Note 20 – Subsequent Events

Acquisition of Acute Care Hospital Under Asset Purchase Agreement

On January 31, 2018, the Company entered into an asset purchase agreement (the “Purchase Agreement”) to acquire certain assets related to an acute care hospital located in Jamestown, Tennessee. The hospital is known as Tennova Healthcare - Jamestown and its associated assets are being acquired from Community Health Systems, Inc. The transaction is expected to close in the second quarter of 2018, subject to customary regulatory approvals and closing conditions. The purchase price is equal to the Net Working Capital (as defined in the Purchase Agreement), plus $1.00.

Tennova Healthcare – Jamestown is a fully-operational 85-bed facility including a 24/7 emergency department, radiology department, surgical center, and a wound care and hyperbaric center. The purchase includes a 90,000 square foot hospital building on approximately eight acres. Tennova Healthcare – Jamestown is located 38 miles from the Company’s existing hospital, the Big South Fork Medical Center in Oneida Tennessee.

Sale of NanoVibronix, Inc. Common Stock

On February 14, 2018, the Company entered into a Common Stock Purchase Agreement with two investors pursuant to which the Company agreed to sell an aggregate of 200,000 shares of common stock of NanoVibronix, Inc. owned by the Company (the “Shares”). The purchase price was $4.00 per Share and the Company received the $800,000 of proceeds on February 15, 2018. The Shares were acquired by the Company as the result of an investment originally made in 2011.

Exchange of Convertible Debentures for Shares of Series I-2 Convertible Preferred Stock

As previously announced, on October 30, 2017 the Company entered into Exchange Agreements with the holders of the Company’s $9,016,136 aggregate principal amount of September Debentures. The Exchange Agreements provide that the holders may, from time to time, exchange their September Debentures for shares of a newly-authorized Series I-2 Preferred Stock. The terms of the Series I-2 Preferred Stock are discussed in Note 13. The Exchange Agreements permit the holders of the September Debentures to exchange specific principal amounts of the September Debentures on various dates beginning December 2, 2017. Any exchange is at the option of the holders.

On March 5, 2018, the Company closed an offering of $2,480,000 aggregate principal amount of Senior Secured Original Issue Discount Convertible Debentures due September 19, 2019 (the “Additional Debentures”). The offering was pursuant to the terms of an Additional Issuance Agreement, dated as of March 5, 2018 (the “Issuance Agreement”), between the Company and certain existing institutional investors of the Company. The Company received proceeds of $2,000,000 in the offering. The terms of the Additional Debentures are the same as the New Debentures, which are more fully described in Note 8. The Additional Debentures may also be exchanged for shares of the Company’s Series I-2 Convertible Preferred Stock under the terms of the Exchange Agreements.

The holders exercised their right to exchange a portion of the September Debentures for shares of the Company’s Series I-2 Preferred Stock for the first time on February 9, 2018. On that date, the holders elected to exchange an aggregate of $1,384,556 principal amount of September Debentures and the Company issued an aggregate 1,731 shares of its Series I-2 Preferred Stock.

Second Amendment to Accounts Receivable Sale Agreement

On April 2, 2018, the Company, the counterparty, and Mr. Diamantis, as guarantor, entered into a second amendment (the “Second Amendment”) to extend further the Company’s obligation to May 30, 2018. In connection with this further extension, the counterparty received a fee of $100,000. To the extent the Company satisfies its obligation to the counterparty prior to May 30, 2018, the $100,000 fee will be reduced pro rata and the reduced portion shall be refunded to the Company. No funds have been paid to date to the counterparty in connection with the accounts receivable.

Stock Grants to Employees and Directors

On March 6, 2018, the Board of Directors (the “Board”) of the Company, based on the recommendation of the Compensation Committee of the Board, approved grants to employees and directors of an aggregate of 71,333,331 shares of common stock, including the following to the directors of the Company:

The shares were issued in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering.

Proposals Submitted to Stockholders

On March 14, 2018, the Company gave notice of a special meeting of the stockholders of the Company to be held on May 2, 2018, at 11:00 a.m., local time, to, among other things:

1. Approve an amendment to its Certificate of Incorporation, as amended, to effect a reverse stock split of all of the outstanding shares of its common stock, par value $0.01 per share, at a specific ratio within a range from 1-for-50 to 1-for-300, and to grant authorization to its Board of Directors to determine, in its discretion, the specific ratio and timing of the reverse stock split any time before March 1, 2019, subject to the Board of Directors’ discretion to abandon such amendment;

2. Approve an amendment to its Certificate of Incorporation, as amended, to increase the number of authorized shares of our common stock from 500,000,000 to 3,000,000,000 shares; and

3. Approve the Company’s new 2018 Incentive Award Plan.

The Board of Directors has fixed the close of business on March 12, 2018 as the record date for the determination of stockholders entitled to notice of and to vote at the Special Meeting.

The Company’s new 2018 Incentive Award Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards, and performance-based awards. An aggregate of 100,000,000 shares of the Company’s common stock is proposed to be available for grant pursuant to the plan. No determination has been made as to the types or amounts of awards that will be granted to specific individuals pursuant to the plan and no awards will be granted under the plan until there are shares of authorized common stock available.

Issuance of Common Stock

Subsequent to December 31, 2017 and through April 1, 2018, the Company issued an aggregate of 480,249,156 shares of common stock for conversions of debentures, warrant exercises and the issuance of restricted stock to employees and directors.