Nexeon MedSystems (NXNN) 8-K/A Financial Statements of Business Acquired

Exhibit 99.2

FINANCIAL STATEMENTS OF BUSINESS ACQUIRED

(unaudited) as of JUNE 30, 2017

FINANCIAL STATEMENTS	Page No.
Balance Sheets as of June 30, 2017 and December 31, 2016	2
Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016	3
Statements of Cash Flows for the six months ended June 30, 2017 and 2016	4
Notes to the financial statements	5

NEXEON MEDSYSTEMS BELGIUM, SPRL

BALANCE SHEETS

(Unaudited)

	June 30, 2017			December 31, 2016
Assets
Current Assets
Cash and cash equivalents	$	89,799		$	84,888
Accounts receivable		187,755			48,842
Grants receivable		724,146			69,391
Inventory		155,760			—
Notes receivable - related party		—			104,404
Accrued interest receivable – related party		—			1,658
Other current asset		37,615			4,856
Total Current Assets	$	1,195,075		$	314,039
Property and equipment, net		59,242			68,466
Patents and intellectual property, net		986,795			964,804
Total Assets	$	2,241,112		$	1,347,309
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities
Accounts payable		456,911			165,347
Accrued liabilities		72,873			79,585
Due to related party		121,711			80,593
Note Payable - grants		5,702			131,637
Income tax payable		—			12,401
Deferred liability		—			—
Advance grant payments		—			400,669
Current portion of equipment lease payable		28,827			36,471
Total Current Liabilities		686,024			906,703
Equipment lease payable		—			9,782
Notes payable – related party		1,514,361			—
Accrued interest payable – related party		20,448			—
Notes payable – grants		136,851			—
Total Liabilities	$	2,357,684		$	916,485
Stockholders' Equity (Deficit)
Common Stock – 107,154 shares authorized, no par value; 107,154 and 107,154 issued and outstanding at June 30, 2017 and December 31, 2016, respectively		367,553			367,553
Accumulated income (deficit)		(531,122	)		26,541
Accumulated other comprehensive income		46,997			36,730
Total Stockholders' Equity (Deficit)		(116,572	)		430,824
Total Liabilities and Stockholders' Equity	$	2,241,112		$	1,347,309

The accompanying notes are an integral part of the unaudited consolidated financial statements.

2

NEXEON MEDSYSTEMS BELGIUM, SPRL

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Total revenues	$	66,418		$	11,180		$	115,194		$	1,305,694
Cost of product sold		32,048			—			31,358			3,715
Depreciation and amortization		41,007			18,411			80,462			36,607
General and administrative expenses		97,229			29,825			154,242			41,832
Research and development expenses – related party		—			—			—			56,065
Research and development expenses - other		185,499			20,620			232,767			86,104
Loss from operations		(289,365	)		(57,676	)		(383,635	)		1,801,371
Other Income (Expense)
Interest income		597			—			1,954			4,218
Interest income - other		17			—			172			2
Interest expense – related party		(15,352	)		—			(19,160	)		(91	)
Interest expense – other		(1,035	)		(758	)		(2,576	)		(2,962	)
Loss on settlement of note receivable		(170,945	)		—			(167,262	)		—
Income (loss) before provision (benefit) for taxes		(476,083	)		(58,434	)		(570,507	)		1,082,538
Provision (benefit) for taxes		—			—			(12,844	)		—
Net Income (loss)	$	(476,083	)	$	(58,434	)	$	(557,663	)	$	1,082,538
Other comprehensive income (loss)
Foreign currency translation adjustment		1,771			(21,463	)		10,268			(3,513	)
Comprehensive income (loss)	$	(474,312	)	$	(79,897	)	$	(547,395	)	$	1,079,025
BASIC AND DILUTED PER SHARE DATA:
Net Income (loss) per common share, basic and diluted	$	(4.44	)	$	(0.55	)	$	(5.20	)	$	10.10
Weighted average common shares outstanding, basic and diluted		107,154			107,154			107,154			107,154

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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NEXEON MEDSYSTEMS BELGIUM, SPRL

 STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	June 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)	$	(557,663	)	$	1,082,538
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		80,460			36,608
Accrued interest from note receivable		—			—
Income tax benefit		(12,844	)		—
Loss on settlement of notes receivable		167,262			—
Change in operating assets and liabilities:
Accounts receivable		(128,976	)		(13,790	)
Inventory		(148,961	)
Grants receivable		(620,666	)		(191,896	)
Other current assets		(30,943	)		(240	)
Accounts payable		265,722			(87,509	)
Accrued liabilities		(12,730	)		45,601
Advance grant payments		(414,952	)		366,954
Deferred liability		—			2,292
Accrued interest payable – related party		19,555			(4,218	)
Net cash used in operating activities		(1,394,736	)		1,236,340
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of notes receivable – related party		(57,419	)		(630,866	)
Capital expenditures		(10,724	)		(10,261	)
Net cash used in investing activities		(68,143	)		(641,127	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable – related party		1,448,246			—
Proceeds from related party		98,800			—
Repayment of equipment lease		(20,334	)		(20,047	)
Repayment to related party		(60,369	)		(18,398	)
Net cash provided by financing activities		1,466,343			(38,445	)
Effects of exchange rate changes on cash		1,447			668
Net increase (decrease) in cash and cash equivalents		4,911			557,436
Cash and cash equivalents at beginning of period		84,888			—
Cash and cash equivalents at end of period	$	89,799		$	557,436
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during period for interest	$	2,668		$	2,949
Cash paid during period for taxes		—			—
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Common stock issued for acquisition	$	—		$	—
Common stock issued for conversion of shareholder notes and accrued interest		—			—
Common stock issued for investments		—			—

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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NEXEON MEDSYSTEMS BELGIUM, SPRL

 NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2017

(Unaudited)

NOTE 1 – BUSINESS – NATURE OR ORGANIZATION

Organization and Operations

Nexeon Medsystems Belgium, SPRL (the “Company”) was formed in Liege, Belgium on March 22, 2013. We are a development stage enterprise focusing on the development and commercialization of our technology platform for the treatment of various disorders via electrical stimulation of tissues associated with the nervous system. We are developing solutions with a unique blend of traditional device technologies such as electronics, software, mechanical engineering, and material science. The Company’s primary purposes are to develop and commercialize the implantable neurostimulation and recording platform to be applied for the relief of chronic diseases and disorders, as well as acquire medical device manufacturing capability.

Unless the context otherwise requires, references to “we,” “our,” “us,” “Nexeon” or the “Company” in these Notes mean Nexeon Medsystems Belgium, SPRL a Belgium Private Limited Company.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management Estimates and Assumptions

The preparation of the Company’s annual financial statements are in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ materially from these estimates.

Cash and Cash Equivalents

The Company considers those short-term, highly liquid investments with maturities of three months or less as cash and cash equivalents. The Company currently has no cash equivalents.

Long-lived Assets

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value, of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. The Company did not recognize any impairment losses during the three and six months ended June 30, 2017 and 2016, respectively.

Property and Equipment

Property and equipment are stated at cost. Equipment is depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized based upon the lesser of the term of the lease or the useful life of the asset and such expense is included in depreciation expense. Repair and maintenance costs are expensed as incurred. The Company capitalizes all furniture and equipment with cost greater than €1,000 and benefiting more than one accounting period in the period purchased.

Net Income (Loss) Per Share

The Company calculates net income (loss) per share as required by Accounting Standards Codification subtopic 260-10, “Earnings per Share” (“ASC 260-10”). Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation. Basic and diluted earnings per share were the same for three and six month periods ending June 30, 207 and 2016, respectively, as the Company has no dilutive securities.

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Revenue Recognition

We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.

The Company will record revenue when it is realizable and earned and the engineering services have been rendered to the customers. Additionally, the Company will record revenue from the sale of its medical devices when the product is delivered to the customer.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740,“Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented.

All tax positions are first analyzed to determine if the weight of available evidence indicates that it is more likely than not that the position will be sustained under audit, including resolution of any related appeals or litigation processes. After the initial analysis, the tax benefit is measured as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

If the Company is required to pay interest on the underpayment of income taxes, the Company recognizes interest expense in the first period the interest becomes due according to the provisions of the relevant tax law.

