare shared savings revenue, including overhead and consulting fees related to advising participating physician practices, as well as the physicians’ portion of any shared savings received by the ACO.

Cost of product revenue was $170,543 in the three months ended June 30, 2022, an increase of $10,545, or 7%, compared to the same period of 2021. During the three months ended June 30, 2022, we made two sales with corresponding cost of product revenue of $89,395 for which we do not believe it is probable that we will collect from the customers. As a result, the cost of product revenue is recognized in the three months ended June 30, 2022 with no corresponding revenue recognized.

Selling, general and administrative costs increased by $108,033, or 9%, to $1,255,511 in the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to more personnel, overhead, promotional and development costs in our corporate function in connection with our continued investment in the HealthLynked Network, offset by lower cash-based consulting, legal and accounting fees in 2022 compared to 2021.

Depreciation and amortization increased in the three months ended June 30, 2022 by $2,443, or 1%, to $208,912 compared to the three months ended June 30, 2021. We did not add any new intangible assets subject to amortization during either period.

Loss from operations increased by $264,277, or 19%, to $1,679,101 in the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily as a result of increased selling, general and administrative costs and practice operating costs, as well as one-time product costs recognized with no corresponding revenue in second quarter 2022.

#### Other Income (Expenses)

Gain on extinguishment of debt in the three months ended June 30, 2021 was $632,826, resulting from the forgiveness of Paycheck Protection Program (the “PPP”) loans taken by us in 2020 that were forgiven by the U.S. Small Business Administration (the “SBA”) in May and June 2021. There were no gains or losses from the extinguishment of debt in 2022.

Gains from the change in fair value of contingent acquisition consideration decreased by $180,843, or 66%, to a gain of $93,768 in the three months ended June 30, 2022, compared to $274,611 in the three months ended June 30, 2021. Because contingent acquisition consideration related to our acquisition of MOD is payable in a fixed number of shares, changes in the fair value of the contingent acquisition consideration fluctuates with our share price. During each of the three months ended June 30, 2021, our share price decreased from the price at the end of the preceding quarter, resulting in a decrease in the fair value of the contingent acquisition consideration liability and a corresponding gain from the change in fair value of the liability.

Interest expense increased by $6,111, or 377%, to $4,488 for the three months ended June 30, 2022, compared to interest income of $1,623 in the three months ended June 30, 2021, as a result of the forgiveness of PPP loans in 2021. Remaining interest expense relates to long-term SBA loans.

Total other income decreased by $819,780, or 90%, to $89,280 in the three months ended June 30, 2022 compared to $909,060 in the three months ended June 30, 2021. The change was primarily a result of a $632,826 gain from the forgiveness of PPP loans in 2021, as well as higher gains on the change in fair value of contingent acquisition consideration in 2021.

Net loss increased by $1,084,057, or 214%, to $1,589,821 in the three months ended June 30, 2022, compared to net loss of $505,764 in the three months ended June 30, 2021, primarily as a result of (i) a $632,826 gain from the forgiveness of PPP loans in 2021, (ii) higher gains on the change in fair value of contingent acquisition consideration in 2021, (iii) increased selling, general and administrative costs and practice operating costs, and (iv) one-time product costs recognized with no corresponding revenue in second quarter 2022.

#### Comparison of Six Months Ended June 30, 2022 and 2021

The following table summarizes the changes in our results of operations for the six months ended June 30, 2022 compared with the six months ended June 30, 2021:

|  | Six Months Ended June 30, 2022 | 2021 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Patient service revenue, net | $2,807,461 | $2,984,926 | $(177,465) | -6% |
| Subscription, consulting and event revenue | 170,514 | 159,519 | 10,995 | 7% |
| Product revenue | 277,428 | 350,869 | (73,441) | -21% |
| Total revenue | 3,255,403 | 3,495,314 | (239,911) | -7% |
| **Operating Expenses and Costs** |  |  |  |  |
| Practice salaries and benefits | 1,534,471 | 1,566,969 | (32,498) | -2% |
| Other practice operating expenses | 1,201,770 | 1,241,788 | (40,018) | -3% |
| Medicare shared savings expenses | 464,878 | 408,970 | 55,908 | 14% |
| Cost of product revenue | 331,354 | 328,594 | 2,760 | 1% |
| Selling, general and administrative expenses | 2,590,651 | 2,513,615 | 77,036 | 3% |
| Depreciation and amortization | 412,802 | 418,127 | (5,325) | -1% |
| Loss from operations | (3,280,523) | (2,982,749) | (297,774) | 10% |
| **Other Income (Expenses)** |  |  |  |  |
| Loss on extinguishment of debt | — | (4,957,168) | 4,957,168 | -100% |
| Change in fair value of debt | — | (19,246) | 19,246 | -100% |
| Change in fair value of contingent acquisition consideration | 532,090 | (361,089) | 893,179 | -247% |
| Interest expense | (9,511) | (8,965) | (546) | 6% |
| Total other income (expenses) | 522,579 | (5,346,468) | 5,869,047 | -110% |
| **Net loss** | $(2,757,944) | $(8,329,217) | $5,571,273 | -67% |

