UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year ended
For the transition period from to .
Commission file number:
(Name of Registrant in Its Charter)
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(Address of Principal Executive Offices)
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(Issuer’s Telephone Number, Including Area Code)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock ($0.001 Par Value)
(Title of Each Class)
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer ☐ | Accelerated filer ☐ |
| | Smaller reporting company |
| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
The aggregate market value of the registrant’s common stock outstanding held by non-affiliates (computed at a price of $0.42 per share, the price at which the registrant’s common stock was last sold as of June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter) was $
At March 16, 2022, there were
DOCUMENTS INCORPORATED BY REFERENCE
None.
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. Forward-looking statements may appear throughout this report, including without limitation, the following sections: Item 1 “Business,” Item 1A “Risk Factors,” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Important factors that in our view could cause material adverse effects on our financial condition and results of operations include, but are not limited to, risks associated with the company’s ability to obtain capital to begin funding medical procedures again, service demands and acceptance, our ability to expand, changes in healthcare practices, changes in technology, effects of the COVID-19 virus pandemic, pursuing a strategic business transaction with a third party company, economic conditions, the impact of competition and pricing, government regulation and approvals in the healthcare industry and other risks and uncertainties set forth below and in the “Risk Factors” section below. We undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
As used herein, the “Company,” “we,” “our,” and similar terms include Spine Injury Solutions, Inc. and its subsidiaries and predecessors, unless the context indicates otherwise.
TABLE OF CONTENTS
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PART I |
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Item 1. |
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Item 1A. |
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Item 1B. |
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Item 2. |
11 |
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Item 3. |
11 |
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Item 4. |
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PART II |
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Item 5. |
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Item 6. |
12 |
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Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. |
15 |
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Item 8. |
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Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A. |
29 |
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Item 9B. |
30 |
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| Item 9C. | Disclosure regarding Foreign Jurisdictions that Prevent Inspections | 30 |
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PART III |
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Item 10. |
31 |
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Item 11. |
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
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Item 14. |
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PART IV |
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Item 15. |
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Item 16. |
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PART I
ITEM 1. BUSINESS
Spine Injury Solutions Inc. was incorporated under the laws of Delaware on March 4, 1998. We changed our name from Spine Pain Management Inc. to Spine Injury Solutions, Inc. on October 1, 2015.
We are actively pursuing a merger or similar transaction with a private company where it becomes the controlling company. We find this to be the best course of action for our stockholders. Further, we have been in negotiations with a certain third-party candidate since December 2021. We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock. Although we do not presently have a binding agreement with this company or its shareholders, it is possible that a definitive agreement for the proposed transaction could be agreed to and consummated in the imminent future. There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us.
From 2009 to 2018, we operated as a technology, marketing, billing, and collection company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents. We delivered turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents. Through our affiliate system, we facilitated spine surgeons, orthopedic surgeons and other healthcare providers to provide reasonable, necessary, and appropriate treatments to patients with musculo-skeletal spine injuries. We assisted the centers that provide the spine diagnostic injections and treatment and paid the doctors a fee for the medical procedures they performed. After a patient was billed for the procedures performed by the affiliated doctor, we took control of the patients’ unpaid bill and oversee collection. In most instances, the patient was a plaintiff in an accident case, where the patient was represented by an attorney. Typically, the defendant (and/or the insurance company of the defendant) in the accident case would pay the patient’s bill upon settlement or final judgment of the accident case. The payment to us was made through the attorney of the patient. In most cases, it was required that we agree to the settlement price and the patient must sign off on the settlement. Once we were paid, the patient’s attorney would receive payment for his or her legal fee.
During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, and we have not been involved in any procedures since then, including in 2021 or 2020. Presently, we continue to have no plans to do so in the future. However, we continue to actively pursue the collection of previously funded procedures. Without additional funding, there is no guarantee that we can continue as a going concern.