If the Company is subject to payment of penalties, the Company recognizes an expense for the amount of the statutory penalty in the period when the position is taken on the income tax return. If the penalty was not recognized in the period when the position was initially taken, the expense is recognized in the period when the Company changes its judgment about meeting minimum statutory thresholds related to the initial position taken.

Research and Development Expenses

Research and development expenses are charges to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, materials, supplies and consulting costs.

These expenses are assigned to the research, development and clinical projects to develop the Company’s implantable neurostimulation, sensing, and recording technology development for a variety of clinical therapeutic applications.

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The Company has successfully competed for three grant contract subsidies and one loan subsidy (conventions) through the Public Service of Wallonia - Department of Technology Development and the Research Programs Department (the Wallonia region is located in South Brussels, in Belgium) to support research projects with potential for commercialization. The contract awards are reimbursement subsidies with payment in response to bi-annual invoices of periodic expenses incurred and provide non-diluting funds that do not include a repayment obligation. Details on the three contracts follow:

1. Convention number 6820 STARflo PLUS, is a partnership contract through the BioWin Health Cluster of Wallonia (“Biowin”) BioWin is a non-profit organization involved in innovative R&D projects and/or trainings for the development of new products and services. STARflo PLUS ™ is a complete implant system for glaucoma management that combines the latest advances in bio-implantable MEMS (microelectromechanical systems). The STARflo PLUS ™ system mimics the Natural Eye Drainage Network, Relieving Blockages and the Damaging Pressure Increase with Glaucoma. The main objective of the project is to obtain, at the end of the 4 years of the project, a STARflo PLUS ™ in vivo functional prototype whose effectiveness has been demonstrated on an animal model (eg. in dogs) and a first study of man. As a project partner with ISTAR Medical, SA, the Catholic University of Louvain and the University of Leige, the Company will manufacture and assemble the set of electronic devices inserted into the STARflo PLUS ™ implant, including the antenna for data transmission as well as the external reader allowing the electrical supply and the reception of the data from the STARflo PLUS ™ implant and transmission of data to a storage system. As a project partner, the contract includes €734,060 (approximately $773,000) of funding from June 1, 2013 through November 30, 2016 for the Company’s research and development of project deliverables. Contract funds to the Company are paid in an advance at the commencement of contract in the amount of €137,636 (approximately $145,000) and the remaining funding is reimbursed bi-annually upon submitting invoices for related project expenses pursuant to the approved project budget. Total contract funding will support 80% of the approved project budget costs and the Company is responsible for the remaining 20% of the approved project budget.

2. The Convention number 7205 CARDIAX-PILOTE contract is with the Company as the sole project partner. The primary goal of the research is to further validate the implantable Vagus Nerve Stimulation (VNS) as a treatment option for Atrial Fibrillation (AF). The project will focus on improving the ratio of VNS / non-responding patients. The project includes: the design and testing of a pre-implantation methodology for the identification of patients that will positively respond to VNS therapy, design and evaluation of monitoring software to guide treatment, and design and evaluation of a new physical sensory sensor for a measure of processes. The contract included €630,000 (approximately $663,700) of funding from April 1, 2014 through March 31, 2017 for the Company’s research and development of project deliverables. Contract funds to the Company are paid in an advance at the commencement of contract in the amount of €378,000 (approximately $398,000) and the remaining funding is reimbursed bi-annually upon submitting invoices for related project expenses pursuant to the approved project budget. Total contract funding will support 70% of the approved project budget costs and the Company is responsible for the remaining 30% of the approved project budget.

3. Convention number 7452 CARDIAX, is a partnership contract through the BioWin. The project aims are to perform a clinical study in order to collect data in the therapeutic field of Vagus Nerve Stimulation (VNS) for Atrial Fibrillation (AF). The strategy for the project is to: 1) develop a pre-implantation methodology for identifying AF patient responders to VNS therapy, 2) develop a remote monitoring software package to guide and manage treatment, and 3) develop integrated bio-signal extraction capabilities. As a project partner with the Catholic University of Louvain and the University of Leige, Medline, S.A. and L&C Software, SPRL. The Company, serving as project coordinator, will develop the active device (VNS neurostimulator), the wireless systems, remote monitoring algorithms and provide clinical trial coordination. As a project partner, the contract includes €1,071,357 (approximately $1,129,000) of funding from January 1, 2016 through December 31, 2019 for the Company’s research and development of project deliverables. Contract funds to the Company are paid in an advance at the commencement of contract in the amount of €267,839 (approximately $282,000) and the remaining funding is reimbursed bi-annually upon submitting invoices for related project expenses pursuant to the approved project budget. Total contract funding will support 67% of the approved project budget costs and the Company is responsible for the remaining 33% of the approved project budget.

