Texas
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000-11808
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59-2219994
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(State or other jurisdiction
of incorporation)
|
(Commission File
Number)
|
(I.R.S. Employer
Identification No.)
|
1200 Summit Avenue, Suite
414
Fort Worth,
Texas
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76102
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(Address of principal
executive offices)
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(zip
code)
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Title of each
class
|
Trading
Symbol(s)
|
Name of each exchange on
which registered
|
|
|
|
|
Sanara MedTech Inc. |
|
|
|
|
|
|
Date:
August 13, 2019 |
By:
|
/s/
Michael
D. McNeil
|
|
|
|
Name: Michael D. McNeil |
|
|
|
Title: Chief Financial Officer |
|
Report of Independent Registered Public Accounting
Firm
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1
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Balance Sheet
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2
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|
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Statement of Operations
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3
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Statement of Changes in Members’ Capital
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4
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Statement of Cash Flows
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5
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Notes to the Financial Statements
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6
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December 31,
|
|
2018
|
Assets
|
|
Current assets
|
|
Cash
|
$176,421
|
Accounts
receivable
|
1,022,500
|
Inventory,
net of allowance for obsolescence of $484
|
465,314
|
Prepaid
and other assets
|
26,446
|
Total current assets
|
1,690,681
|
Long-term assets:
|
|
Property,
plant and equipment, net of accumulated depreciation of
$511
|
18,777
|
Total long-term assets
|
18,777
|
|
|
Total assets
|
$1,709,458
|
|
|
Liabilities and Members' Capital
|
|
Current liabilities
|
|
Accounts
payable
|
$156,727
|
Accounts
payable – related party
|
36,203
|
Accrued
royalties and expenses
|
228,606
|
Accrued
bonus and commissions
|
701,125
|
Total current liabilities
|
1,122,661
|
|
|
Total liabilities
|
2,245,322
|
|
|
Members’ Capital
|
|
Members’
capital
|
448,511
|
Retained
earnings
|
138,286
|
Total
members’ capital
|
586,797
|
|
|
Total liabilities and members’ capital
|
$1,709,458
|
|
August 28, 2018 (Inception) through
December 31, 2018
|
|
|
Revenues
|
$3,006,320
|
|
|
Cost of goods sold
|
371,421
|
|
|
Gross profit
|
2,634,899
|
|
|
Operating expenses
|
|
Selling,
general and administrative expenses
|
2,519,469
|
Depreciation
and amortization
|
511
|
Total operating expenses
|
2,354,703
|
|
|
Operating income
|
114,919
|
|
|
Other income
|
|
Transition
services income
|
23,367
|
Total other income
|
23,367
|
|
|
Net income
|
$138,286
|
|
Members’ Capital
|
Retained
Earnings
|
Total Members’
Capital
|
|
|
|
|
Balance
at August 28, 2018
|
$-
|
$-
|
$-
|
Contribution
of Assets
|
448,511
|
-
|
448,511
|
Net
Income
|
-
|
138,286
|
138,286
|
Balance
at December 31, 2018
|
$448,511
|
$138,286
|
$586,797
|
|
August 28, 2018 (Inception) through
December 31, 2018
|
|
|
Cash flows from operating activities:
|
|
Net
income
|
$138,286
|
Adjustments
to reconcile net income to net cash provided by operating
activities
|
|
Depreciation
and amortization
|
511
|
Changes
in assets and liabilities:
|
|
(Increase)
decrease in accounts receivable
|
(1,022,500)
|
(Increase)
decrease in inventory
|
(16,803)
|
(Increase)
decrease in prepaid and other assets
|
(26,446)
|
Increase
(decrease) in accounts payable
|
156,727
|
Increase
(decrease) in accounts payable – related party
|
36,203
|
Increase
(decrease) in accrued liabilities
|
929,731
|
Net cash flows provided by operating activities
|
195,707
|
|
|
Cash flows from investing activities:
|
|
Purchase
of property and equipment
|
(19,288)
|
Net cash flows used in investing activities
|
(19,288)
|
|
|
Net increase in cash
|
176,421
|
Cash and cash equivalents, beginning of period
|
-
|
Cash and cash equivalents, end of period
|
$176,421
|
|
|
Cash paid during the period for:
|
|
Interest
|
$-
|
Income
taxes
|
-
|
|
|
Supplemental non-cash investing and financing
activities:
|
|
Contribution
of inventory
|
$448,511
|
|
For the Four Months Ending December 31, 2018
|
Product sales
revenue
|
$3,003,609
|
Shipping
revenue
|
2,711
|
Total Revenue
|
$3,006,320
|
|
|
Sanara
|
Pro Forma
|
|
Pro Forma
|
|
Cellerate LLC
|
MedTech Inc.