We own a device and process by which a video recording system known as the Quad Video Halo (“QVH”) is used to record medical procedures. The QVH system can simultaneously capture views and machine images, thus providing a record of internal and external views of a recorded procedure. The QVH system has been refined and improved over the years. The first- and second-generation systems required post-procedure file transfers, synchronizing and editing. This involved considerable software and time for a videographer to produce a complete video. The latest generation of the QVH referred to as NextGen 2.0 completely eliminates all of the issues associated with prior QVH approaches. The new varifocal lens cameras allow ceiling placement which eliminates the impact of room clutter and fluoroscope movement. The system server automatically synchronizes and renders the final videos, thus eliminating all backend processing.
We lease QVH units to customers who pay us monthly lease payments. Presently, the majority of our total revenues are derived from these lease payments. Our wholly-owned subsidiary, Quad Video Halo, Inc. holds certain company assets affiliated with the QVH units.
Billing and Operations
From 2009 to 2018, we worked with independent medical contractors who would perform the medical services for patients and bill a fixed fee for the services. We funded certain spine injury diagnostic centers where we work with healthcare providers as independent contractors to perform medical services for patients (however, we discontinued our involvement in future medical procedures during the fourth quarter of 2018—see above). We paid the healthcare providers for medical services performed. The patients were billed based on Current Procedural Terminology (“CPT”) codes for the medical procedure performed. CPT codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services. CPT codes are developed, maintained and copyrighted by the American Medical Association. Patients were billed at the normal billing amount, based on national averages, for a particular CPT code procedure. We would take control of the patients’ unpaid bills.
The clinic facilities where our spine injury diagnostic centers operated were owned or leased by a medical affiliate or third party. We had no ownership interest in these clinic facilities, nor did we have any responsibilities towards building or operating the clinic facilities.
Governmental Regulation
All of the medical diagnostic procedures offered at the clinics were performed by independent medical contractors, who were subject to regulation by a number of governmental entities at the federal, state, and local levels. We were and are subject to laws and regulations relating to business corporations in general.
HIPAA Administrative Simplification Provisions—Patient Privacy and Security
The Health Insurance Portability and Accountability Act of 1996, commonly known as “HIPAA,” requires the adoption of standards for the exchange of health information in an effort to encourage overall administrative simplification and to enhance the effectiveness and efficiency of the healthcare industry. Pursuant to HIPAA, the Secretary of the Department of Health and Human Services has issued final rules concerning the privacy and security of health information, the establishment of standard transactions and code sets, and the adoption of a unique employer identifier and a national provider identifier. Noncompliance with the administrative simplification provisions can result in civil monetary penalties up to $100 per violation as well as criminal penalties that include fines and imprisonment. The Department of Health and Human Services Office of Civil Rights is charged with implementing and enforcing the privacy standards, while the Centers for Medicare and Medicaid Services are responsible for implementing and enforcing the security standards, the transactions and code sets standards, and the other HIPAA administrative simplification provisions.
The HIPAA requirements only apply to “covered entities,” such as health plans, healthcare clearinghouses, and healthcare providers, which transmit any health information in electronic form. Our business is likely considered a “covered entity” under HIPAA.
Of the HIPAA requirements, the privacy standards and the security standards have the most significant impact on our business operations. The privacy standards require covered entities to implement certain procedures to govern the use and disclosure of protected health information and to safeguard such information from inappropriate access, use, or disclosure. Protected health information includes individually identifiable health information, such as an individual’s medical records, transmitted or maintained in any format, including paper and electronic records. The privacy standards establish the different levels of individual permission that are required before a covered entity may use or disclose an individual’s protected health information and establish new rights for the individual with respect to his or her protected health information.
The final security rule establishes security standards that apply to covered entities. The security standards are designed to protect health information against reasonably anticipated threats or hazards to the security or integrity of the information, and to protect the information against unauthorized use or disclosure. The security standards establish a national standard for protecting the security and integrity of medical records when they are kept in electronic form.