In regard to the accounting treatment for reimbursements, US GAAP provides limited guidance on the accounting for government grants received by for-profit companies. We understand that there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized, revenue, or other income. Due to the terms of the contracts we have entered into the Company concluded that the reimbursements were more akin to a reduction of costs rather than any of the other alternatives to match the contract reimbursements on a systematic basis to the costs that the contract is intended to compensate.

The Company has received contracts from the Public Service of Wallonia - Department of Technology Development and the Research Programs Department to assist with the clinical development of the Company’s implantable neurostimulation, sensing, and recording technology for a variety of clinical therapeutic applications. The Company recognizes the amounts receivable in regard to the contracts at fair value when there is reasonable assurance that the contract amount will be received and that all the conditions of the specific contract will be complied with in order to properly match the reimbursements with the specific expenditures that the specific contract intends to reimburse. The Company recognizes the amounts received in accordance with the contracts as a reduction of research and development expenses over the periods necessary to match the contract on a systematic basis to the costs that it is intended to compensate. The Company records, on the balance sheet, Grants receivable upon meeting the criteria discussed above until cash is received. As of June 30, 2017, the Company has $724,146 in Grants receivable in accordance with the contracts, which have been recorded as a reduction of research and development expense in the accompanying statements of comprehensive income.

Where the Company receives payments in advance it is recorded as Advance grant payments on the balance sheet and relieved against research and development expense as the associated costs are incurred. As of June 30, 2017 the Company has $0 in Advance grant payments.

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Foreign Currency Translation and Transactions

The Company’s reporting currency is the U.S. dollar. The Company’s operations in Belgium use their local currencies as their functional currency. The financial statements in foreign currency are translated into U.S. Dollars, “USD,” in accordance with ASC Topic 830, Foreign Currency Translation. All assets and liabilities are translated at the year-end currency exchange rate, stockholders’ equity items are translated at the historical rates and income statement items are translated at the average exchange rate prevailing during the year. Translation adjustments resulting from this process are reported under other comprehensive income (“OCI”) in accordance with ASC Topic 220, Reporting Comprehensive Income as a Component of Stockholders’ Equity. Foreign exchange transaction gains and losses are reflected in the statement of comprehensive income.

Fair Value Measurements

The Company adopted the provisions of ASC Topic 820,“Fair Value Measurements and Disclosures,” which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC 820 defines “fair value” as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

The Company currently has no assets or liabilities valued at fair value on a recurring basis.

Leases

Leases are reviewed and classified as capital or operating at their inception in accordance with ASC Topic 840, Accounting for Leases. For leases that contain rent escalations, the Company records monthly rent expense equal to the total amount of the payments due in the reporting period over the lease term. The difference between rent expense recorded and the amount paid is credited or charged to deferred rent account.

Property and Equipment

Property and equipment are stated at cost. Equipment is depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized based upon the lesser of the term of the lease or the useful life of the asset and such expense is included in depreciation expense. Repair and maintenance costs are expensed as incurred.

Acquired Intangibles

Acquired intangibles include patents and patent licenses acquired by the Company, which are recorded at fair value, assigned an estimated useful life, and are amortized on a straight-line basis over their estimated useful lives ranging from 4 to 18.5 years. The Company periodically evaluates whether current facts or circumstances indicate that the carrying values of its acquired intangibles may not be recoverable. If such circumstances are determined to exist, an estimate of the undiscounted future cash flows of these assets, or appropriate asset groupings, is compared to the carrying value to determine whether an impairment exists. If the asset is determined to be impaired, the loss is measured based on the difference between the carrying value of the intangible asset and its fair value, which is determined based on the net present value of estimated future cash flows.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC during the current reporting period did not, or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

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NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company currently does not have sufficient continuing revenue to cover its future operating expenses. The Company currently has limited liquidity, and has not completed its efforts to establish a source of revenues sufficient to cover operating costs over an extended period of time. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern.