#### Revenue

Patient service revenue in the six months ended June 30, 2022 decreased by $177,465, or 6% year-over-year, to $2,807,461, primarily as a result of decreased patient service revenue at our NWC practice of $399,647 due to the departure of a physician and a decrease at BTG of $15,205, offset by a year-over-year increase at our NCFM practice of $200,987 and the addition of AEU revenue following its acquisition.

Subscription, consulting and event revenue in the six months ended June 30, 2022 increased by $10,995, or 7% year-over-year to $170,514. Consulting revenue of $162,251 was earned by the ACO/MSO Division in 2022, compared to $147,434 in the three months ended June 30, 2021. Subscription and event revenue of $8,262 and $12,805 in 2022 and 2021, respectively, was earned from Digital Healthcare division subscription revenues.

Product revenue was $277,428 in the six months ended June 30, 2022, compared to $350,869 in the six months ended June 30, 2021, a decrease of $73,441, or 21%. Product revenue was earned by the Medical Distribution Division, comprised of the operations of MOD.

#### Operating Expenses and Costs

Practice salaries and benefits decreased by $32,498, or 2%, to $1,534,471 in the six months ended June 30, 2022 primarily as a result of cost-cutting measures at our NWC facility, offset by increased staffing at our NCFM facility corresponding to an increase in patient visits and revenue in 2022.

Other practice operating costs decreased by $40,018, or 3%, to $1,201,770 in the six months ended June 30, 2022, due to reduced overhead at our NWC and NCFM facilities on a year-to-date basis, offset by the addition of costs associated with AEU following its acquisition.

Medicare shared savings expenses increased by $55,908, or 14% to $464,878 in the six months ended June 30, 2022.

Cost of product revenue was $331,354 in the six months ended June 30, 2022, an increase of $2,760, or 1%, compared to the same period of 2021. During the six months ended June 30, 2022, we made two sales with corresponding cost of product revenue of $89,395 for which we do not believe it is probable that we will collect from the customers. As a result, the cost of product revenue is recognized in the three months ended June 30, 2022 with no corresponding revenue recognized.

Selling, general and administrative costs increased by $77,036, or 3%, to $2,590,651 in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to more personnel, overhead, promotional and development costs in our corporate function in connection with our continued investment in the HealthLynked Network, offset by lower stock-based and cash-based consulting fees, and legal and accounting fees in 2022 compared to 2021.

Depreciation and amortization decreased in the six months ended June 30, 2022 by $5,325, or 1%, to $412,802 compared to the six months ended June 30, 2021, primarily as a result of certain fixed assets reaching the end of their depreciable lives. We did not add any new intangible assets subject to amortization during either period.

Loss from operations increased by $297,774, or 10%, to $3,280,523 in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily as a result of lower patient service and product revenue and an increase in selling, general and administrative and Medicare shared savings expense, offset by reductions in practice costs.

#### Other Income (Expenses)

Loss on extinguishment of debt in the six months ended June 30, 2021 was $4,957,168 resulting from (i) a loss on debt extinguishment of $5,463,592 representing the excess of the fair value of shares and a warrant issued at conversion of convertible notes over the carrying value of the host instruments and accrued interest, and (ii) a debt extinguishment gain of $632,826 related to the forgiveness of PPP loans in May and June 2021. There were no gains or losses from the extinguishment of debt in 2022.

Losses from the change in fair value of debt was $19,246 in the six months ended June 30, 2021. Such losses resulted from certain convertible notes and notes payable to related parties that, in previous periods, were extended and treated as an extinguishment and reissuance for accounting purposes, requiring these notes to be subsequently carried at fair value. The change in fair value at the end of each reporting period was recorded as “Change in fair value of debt.” After conversion of our remaining convertible notes outstanding in January 2021, we had no further debt carried at fair value, and therefore no change in fair value of debt in the six months ended June 30, 2022

Gain (loss) from the change in fair value of contingent acquisition consideration increased by $893,179, or 247%, to a gain of $532,090 in the six months ended June 30, 2022, compared to a loss of $361,089 in the six months ended June 30, 2021. Because contingent acquisition consideration related to our acquisition of MOD is payable in a fixed number of shares, changes in the fair value of the contingent acquisition consideration fluctuates with our share price. During the six months ended June 30, 2021, our share price increased substantially, resulting in an increase in the fair value of the contingent acquisition consideration liability and a corresponding loss from the change in fair value. During the six months ended June 30, 2022, our share price decreased substantially, resulting in a gain from the decrease in fair value of the liability.