The administrative simplification provisions of HIPAA require the use of uniform electronic data transmission standards for healthcare claims and payment transactions submitted or received electronically. We believe that we are in substantial compliance with the transaction and code set standards. The transaction standards require us to use standard code sets when we transmit health information in connection with certain transactions, including health claims, health payments and remittance advices.
In addition, the Secretary of the Department of Health and Human Services issued a final rule that requires each healthcare provider to adopt a standard unique health identifier, the National Provider Identifier (“NPI”). The NPI will identify healthcare providers in the electronic transactions for which the Secretary has already adopted standards (the “standard transactions”). These transactions include claims, eligibility inquiries and responses, claim status inquiries and responses, referrals, and remittance advices. All health plans and all healthcare clearinghouses must accept and use NPIs in standard transactions.
Other Privacy and Confidentiality Laws
In addition to the HIPAA requirements described above, numerous other state and federal laws regulate the privacy of an individual’s health information. These laws specify how an individual’s health information may be used internally, the persons to whom health information may be disclosed, and the conditions under which such uses and disclosures may occur. Many states have requirements relating to an individual’s right to access his or her own medical records, as well as requirements relating to the use and content of consent or authorization forms. Also, because of employers’ economic interests in paying medical bills for injured employees and in the timing of the injured employees’ return to work, many states have enacted special confidentiality laws relating to disclosures of medical information in workers’ compensation claims. These laws limit employer access to such information. Many states have also passed laws that regulate the notification process to individuals when a security breach involving an individual’s personally identifiable information, such as social security number or date of birth, occurs. To the extent that state law affords greater protection of an individual’s health information than that provided under HIPAA, the state law will control.
We anticipate that there will be more regulation in the areas of privacy and confidentiality, particularly with respect to medical information. We regularly monitor the privacy and confidentiality requirements that relate to our business, and we anticipate that we may have to modify our operating practices and procedures in order to comply with these requirements.
Competition
Presently, the majority of our total revenues are derived from leasing QVH units. Although we believe the QVH system is unique in the healthcare industry, there may be low barriers to entry in this market, and the addition of new competitors may occur relatively quickly. If competition within our industry intensifies, our ability to maintain or increase our revenue growth, price flexibility and control over medical costs, trends, and marketing expenses, may be compromised.
Employees
We currently have one paid part-time employee (our CFO, John Bergeron), plus one collection consultant and one QVH consultant at our corporate headquarters. We do not presently pay our President and CEO, William Donovan, M.D., any compensation. We expect to continue to use independent contractors, consultants, attorneys and accountants as necessary, to complement services rendered by our employees.
ITEM 1A. RISK FACTORS
Our future operating results are highly uncertain. Before deciding to invest in us or to maintain or increase your investment, you should carefully consider the risks described below, in addition to the other information contained in this annual report. If any of these risks actually occur, our business, financial condition or results of operations could be seriously harmed. In that event, the market price for our common stock could decline and you may lose all or part of your investment.
Risks Related to Our Company
We have discontinued our involvement in future medical procedures due to our cash position
During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, which also hampers our ability to pay back existing debt to Peter Dalrymple, a director and shareholder (see Note 6—Notes Payable). We have not funded any procedures in 2021 and have no plans to do so in the future. The service revenue we previously earned has resulted in longer settlement times, which has created a slowdown in cash collections. Additionally, our efforts to establish a market for the Quad Video Halo has not met our expectations and we have cut back its development and operations. If we are unable to access additional capital in the near future, these recent developments could have a material negative impact on our financial performance and could have a material adverse effect on our results of operations and financial condition.
Management has determined that certain factors raise substantial doubt about our ability to continue as a going concern, and our continued existence is dependent upon our ability to successfully execute our business plan.
The financial statements included with this report are presented under the assumption that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. Management has determined that certain factors raise substantial doubt about our ability to continue as a going concern, including our net loss of $140,365 for the year ended December 31, 2021 and our accumulated deficit of $20,278,547 at year-end. We are not generating sufficient operating cash flows to support continuing operations. Our ability to continue as a going concern is dependent upon our ability to successfully execute our business plan, obtain additional financing and achieve a level of cash flows from operations adequate to support our cost structure. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We are dependent on key personnel.