NOTE 4 – INVENTORIES

Inventory balances as June 30, 2017 are as follow:

	June 30, 2017		December 31, 2016
Raw materials and supplies	$	28,451	$	—
Goods in process		116,337		—
Finished goods		10,972		—
Total inventories	$	155,760	$	—

NOTE 5 – NOTES PAYABLE (FINANCIAL LIABILITIES)

The following financial liabilities are held at carrying amount on the consolidated balance sheet as of June 30, 2017:

Notes Payable

Loan Subsidy

On December 22, 2016, NMB was awarded a loan subsidy through the Public Service of Wallonia in the amount of approximately $570,150. Of the total amount awarded, approximately $171,064 (€149,934 EUR) is categorized as loan with repayment amounts ranging from approximately $5,702 (€4,998) and $22,808 (€19,991) annually from 2018 through 2032. The current portion of the liability is recorded as Notes payable – grants in the amount of $5,702, current, and $136,851, long-term on the balance sheet. The award amounts in excess of the loan amount are invoiced for reimbursement and recorded as a credit to applicable research and development expenses.

Leases

As of June 30, 2017, the Company has a lease payable in the amount of $28,827 to Biotech Coaching S.A. On February 4, 2015, the Company entered into a sale-leaseback transaction with Biotech Coaching S.A. for the sale and lease of $125,502 (€110,000) of medical and clean-room equipment. In March 2015, the Company commenced leasing the equipment with a 36-month term. Monthly lease payments excluding VAT are $3,642 (€3,192). The Company has the right to purchase the equipment at the end of the lease term for a residual value of $1,255 (€1,100).

NOTE 6 – INCOME TAXES

As of June 30, 2017, the Company has approximately $531,122 of Belgian net operating losses (“NOL”) carryovers to offset taxable income, if any, in future years which expire in fiscal 2036. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets relating to the NOL period because it is more likely than not that all of the deferred tax assets will not be realized.

The Company is incorporated in Liege, Belgium. Belgium corporate income tax (“CIT”) is levied at a rate of 33% plus a 3% crisis tax, which is a sur-tax on the CIT amount, implying an effective rate of 33.99%. No state, region or municipal income tax is levied. Under Belgian tax law, the operating loss carryforwards available for offset against future profits can be used indefinitely. Operating loss carryforwards are only available for offset against national income tax.

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NOTE 7 – PROPERTY AND EQUIPMENT

As of June 30, 2017, and December 31, 2016, Tangible Assets consist of:

	Estimated Useful Lives	June 30, 2017			December 31, 2016
Scientific equipment	7 years	$	2,338		$	2,159
Leased testing and clean room equipment	3 years		125,502			115,892
Computer equipment	5 years		22,421			10,349
Receiver testing system	3 years		21,460			19,817
			171,721			148,217
Less: Accumulated depreciation			(112,479	)		(79,751	)
Property and equipment, net		$	59,242		$	68,466

NOTE 8 – INTANGIBLE ASSETS

As of June 30, 2017, and December 31,2016, Intangible Assets consist of:

	June 30, 2017			December 31, 2016
Amortized intangible assets: License, copyright (7 years useful life)
Gross carrying amount	$	65,341		$	60,337
Accumulated amortization		(23,336	)		(17,239	)
	$	42,005		$	43,098
Amortized intangible assets: Patents (11.5 years average useful life)
Gross carrying amount	$	188,651		$	174,205
Accumulated amortization		(35,116	)		(21,617	)
	$	153,535		$	152,588
Amortized intangible assets: Mask Works (10 years useful life)
Gross carrying amount	$	832,900		$	769,118
Accumulated amortization		(41,645	)		-
	$	791,255		$	769,118
Patents, intellectual property, net	$	986,795		$	964,804

Intangible asset amortization expense for the periods ended June 30, 2017 and December 31, 2016 was $100,097 and $35,245, respectively.