Interest expense increased by $546, or 6%, to $9,511 for the six months ended June 30, 2022, compared to interest expense of $8,965 in the six months ended June 30, 2021, as a result of the repayment and conversion of convertible notes and notes payable to related parties during 2020 and forgiveness of PPP loans in 2021, leaving low-interest government loans as our only debt.

Total other income (expenses) increased by $5,869,047, or 110%, to income of $522,579 in the six months ended June 30, 2022 compared to expense of $5,346,468 in the six months ended June 30, 2021. The change was primarily a result of a $5,589,994 loss on extinguishment of debt associated with the retirement of our last remaining convertible notes payable in 2021, and a gain from the change in fair value of contingent acquisition recognized in the six months ended June 30, 2022, contrasted to a loss in the six months ended June 30, 2021, due principally to the fixed-share structure of the MOD contingent consideration.

Net loss decreased by $5,571,273, or 67%, to $2,757,944 in the six months ended June 30, 2022, compared to net loss of $8,329,217 in the six months ended June 30, 2021, primarily as a result of (i) a loss on extinguishment of debt of $5,589,994 in 2021 associated with the retirement of our last remaining convertible notes payable, (ii) a $532,090 gain from the change in fair value of contingent acquisition recognized in 2022, as compared to a loss of $361,089 in 2021, due principally to the fair value impact of changes in our stock price on the fixed-share structure of the MOD contingent acquisition consideration, (iii) a decrease in patient services revenue at our NWC facility and a decrease in product revenue, and (iv) an increase in selling, general and administrative and Medicare shared savings expense, offset by (v) decreases in practice salaries and operating costs in our Health Services division.

### Seasonal Nature of Operations

We acquired CHM in May 2020. CHM’s primary source of revenue is derived from payments earned under the Medicare shared savings program. Such amounts are determined annually when we are notified by CMS of the amount of shared savings earned. Accordingly, we recognize Medicare shared savings revenue in the period in which the CMS notifies us of the exact amount of shared savings to be paid, which historically has occurred during the three-month period ended September 30 for the program year ended December 31 of the previous year. Medicare shared savings revenue for the program year ended December 31, 2020, for which we received payment and recognized revenue in September 2021, was $2,419,312. Medicare shared savings revenue for the program year ended December 31, 2019, for which we received payment and recognized revenue in September 2020, was $767,744. Future recognition of Medicare shared savings revenue is expected to result in a material increase in our consolidated revenues in the third fiscal quarter of each year compared to the first, second and fourth fiscal quarters. Likewise, in the period in which we recognize Medicare shared savings revenue, we also determine the amount of shared savings expense to be paid to physicians participating in our ACO. This expense is also expected to be recognized in the third fiscal quarter of each year and is expected to materially increase our total operating expenses in the third fiscal quarter compared to other quarters of the fiscal year.

### Liquidity and Capital Resources

#### Liquidity and Going Concern

During the second quarter of 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This update provided U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. Under this standard, we are required to evaluate whether there is substantial doubt about our ability to continue as a going concern each reporting period, including interim periods. In evaluating our ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about our ability to continue as a going concern within 12 months after our financial statements were issued (August 15, 2022). Management considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our obligations due before August 15, 2023.

We are subject to a number of risks, including uncertainty related to product development and generation of revenues and positive cash flow from our Digital Healthcare division and a dependence on outside sources of capital. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill our growth and operating activities and generating a level of revenues adequate to support our cost structure.

We have experienced net losses and cash outflows from operating activities since inception. As of June 30, 2022, we had cash balances of $251,118, a working capital deficit of $1,381,166 and an accumulated deficit of $34,963,133. For the six months ended June 30, 2022, we had a net loss of $2,757,944, net cash used by operating activities of $2,518,152, and no cash provided by financing activities. We expect to continue to incur net losses and have significant cash outflows for at least the next 12 months.

Management has evaluated the significance of the conditions described above in relation to our ability to meet our obligations and concluded that, without additional funding, we will not have sufficient funds to meet our obligations within one year from the date the condensed consolidated financial statements were issued.

On July 5, 2022, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, we shall have the right to sell to Yorkville up to 30,000,000 of our shares of common stock, par value $0.0001 per share, at our request any time during the commitment period set forth in the SEPA. Because the purchase price per share to be paid by Yorkville for the shares of common stock sold us to Yorkville pursuant to the SEPA, if any, will fluctuate based on the market prices of our common stock during the applicable pricing period, we cannot reliably predict the actual purchase price per share to be paid by Yorkville for those shares, or the actual gross proceeds to be raised by us from those sales, if any.