We depend to a large extent on the services of certain key management personnel, including our executive officers and other key consultants, the loss of any of which could have a material adverse effect on our operations.
We may experience potential fluctuations in results of operations.
Our future revenues may be affected by a variety of factors, many of which are outside our control. We have no control on how long it takes our remaining cases to settle, making it difficult to forecast cash flow. As a result of our limited operating history and the discontinuation of our previous business plan, it is difficult to forecast revenues or earnings accurately, which may fluctuate significantly from quarter to quarter.
We have a history of significant operating losses and will need to increase operating expenses in the future if we decide to grow our business.
Since our inception in 1998, until commencement of our spine injury diagnostic operations in August 2009, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of $20,278,547 as of December 31, 2021. During the fourth quarter of 2018, we chose to discontinue our involvement in future medical procedures due to our cash position. Presently, we are trying to limit all operating expenses as much as possible. If in the future we decide to increase our service development, marketing efforts and/or brand building activities, we will need to increase our operating expenses and our general and administrative functions to support such growth in operations. No such growth in operations is presently planned. We will need to generate significant revenues to achieve our business plan. Our continued existence is dependent upon our ability to successfully execute our business plan, as well as our ability to increase revenue and obtain additional capital from borrowing and selling securities, as needed, to fund our operations. There is no assurance that additional capital can be obtained or that it can be obtained on terms that are favorable to us and our existing stockholders. Any expectation of future profitability is likely dependent upon our ability to consummate a merger with a target company, of which there can be no assurances.
We may incur significant expenses as a result of being a publicly traded company, which may negatively impact our financial performance.
We may incur significant legal, accounting and other expenses as a result of being a publicly traded company. The Sarbanes-Oxley Act of 2002, as well as related rules implemented by the SEC, has required changes in corporate governance practices of public companies. We expect that compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 as discussed in the following risk factor, may substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly. As a result, there may be a substantial increase in legal, accounting and certain other expenses in the future, which would negatively impact our financial performance and could have a material adverse effect on our results of operations and financial condition.
Our internal control over financial reporting may not be considered effective, which could result in a loss of investor confidence in our financial reports and in turn could have an adverse effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, with our annual reports, we are required to furnish a report by our management on our internal control over financial reporting. Such report will contain, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of the year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. If we are unable to assert that our internal control is effective, investors could be adversely affected.
Our QVH business model is unproven.
Our QVH business model depends upon our ability to implement and successfully execute our business and marketing strategy, which includes our ability to find healthcare providers to whom we can sell or lease QVH units, and from whom we may obtain referrals. If we are unable to find and form relationships with such healthcare providers, our business will likely fail.
We have been contacted in connection with various merger and acquisition opportunities and may choose to enter into a merger and/or acquisition transaction in the future.
We have been contacted by parties seeking to merge and/or acquire us. While we have not entered into any definitive agreements or understandings to merge with or acquire any entity, in the event that we do enter into a merger and/or acquisition with a separate company in the future, our majority shareholders will likely change and new shares of common stock could be issued, resulting in substantial dilution to our then current shareholders. As a result, our new majority shareholders will likely change the composition of our board of directors and replace our current management. The new management will likely change our business focus and we can make no assurances that our new management will be able to properly manage our direction or that this change in our business focus will be successful. If we do enter into a merger or acquisition, and our new management fails to properly manage and direct our operations, we may be forced to scale back or abandon our operations, which will cause the value of our common stock to decline or become worthless. We have not entered into any binding merger or acquisition agreements as of the date of this filing.
Since we have not yet selected a particular target industry or target business with which to complete a business combination, we are unable to ascertain the merits or risks associated with any particular business or industry.
