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	)