NOTE 9 – EQUITY

Common Stock

The Company’s Articles of Incorporation and Amendment to the Articles of Incorporation dated January 28, 2015 authorize share capital of the Company in the amount of $367,553 (€329,500) and the issuance of 107,154 shares of the Company’s common stock with no stated par value. 

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NOTE 10 – RELATED PARTY TRANSACTIONS

During the six months ended June 30, 2017, the Company had the following transactions with related parties.

Copyright Transfer Agreement

On January 20, 2017, with an effective date of December 30, 2016, the Company entered into a Copyright Transfer Agreement with Nuviant Medical, Inc. in which Nuviant Medical Inc. agreed to sell, transfer, convey and assign to the Company all proprietary rights in and to the Copyrights and related derivative works and goodwill associated with United States Copyright Office copyright registration number MW0000019643, hereinafter collectively known as the “Mask Works”, as repayment on the outstanding loan payable and accrued interest in the amount of $769,118 (€730,019) pursuant to the loan agreement dated March 30, 2015 between the Company and Nuviant Medical Inc.

Loan Agreement and Promissory Note

On January 10, 2017, the Company entered into a Loan Agreement and related Promissory Note with Nexeon Medsystems Europe, S.a.r.l., a Luxembourg private limited liability company (hereinafter referred to as “Nexeon Europe”) pursuant to which Nexeon Europe agreed to make a loan to the Company in the aggregate principal amount of €1,000,000 (One Million Euros) (the “Loan”). Nexeon Europe is a wholly-owned subsidiary of Nexeon MedSystems Inc. Rosellini Scientific, LLC (“RS”), an entity controlled by William Rosellini, is the majority shareholder in the Company. William Rosellini is the Manager, and a Director of the Company and a major shareholder in Nexeon MedSystems Inc. The Loan shall mature on the first Business Day falling one (1) year from the date of the Loan Agreement (the “Maturity Date”). The Maturity Date shall be extended, and the term of the Loan Agreement automatically renewed for successive thirty (30) day periods unless the Company notifies Nexeon Europe within ten (10) days of the then upcoming Maturity Date that it intends to repay the full amount or the then outstanding amount of the Loan prior to the upcoming Maturity Date. The Company may repay, either partially or entirely, the Loan and/or accrued interest thereon at any time prior to the Maturity Date without penalty, upon giving at least two (2) Business Days’ prior written notice to Nexeon Europe. the Company and Nexeon Europe may also agree to settle the Loan through the inter-company account netting procedure or to capitalize as an investment in the subsidiary.

The Loan shall bear interest at the rate of 5% per annum on a 365-day year basis and the actual number of days elapsed. Accrued interest on the unpaid principal amount of the Loan shall be payable on the Maturity Date. Accrued interest on any partial repayment of the Loan shall be payable on the earlier of the date of repayment or the first business day of the month following partial repayment.

The foregoing description of the terms of the Loan Agreement and related Promissory Note does not purport to be complete and is subject to and qualified in its entirety by reference to the Loan Agreement and the Promissory Note,

On May 1, 2017, the terms of the Promissory Note were amended to increase the aggregate principal amount of the loan to €1,500,000. On July 15, 2017, the Company executed the Second Amended and Restated Promissory Note amending the existing terms to increase the aggregate principal amount of the loan to €1,750,000. On August 27, 2017, the Company executed the Third Amended and Restated Promissory Note amending the existing terms to increase the aggregate principal amount of the loan to €2,600,000. As of June 30, 2017, the outstanding balance of the loan is $1,514,361 with accrued interest of $20,448. As of September 1, 2017, the Company was acquired by Nexeon MedSystems Europe, SARL and the outstanding balance and accrued interest has been eliminated in consolidation on the consolidated balance sheet of Nexeon MedSystems Inc.

Security Agreement

In connection with the Loan Agreement and the Promissory Note described above, the Company and Nexeon Europe entered into a Security Agreement pursuant to which the Company has agreed to grant a security interest in the Collateral (as defined below) as security for the Loan being granted pursuant to the Loan Agreement.