Since we have not yet identified a particular industry or prospective target business, there is no basis for investors to evaluate the possible merits or risks of the target business which we may ultimately acquire (or which may acquire us). If we complete a business combination with a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent in the operations of those entities. Although our management intends to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors. There can be no assurance that any prospective business combination will benefit shareholders or prove to be more favorable to shareholders than any other investment that may be made by shareholders and investors.
Our officers and directors may allocate time to other business activities, thereby causing conflicts of interest as to how much time to devote to our affairs. This could have a negative impact on the Company’s ability to consummate a business combination in a timely manner, if at all.
Our officers and directors are not required to commit full time to our affairs, which may result in a conflict of interest in allocating time between our business and other businesses. Management is also engaged in other business endeavors and is not obligated to contribute any specific number of hours per week to our affairs. If management’s other business affairs require them to devote more time to such affairs, it could limit their ability to devote time to our affairs or present the Company as a viable business opportunity and could have a negative impact on our ability to consummate a business combination. Furthermore, we do not have an employment agreement with any members of management.
The Company may be unable to obtain additional financing, if and when required, to complete a business combination or to fund the operations and growth of the business combination target, which could compel the Company to restructure a potential business combination transaction or to entirely abandon a particular business combination.
The Company has not yet identified any prospective target business. If we require funds for a particular business combination because of the size of the business combination or otherwise, or if we require funds for any other purpose, we will be required to seek additional financing, which may or may not be available a terms and conditions satisfactory to the Company, if at all. To the extent that additional financing proves to be unavailable when and if needed to consummate a particular business combination, we would be compelled to restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. The Company’s officers, directors or stockholders are not required to provide any financing to us in connection with or after a business combination.
It is probable that the Company will only be able to enter into one business combination, which will cause us to be solely dependent on such single business and a limited number of products or services.
If and when the Company is able to enter into a business combination transaction, it is probable that transaction will be with a single operating business. Accordingly, the prospects for the Company’s success may be:
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dependent upon the development or market acceptance of a single or limited number of products or services. |
In this case, the Company will not be able to diversify the Company’s operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry.
The Company has limited resources and there is significant competition for business combination opportunities. Therefore, the Company may not be able to enter into or consummate an attractive business combination.
The Company expects to encounter intense competition from other entities having a business objective similar to the Company’s, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than the Company does and the Company’s financial resources are limited when contrasted with those of many of these competitors. While the Company believes that there are numerous potential target businesses that it could acquire, the Company’s ability to compete in acquiring certain sizable target businesses will be limited by the Company’s limited financial resources and the fact that the Company will use its common stock to acquire an operating business. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.
If the Company is deemed to be an investment company, the Company may be required to institute burdensome compliance requirements and the Company’s activities may be restricted, which may make it difficult for the Company to enter into a business combination
Although we are subject to the reporting requirements of the Exchange Act, management believes we will not be subject to regulation under the Investment Company Act of 1940, since we will not be engaged in the business of investing or trading in securities. If we engage in business transactions which will result in our holding passive investment interests in a number of entities, we could be subject to regulations under the Investment Company Act. If so, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have received no formal determination from the SEC as to our status under the Investment Company Act, and, consequently, violation of the Investment Company Act could subject us to material adverse consequences.
Only one of four of our directors is independent, so actions taken and expenses incurred by our officers and directors on behalf of us will generally not be subject to independent review.
Only one of the four members of our board of directors is independent. While the Company anticipates that all actions taken by our director on the Company’s behalf will be in the Company’s and its stockholders’ best interests, if actions are taken, or expenses are incurred that are actually not in the Company’s and its stockholders best interests, it could have a material adverse effect on our business and plan of operation and the price of our stock held by the public stockholders.
Risks Related to Our Common Stock
We may issue a large number of shares of common stock in the future, including without limitation in a strategic business transaction, which could cause substantial dilution to all stockholders.
We may seek to raise equity or equity-related capital in the future. Additionally, we are presently seeking to enter into a strategic business transaction with another company. Either event is expected to result in us issuing a large number of shares of common stock. Any issuance of shares of our common stock will dilute the percentage ownership interest of all stockholders and may further dilute the book value per share of our common stock. This dilution could be substantial, depending on the size of any such transaction.