|
Adjustments
|
|
Combined
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash
|
$176,421
|
$731,849
|
$-
|
|
$908,270
|
Accounts
receivable, net of allowance for bad debt
|
1,022,500
|
164,459
|
-
|
|
1,186,959
|
Royalty
receivable
|
-
|
50,250
|
-
|
|
50,250
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Inventory,
net of allowance for obsolescence
|
465,315
|
-
|
-
|
|
465,315
|
Prepaid
and other assets
|
26,445
|
31,926
|
-
|
|
58,371
|
Total current assets
|
1,690,681
|
978,484
|
-
|
|
2,669,165
|
|
|
|
|
|
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Long-term assets:
|
|
|
|
|
|
Property
and equipment, net of accumulated depreciation
|
18,777
|
52,827
|
-
|
|
71,604
|
Intangible
assets, net of accumulated amortization
|
-
|
52,266
|
-
|
|
52,266
|
Investment
Cellerate LLC
|
-
|
1,958,463
|
(1,958,463)
|
A
|
-
|
Total long-term assets
|
18,777
|
2,063,556
|
(1,958,463)
|
|
123,870
|
|
|
|
|
|
|
Total assets
|
$1,709,458
|
$3,042,040
|
$(1,958,463)
|
|
$2,793,035
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
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Current liabilities
|
|
|
|
|
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Accounts
payable
|
$156,727
|
$54,179
|
$(52,065)
|
B
|
$158,841
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Accounts
payable - related parties
|
36,203
|
63,288
|
52,065
|
B
|
151,556
|
Accrued
royalties and payables
|
228,606
|
34,214
|
-
|
|
262,820
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Accrued
bonus and commission
|
701,125
|
241,849
|
-
|
|
942,974
|
Deferred
rent
|
-
|
10,474
|
-
|
|
10,474
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Total current liabilities
|
1,122,661
|
404,004
|
-
|
|
1,526,665
|
|
|
|
|
|
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Long-term liabilities
|
|
|
|
|
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Convertible notes payable
|
-
|
1,500,000
|
(1,500,000)
|
|
-
|
Accrued
interest
|
-
|
25,978
|
(25,978)
|
|
-
|
Convertible
notes payable - related parties
|
-
|
-
|
1,500,000
|
|
1,500,000
|
Accrued
interest - related parties
|
-
|
-
|
25,978
|
|
25,978
|
Total long-term liabilities
|
-
|
1,525,978
|
-
|
|
1,525,978
|
|
|
|
|
|
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Total liabilities
|
1,122,661
|
1,929,982
|
-
|
|
3,052,643
|
|
|
|
|
|
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Shareholders' deficit and members’ capital
|
|
|
|
|
|
Series
F Convertible Preferred Stock, $10 par value, 1,200,000 shares
authorized; 1,136,815 issued and outstanding as of December 31,
2018
|
-
|
-
|
11,368,150
|
C
|
11,368,150
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Common
Stock: $.001 par value; 20,000,000 shares authorized; 2,366,465
issued and 2,366,424 outstanding as of December 31,
2018
|
-
|
236,647
|
(234,281)
|
D
|
2,366
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Additional
paid-in capital
|
448,511
|
48,356,467
|
(59,950,823)
|
E
|
(11,145,845)
|
Treasury
stock
|
-
|
(12,039)
|
-
|
|
(12,039)
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Retained earnings (accumulated deficit)
|
138,286
|
(47,469,017)
|
46,858,491
|
E, F
|
(472,240)
|
Total
shareholders' deficit and members’ capital
|
586,797
|
1,112,058
|
(1,958,463)
|
|
(259,608)
|
|
|
|
|
|
|
Total liabilities and shareholders' deficit and members’
capital
|
$1,709,458
|
$3,042,040
|
$(1,958,463)
|
|
$2,793,035
|
|
Cellerate, LLC September 1 through December
31, 2018
|
Sanara MedTech Inc. January 1 through December
31, 2018
|
Pro FormaAdjustments
|
|
CombinedDecember 31, 2018
|
|
|
|
|
|
|
Revenues
|
$3,006,320
|
$5,837,839
|
$-
|
|
$8,844,159
|
|
|
|
|
|
|
Cost of goods sold
|
371,421
|
507,418
|
-
|
|
878,839
|
|
|
|
|
|
|
Gross profit
|
2,634,899
|
5,330,421
|
-
|
|
7,965,320
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
Selling,
general and administrative expenses
|
2,519,469
|
5,735,833
|
-
|
|
8,255,302
|
Depreciation
and amortization
|
511
|
83,890
|
-
|
|
84,401
|
Bad
debt expense
|
-
|
12,558
|
-
|
|
12,558
|
Total operating expenses
|
2,519,980
|
5,832,281
|
-
|
|
8,352,261
|
|
|
|
|
|
|
Operating income / (loss)
|
114,919
|
(501,860)
|
-
|
|
(386,941)
|
|
|
|
|
|
|
Other income / (expense)
|
|
|
|
|
|
Gain
on Equity Method Investment in Cellerate, LLC
|
-
|
9,951
|
(9,951)
|
G
|
-
|
Other
income (expense)
|
23,367
|
(22,078)
|
-
|
|
1,289
|
Interest
expense
|
-
|
(86,587)
|
-
|
|
(86,587)
|
Total other income / (expense)
|
23,367
|
(98,714)
|
(9,951)
|
|
(85,298)
|
|
|
|
|
|
|
Net income / (loss)
|
138,286
|
(600,574)
|
(9,951)
|
|
(472,239)
|
|
|
|
|
|
|
Series
C preferred stock dividends
|
-
|
(28,061)
|
-
|
|
(28,061)
|
Series
C preferred stock inducement dividends
|
-
|
(103,197)
|
-
|
|
(103,197)
|
|
|
|
|
|
|
Net income / (loss) available to common stockholders
|
$138,286
|
$(731,832)
|
$(9,951)
|
|
$(603,497)
|
|
|
|
|
|
|
Basic
income (loss) per share of common stock
|
$-
|
$-
|
$-
|
|
$(0.28)
|
|
|
|
|
|
|
Diluted
income (loss) per share of common stock
|
$-
|
$-
|
$-
|
|
$(0.28)
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding basic
|
N/A
|
217,163,538
|
(214,991,903)
|
H
|
2,171,635
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding diluted
|
N/A
|
217,163,538
|
|
H
|
2,171,635
|