On July 11, 2022, we filed a Form S-1 registration statement registering up to 30,000,000 shares of common stock underlying the SEPA. The registration statement was declared effective on July 19, 2022. Between July 19, 2022 and August 15, 2022, we completed three advances under the SEPA, receiving $88,897 in proceeds for the issuance of 683,100 shares of common stock.

On July 19, 2022, pursuant to a Note Purchase Agreement between us and Yorkville, dated July 5, 2022, we issued to Yorkville a promissory note with an initial principal amount equal to $550,000 (the “Promissory Note”) at a purchase price equal to the principal amount of the Promissory Note less any original issue discounts and fees. We received net proceeds of $522,500. The Promissory Note will mature on the six-month anniversary of execution. The Promissory Note accrues interest at a rate of 0%, but was issued with 5% original issue discount, and will be repaid in five equal monthly installments beginning on August 19, 2022. The Promissory Note may be repaid with the proceeds of an advance under the SEPA, or repaid in cash and, if repaid in cash, together with a 2% premium.

Without raising additional capital, either via Advances made pursuant to the SEPA or from other sources, there is substantial doubt about our ability to continue as a going concern through August 15, 2023. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. This basis of presentation contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business.

#### COVID-19

A novel strain of coronavirus, COVID-19, that was first identified in China in December 2019, has surfaced in several regions across the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The outbreak of the pandemic is materially adversely affecting our employees, patients, communities and business operations, as well as the U.S. economy and financial markets. The further spread of COVID-19, and the requirement to take action to limit the spread of the illness, may impact our ability to carry out our business as usual and may materially adversely impact global economic conditions, our business and financial condition, including our potential to conduct financings on terms acceptable to us, if at all. The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. In response to COVID-19, we implemented additional safety measures in our patient services locations and our corporate headquarters.

#### Plan of operation and future funding requirements

Our plan of operations is to profitably operate our Health Services business and continue to invest in our Digital Healthcare business, including our cloud-based online personal medical information and record archiving system, the “HealthLynked Network.”

We are marketing the HealthLynked Network by targeting large health systems, hospitals and universities. In addition, we are marketing via direct-to-patient marketing, affiliated marketing campaigns, co-marketing with our Medical Distribution businesses subsidiary MOD, and expanded southeast regional sales efforts. Our initial sales strategy is utilizing Internet-based marketing to increase penetration to targeted geographical areas. These campaigns are focused on both physician providers and patient members. We also are leveraging MOD’s discounted medical supplies as an offering to our patient and physician members in both the HealthLynked Network and our ACO network. We also intend to utilize physician telesales through the use of telesales representatives whom we will hire as access to capital allows. 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.

#### Historical Cash Flows

| Net cash (used in) provided by: | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: |
| Operating activities | $(2,518,152) | $(2,261,352) |
| Investing Activities | (531,864) | (203,399) |
| Financing activities | 9,488 | 4,892,202 |
| Net increase (decrease) in cash | $(3,040,528) | $2,427,451 |

*Operating Activities –* During the six months ended June 30, 2022, we used cash from operating activities of $2,518,152, as compared with $2,261,352 in the six months ended June 30, 2021. The increase in cash usage results primarily from increased selling, general and administrative costs increased related to our continued expansion and investment in developing and marketing the HealthLynked Network.

*Investing Activities –* During the six months ended June 30, 2022, we used $531,864 in investing activities, including $300,916 used to acquire AEU (net of cash acquired), $207,384 contingent acquisition consideration payment paid the sellers of NCFM related to the third and final year of earn-out, and $23,564 to acquire fixed assets. During the six months ended June 30, 2021, we used $203,399 in investing activities, including $196,000 contingent acquisition consideration payment paid the sellers of NCFM related to the second year of earn-out, plus $7,399 for the acquisition of computers and equipment.

*Financing Activities –* During the six months ended June 30, 2022, we received $10,000 from the sale of common stock and paid $512 against notes acquired in the AEU transaction. Cash generated in the six months ended June 30, 2021 was comprised mainly of $4,649,360 from the sale of common stock pursuant to private placements and puts under the now-expired July 2016 $3 million investment agreement and $293,951 proceeds from the exercise of options and warrants. We also made cash repayments against a vendor note in the amount of $51,109, retiring the note in full.

## Market risk

As filed, 149 characters.

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

## Controls and procedures

As filed, 1,591 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of June 30, 2022 based on the framework in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of June 30, 2022.

### Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the fiscal quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 149 characters.

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

Filed Aug 15, 2022.
Source: SEC EDGAR, the filing index for accession 0001213900-22-048070. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.