We do not anticipate paying any cash dividends.
We have never paid cash dividends on our common stock and do not anticipate doing so for the foreseeable future. The payment of dividends, if any, is within the discretion of our board of directors and is dependent on our revenues and earnings, if any, capital requirements, general financial condition, and other relevant factors. We presently intend to retain all earnings, if any, to implement our business strategy.
The market for our stock is limited and our stock price may be volatile.
There is a limited market for our common stock and a stockholder may not be able to liquidate his or her shares regardless of the necessity of doing so. The prices of our shares are highly volatile. This could have an adverse effect on developing and sustaining the market for our securities. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly. In addition, the stock markets in general can experience considerable price and volume fluctuations.
The trading price of our common stock entails additional regulatory requirements, which may negatively affect such trading price.
Generally, the Securities and Exchange Commission generally defines a “penny stock” as any equity security that is quoted over-the-counter, such as on the OTC Bulletin Board (which is a facility of FINRA) or OTC Link LLC (which is owned by OTC Markets Group, Inc., formerly known as Pink OTC Markets Inc.) that has a market price of less than $5.00 per share. The trading price of our common stock is below $5.00 per share. As a result of this price level, our common stock is considered a penny stock and trading in our common stock is subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934. These rules require additional disclosure by broker-dealers in connection with any trades generally involving penny stocks subject to certain exceptions. Such rules require the delivery, before any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions). For these types of transactions, the broker-dealer must determine the suitability of the penny stock for the purchaser and receive the purchaser’s written consent to the transaction before sale. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our common stock. As a consequence, the market liquidity of our common stock could be severely affected or limited by these regulatory requirements.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
We currently maintain our executive offices at 5151 Mitchelldale A2, Houston, Texas 77092. This office space encompasses approximately 200 square feet and through November 2021, was provided to us at a rental rate of $1,000 per month on a monthly basis by Northshore Orthopedics, Assoc. (“NSO”), a company owned by William Donovan, M.D., our director and Chief Executive Officer. The rent included the use of the telephone system, computer server, and copy machines. We discontinued paying rent in December 2021 due to a lack of funds, and since then NSO has provided us this office space rent free.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is quoted on the OTC Markets under the symbol, “SPIN.” Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
Record Holders
As of March 16, 2022, there were approximately 63 stockholders of record of our common stock, and we estimate that there were approximately 425 additional beneficial stockholders who hold their shares in “street name” through a brokerage firm or other institution. As of March 16, 2022, we have a total of 20,240,882 shares of common stock issued and outstanding. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.
Equity Compensation Plan Information
As of December 31, 2021, we do not have any compensation plans under which our equity securities are authorized for issuance.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the audited consolidated financial statements and the related notes to the consolidated financial statements included in this Form 10-K.
Management Overview
At the end of 2008, we launched our new business concept of medical services and technology that delivers turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary, reasonable and appropriate treatment for musculo-skeletal spine injuries.
During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, which also hampers our ability to pay back existing debt to a current director and shareholder. We were not involved in any procedures in 2021 and have no plans to do so in the future. The service revenue previously earned has resulted in longer settlement times, which has created a slowdown in cash collections. Additionally, our efforts to establish a market for the Quad Video Halo has not met our expectations and we have cut back its development and operations. In late 2018, however, we were able to lease QVH units to customers, which leases include the use of our QVH units along with image processing services.
There can be no guarantee of us continuing as a going concern if we cannot find additional capital. We continue to explore opportunities to raise additional capital to fund our operations. We are also actively seeking a private company with which to enter into a strategic business transaction, including without limitation a merger. Further, we have been in negotiations with a certain third-party candidate since December 2021. We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock. Although we do not presently have a binding agreement with this company or its shareholders, it is possible that a definitive agreement for the proposed transaction could be agreed to and consummated in the imminent future. There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us.
