Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations (Tables)

v3.21.2
Discontinued Operations (Tables)
 9 Months Ended
Sep. 30, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Discontinued Operation of Balance Sheet and Operation Statement

Carrying amounts of major classes of assets and liabilities sold or included as part of discontinued operations in the consolidated balance sheets as of September 30, 2021 and December 31, 2020 consisted of the following:

 

HTS and AMSG Assets and Liabilities:

 

   

September 30,

2021

    

December 31,

2020

  
    (unaudited)        
Cash   $        -     $ 31,294  
Accounts receivable, net     -       151,363  
Prepaid expenses and other current assets     -       1,717  
Current assets classified as held for sale   $ -     $ 184,374  
                 
Property and equipment, net   $ -     $ 685  
Deposits     -       -  
Right-of-use assets     -       -  
Non-current assets classified as held for sale   $ -     $ 685  
                 
Accounts payable and checks issued in excess of bank balance   $ -     $ 726,220  
Accrued expenses     -       1,308,283  
Current portion of right-of-use operating lease obligation     -       -  
Current portion of notes payable     -       168,751  
Current liabilities classified as held for sale   $ -     $ 2,203,254  
                 
Note payable   $ -     $ 69,267  
Right-of-use operating lease obligation     -       -  
Non-current liabilities classified as held for sale   $ -     $ 69,267  

 

 

EPIC Reference Labs, Inc. and Other Subsidiaries Assets and Liabilities:

 

    September 30,
2021		     December 31,
2020		  
    (unaudited)        
Cash   $ -     $ 136  
Accounts receivable, net     -       -  
Prepaid expenses and other current assets     -       -  
Current assets classified as held for sale   $ -     $ 136  
                 
Property and equipment, net   $ -     $ -  
Deposits     5,014       100,014  
Right-of-use assets     -       100,116  
Non-current assets classified as held for sale   $ 5,014     $ 200,130  
                 
Accounts payable and checks in excess of bank balance   $ 1,111,557     $ 1,185,158  
Accrued expenses     336,410       334,667  
Current portion of right-of-use operating lease obligation     -       91,166  
Current portion of notes payable     -       -  
Current liabilities classified as held for sale   $ 1,447,967     $ 1,610,991  
                 
Note payable   $ -     $ -  
Right-of-use operating lease obligation     -       8,950  
Non-current liabilities classified as held for sale   $ -     $ 8,950  

 

Consolidated Discontinued Operations Assets and Liabilities:

 

    September 30,
2021		     December 31,
2020		  
    (unaudited)        
Cash   $ -     $ 31,430  
Accounts receivable, net     -       151,363  
Prepaid expenses and other current assets     -       1,717  
Current assets classified as held for sale   $ -     $ 184,510  
                 
Property and equipment, net   $ -     $ 685  
Deposits     5,014       100,014  
Right-of-use assets     -       100,116  
Non-current assets classified as held for sale   $ 5,014     $ 200,815  
                 
Accounts payable and checks issued in excess of bank balance   $ 1,111,557     $ 1,911,378  
Accrued expenses     336,410       1,642,950  
Current portion of right-of-use operating lease obligation     -       91,166  
Current portion of notes payable     -       168,751  
Current liabilities classified as held for sale   $ 1,447,967     $ 3,814,245  
                 
Note payable   $ -     $ 69,267  
Right-of-use operating lease obligation     -       8,950  
Non-current liabilities classified as held for sale   $ -     $ 78,217  

 

 

Major line items constituting income (loss) from discontinued operations in the consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 consisted of the following (unaudited):

 

HTS and AMSG Income (Loss) from Discontinued Operations (unaudited):

 

    Three Months
Ended
September 30,
2021		    

Three Months

Ended
September 30,
2020

     Nine Months
Ended
September 30,
2021		     Nine Months
Ended
September 30,
2020		  
Revenue from services   $ -     $ 174,941     $ 216,941     $ 437,119  
Cost of services     -       390       2,386       11,379  
Gross profit     -       174,551       214,555       425,740  
Operating expenses     -       (258,710 )     (551,296 )     (509,989 )
Other income (expense)     -       (9,636 )     (9,577 )     (61,067 )
Gain on sale     576,787       -       11,303,939       -  
Provision for income taxes     -       -       -       -  
Income (loss) from discontinued operations   $ 576,787     $ (93,795 )   $ 10,957,621     $ (145,316 )

 

The fair value of the InnovaQor Series B Preferred Stock that the Company received as consideration for the sale of $9.1 million was based on a third-party valuation using the Option Price Method (the “OPM”). The OPM treats common and preferred interests as call options on the equity value of the subject company, with exercise prices based on the liquidation preference of the preferred interests and participation thresholds for subordinated classes. The common interest is modeled as a call option that gives its owner the right but not the obligation to buy the enterprise value at a predetermined or exercise price. In the model, the exercise price is based on a comparison with the enterprise value rather than, as in the case of a “regular” call option, a comparison with a per share stock price. Thus, the common interest is considered to be a call option with a claim on the enterprise at an exercise price equal to the remaining value immediately after the preferred interests are liquidated. The Black Scholes model was used to price the call options. The assumptions used were: risk free rate of 0.84%; volatility of 250.0%; and exit period of 5 years. Lastly, a discount rate of 35% was applied due to the lack of marketability of the InnovaQor Series B Preferred Stock and the underlying liquidity of InnovaQor’s common stock.

 

EPIC Reference Labs, Inc. and Other Subsidiaries Income (Loss) from Discontinued Operations (unaudited):

 

    Three Months
Ended
September 30,
2021		    

Three Months

Ended
September 30,
2020

     Nine Months
Ended
September 30,
2021		     Nine Months
Ended
September 30,
2020		  
Revenue from services   $ -     $ -     $ -     $ 441  
Cost of services     -       -       -       -  
Gross profit     -       -       -       441  
Operating expenses     (31,388 )     (41,439 )     (126,243 )     (106,704 )
Other income (expense)     -       (30,946 )     48,770       87,286  
Gain on sale     -       -       -       -  
Provision for income taxes     -       -       -       -  
Loss from discontinued operations   $ (31,388 )   $ (72,385 )   $ (77,473 )   $ (18,977 )

 

Consolidated Income (Loss) from Discontinued Operations (unaudited):

 

    Three Months
Ended
September 30,
2021		    

Three Months

Ended
September 30,
2020

     Nine Months
Ended
September 30,
2021		     Nine Months
Ended
September 30,
2020		  
Revenue from services   $ -     $ 174,941     $ 216,941     $ 437,560  
Cost of services     -       390       2,386       11,379  
Gross profit     -       174,551       214,555       426,181  
Operating expenses     (31,388 )     (300,149 )     (677,539 )     (616,693 )
Other income (expense)     -       (40,582 )     39,193       26,219  
Gain on sale     576,787       -       11,303,939       -  
Provision for income taxes     -       -       -       -  
Income (loss) from discontinued operations   $ 545,399     $ (166,180 )   $ 10,880,148     $ (164,293 )