Notes Payable and Other Amounts Due to Related Party

12 Months Ended

Dec. 31, 2019

Notes Payable and Other Amounts Due to Related Party [Abstract]

NOTES PAYABLE AND OTHER AMOUNTS DUE TO RELATED PARTY

NOTE 8 – NOTES PAYABLE AND OTHER AMOUNTS DUE TO RELATED PARTY

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

	December 31,
	2019		2018
Due to related party:
Deferred compensation, Dr. Michael Dent	$	300,600	$	300,600
Accrued interest payable to Dr. Michael Dent		192,857		129,117
Total due to related party		493,457		429,717
Notes payable to related party:
Notes payable to Dr. Michael Dent, current portion	$	743,955	$	672,471

Dr. Michael Dent

Our founder and CEO, Dr. Michael Dent, has made loans to the Company from time to time in the form of unsecured promissory notes payable. The carrying values of notes payable to Dr. Dent as of December 31, 2019 and 2018 were as follows:

		Interest			December 31,
Inception Date	Maturity Date	Rate			2019			2018
January 12, 2017	December 31, 2020		10	%	$	38,378	*	$	40,560
January 18, 2017	December 31, 2020		10	%		21,904	*		23,165
January 24, 2017	December 31, 2020		10	%		54,696	*		57,839
February 9, 2017	December 31, 2020		10	%		32,715	*		34,586
April 20, 2017	December 31, 2020		10	%		10,754	*		11,357
June 15, 2017	December 31, 2020		10	%		34,560	*		36,464
August 17, 2017	December 31, 2020		10	%		20,997	*		20,000
August 24, 2017	December 31, 2020		10	%		39,312	*		37,500
September 7, 2017	December 31, 2020		10	%		36,586	*		35,000
September 21, 2017	December 31, 2020		10	%		27,621	*		26,500
September 29, 2017	December 31, 2020		10	%		12,487	*		12,000
December 21, 2017	December 31, 2020		10	%		14,318	*		14,000
January 8, 2018	December 31, 2020		10	%		76,415	*		75,000
January 11, 2018	December 31, 2020		10	%		9,164	*		9,000
January 26, 2018	December 31, 2020		10	%		17,712	*		17,450
January 3, 2014	December 31, 2020		10	%		296,336	*		222,050
					$	743,955		$	672,471

* Denotes that note payable is reflected at fair value

Interest accrued on the above unsecured promissory notes as of December 31, 2019 and 2018 was $192,888 and $129,117, respectively.

On February 12, 2018, the Company issued a five-year warrant to purchase 6,678,462 shares of common stock at an exercise price of $0.065 per share to Dr. Dent (the "2018 Warrant") as an inducement to (i) extend the maturity dates of up to $439,450 loaned by Dr. Dent to the Company in 2017 and 2018 in the form of unsecured promissory notes, including $75,000 loaned from Dr. Dent to the Company in January 2018 to allow the Company to retire an existing convertible promissory note payable to a third party before such convertible promissory note became eligible for conversion, and (ii) provide continued loans to the Company. The fair value of the warrant was calculated using the Black-Scholes pricing model at $337,466, with the following assumptions: risk-free interest rate of 2.56%, expected life of 5 years, volatility of 268.90%, and expected dividend yield of zero. On March 28, 2018, Dr. Dent agreed to extend the maturity dates of promissory notes with an aggregate face value of $177,500, which were originally scheduled to mature before September 30, 2018, by one year from the original maturity date. Because the fair value of the warrants was greater than 10% of the present value of the remaining cash flows under the modified promissory notes, the transaction was treated as a debt extinguishment and reissuance of new debt instruments pursuant to the guidance of ASC 470-50 "Debt – Modifications and Extinguishments" ("ASC 470-50"). A loss on debt extinguishment was recorded in the amount of $348,938, equal to the fair value of the warrants of $337,466, plus the excess of $11,472 of the fair value of the reissued debt instruments over the carrying value of the existing debt instruments at the time of extinguishment. The change in fair value of the reissued debt instruments subsequent to the reissuance date, which is included on the statement of operations in "Change in fair value of debt," was $24,098 and $15,029 in the years ended December 31, 2019 and 2018, respectively.

On July 18, 2018, in connection with a $2,000,000 private placement by a third-party investor, Dr. Dent agreed to extend the maturity date on all of the above notes until December 31, 2019 for no additional consideration.

On December 31, 2019, Dr. Dent agreed to further extend the maturity date on all of the above notes until December 31, 2020 in exchange for (i) a new five-year warrant to purchase 1,157,143 shares of common stock at an exercise price of $0.014 per share, and (ii) an extension of the expiration date on the 2018 Dr. Dent Warrant from February 12, 2023 to January 1, 2025. The fair value of the warrant was calculated using the Black-Scholes pricing model at $133,943, with the following assumptions: risk-free interest rate of 1.69%, expected life of 5 years, volatility of 119.72%, and expected dividend yield of zero. The incremental fair value of the extended 2018 Dr. Dent Warrant was $66,572, being the excess Black-Scholes fair value of the warrant immediately after the change in terms over the Black-Scholes fair value immediately before the change in terms. Because the fair value of consideration issued was greater than 10% of the present value of the remaining cash flows under the modified promissory notes, the transaction was treated as a debt extinguishment and reissuance of new debt instruments pursuant to the guidance of ASC 470-50. A loss on debt extinguishment was recorded in the amount of $247,871, equal to the fair value of the warrant consideration of $200,515, plus the excess of $47,356 of the fair value of the reissued debt instruments over the carrying value of the existing debt instruments at the time of extinguishment. There was no change in fair value of the reissued debt instruments subsequent to the reissuance date, since the extinguishment transaction occurred on December 31, 2019.

During the years ended December 31, 2019 and 2018, the Company paid Dr. Dent's spouse $139,423 and $150,577, respectively, in consulting fees pursuant to a consulting agreement.

MedOffice Direct

During 2017, the Company entered into an agreement with MedOffice Direct ("MOD"), a company majority-owned by the Company's CEO and largest shareholder, Dr. Michael Dent, pursuant to which the Company agreed to pay rent to MOD in the amount of $2,040 per month for office space in MOD's facility used by the Company and its employees for the period from January 1, 2017 through July 31, 2018. The agreement terminated on July 31, 2018. During the years ended December 31, 2019 and 2018, the Company recognized rent expense to MOD in the amount of $-0- and $18,360, respectively, pursuant to this agreement.

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

Stock Repurchase

On October 3, 2018, the Company bought back 100,000 shares of common stock from a shareholder for a total purchase price of $5,000. The shares were retired. The selling shareholder was the brother of our CEO Dr. Michael Dent.

On August 28, 2019, the Company bought back 15,000 shares of common stock from a shareholder for a total purchase price of $1,200. The selling shareholder was a former employee.