As collateral security for the payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Loan, the Company pledged and granted to Nexeon Europe, as Secured Party for the benefit of the Secured Party, a security interest in all of the Company’s right, title and interest in, to and under all of its properties, including but not limited to personal and real property, in each case whether tangible or intangible, in whatever format (as applicable), wherever located, and whether now owned by the Company or hereafter acquired and whether now existing or hereafter coming into existence (collectively, the “Collateral”).

The foregoing description of the terms of the Security Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the agreement itself.

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Nuviant Medical, GmbH Waiver of Debt Agreement

On May 19, the Company entered into a Waver of debt agreement to waive the outstanding loan balance and accrued interest outstanding pursuant to the September 21, 2015, loan agreement between The Company and Nuviant Medical, GmbH, a related entity to Rosellini Scientific, LLC. The agreement waives the outstanding balance of the loan and accrued interest in the amount of approximately $170,945 and thereby waiving any right or action in respect to this debt. An expense had been recorded as bad debt on the statement of comprehensive income in the amount of approximately $170,945. During the six months ended June 30, 2017 and prior to the waiver of debt agreement, NMB loaned Nuviant Medical, GmbH approximately $57,419.

RS Loan of Nexeon MedSystems Inc Common Stock

On June 23, 2017 Rosellini Scientific, LLC transferred 81,035 shares of Nexeon MedSystems Inc restricted Common Stock to the Company. The shares were valued at $98,800. The loan is non-interest bearing and will be re-paid to RS in Nexeon MedSystems Inc restricted Common Stock issued by Nexeon Medsystems Inc through an intercompany loan with the Company post acquisition of the Company by Nexeon MedSystems Inc. The 81,035 shares were exchanged for outstanding payables to vendors of the Company in the amount of $98,800. RS is also due $22,911 from a non-interest bearing loan to the Company in 2016. The total amount due to RS from these transactions is $121,711 and is recorded as Due to related party on the balance sheet as of June 30, 2017.

NOTE 11 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring through the date that the financial statements were issued, for events requiring recording or disclosure.

Stock Purchase Agreement

On August 30, 2017, NMB acquired Medi-Line, S.A and its holding company INGEST, SPRL for $1,740,102 (payable as €1,450,000 EUR cash) or $1,069,858 (€891,496 EUR) net of cash acquired. As part of the transaction, and prior to the acquisition, Nexeon Europe loaned NMB $970,400 (€818,075 EUR) pursuant to the existing loan agreement and promissory note, the Company secured a credit facility in the amount of $330,319 (€275,000 EUR) and Medi-Line, S.A. loaned the Company $540,032 (€450,000 EUR). Payment of the purchase price included the settlement of a note payable in the amount of $120,007 (€100,000 EUR) and a dividend payable in the amount of $9,901 (€8,250 EUR) to the sellers of INGEST, SPRL. The balance of the loan and all accrued interest related to the loan agreement and promissory note between Nexeon Europe and the Company along with the $540,032 (€450,000 EUR) loan from Medi-Line, S.A to the Company is eliminated through consolidation in the financial statements of Nexeon MedSystems Inc as of September 1, 2017, the date Nexeon MedSystems Inc acquired the Company.

Management Services Agreement

With an effective date of May 31, 2017, Med-Line, S.A. entered into a services agreement (the “Agreement”) with HD Resources SPRL, a company controlled by Henri Decloux, in which HD Resources SPRL was named the Manager of Med-Line, S.A. HD Resources shall render and provide management services, under the general direction and control of the board of directors and the managing director(s) of Medi-Line, S.A. The Agreement was effective solely upon and subject to the closing and full execution of the stock purchase agreement by and between Henri Decloux, and Paul Macors, as sellers, and the Company, as purchaser. HD Resources sole relationship with Medi-Line S.A. is that of an independent contractor.

In consideration for the management services provided by HD Resources, Medi-Line S.A. shall pay a monthly fee of approximately $17,114 (€15,000 EUR) exclusive of value Added Tax (VAT). Neither HD Resources nor any representatives of HD Resources will be eligible for any Medi-Line, S.A. employee benefits including, but not limited to severance.

Upon acquisition of Medi-Line, S.A. and INGEST, SPRL by the Company the term of the Agreement shall have an initial fixed term of (2) two years. After the expiration or termination of the initial term, the Agreement shall be automatically renewed once for another fixed period of (2) two years.

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