Results of Operations
For the years ended December 31, 2021 versus 2020:
We recorded $104,292 in QVH lease revenue for the year ended December 31, 2021, coupled with $64,588 of service revenues consisting of excess collections for previously funded procedures totaling $14,588 and a revision to our estimated variable consideration totaling $50,000, resulting in revenue of $168,880. For the same period in 2020, we recorded $95,941 in QVH lease revenue coupled with $76,078 relating to excess collections for previously funded procedures bringing total revenue to $172,019. For the year ended December 31, 2021, our collections of previously funded procedures decreased as we are no longer funding new procedures and previously funded procedures are in run-off.
Expenses
For the years ended December 31, 2021 versus 2020:
Operating, general and administrative expenses for the year ended December 31, 2021 were $379,883 as compared to $507,397 for the year ended December 31, 2020. Operating expenses decreased due primarily to decreases in payroll, rent, consulting and insurance expenses.
Other income (expense) for the year ended December 31, 2021 was other income, net of $70,638 as compared to other income, net of $37,984 for the year ended December 31, 2020. The 2021 other income consisted of $63,500 of deposit received from a private company seeking to acquire us, which was recognized as other income upon termination of the letter of intent agreement. In addition, we recognized $33,946 as other income upon the transfer of certain accounts receivable with a carrying value of $0 to Peter Dalrymple, a director, in exchange for a reduction in the note payable to Mr. Dalrymple in the amount of $33,946. For the year ended December 31, 2020, other income, net consisted primarily of the forgiveness of our Paycheck Protection Program (“PPP”) loan as further described below. Other income (expense) was partially offset by $26,859 and $26,646 of interest expense during the years ended December 31, 2021 and 2020, respectively.
On April 22, 2020 we received an SBA loan in the amount of $64,097 under the federal PPP which helps businesses keep their workforce employed during the Coronavirus crisis. The PPP is part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act signed into law in March of 2020. The PPP is a loan designed to provide direct incentive for small businesses to keep their workers on the payroll, which will be forgiven if all employees are kept on the payroll for eight weeks and the money is used for the sole purpose of payroll, rent, mortgage interest, or utilities, subject to the provisions in the program. The loan carries an interest rate of 1% and is due in two years, April 22, 2022. There is no collateral and no personal guarantees. In December 2020, we applied for forgiveness of our PPP loan and subsequently received a notice of approval. Accordingly, we removed the PPP loan amount from our consolidated balance sheet and recognized a gain on forgiveness of debt.
Net Loss
For the years ended December 31, 2021 versus 2020:
Net loss for the year ended December 31, 2021 was $140,365 compared to net loss of $297,394 for the year ended December 31, 2020. The main reason for the decrease was lower operating expenses, coupled with an increase in other income, as described above.
Liquidity and Capital Resources
For the year ended December 31, 2021 versus 2020:
During 2021, cash provided by operating activities was $35,836 as compared to $446,971 in 2020. The decrease in cash provided by operations was mainly due to a decrease in collections of outstanding receivables.
Cash used in financing activities totaled $61,054 for the year ended December 31, 2021, consisting of $61,054 in payments on our note to Peter Dalrymple. Cash used in financing activities totaled $515,903 for the year ended December 31, 2020, consisting of payments on our note payable totaling $110,000 and $470,000 in payments on our line of credit, partially offset by proceeds received from a PPP loan of $64,097.
Income Tax Expense (Benefit)
We have not made a provision for income taxes in 2021 or 2020, which reflects our valuation allowance established against our benefits from net operating loss carryforwards.
Critical Accounting Policies
In Note 3 to the audited consolidated financial statements for the years ended December 31, 2021 and 2020 included in this Form 10-K, we discuss those accounting policies that are considered to be significant in determining the results of operations and our financial position. The following critical accounting policies and estimates are important in the preparation of our consolidated financial statements:
Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires our management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an ongoing basis, we evaluate estimates. We base our estimates on historical experience and other facts and circumstances that we believe to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition and Accounts Receivable
The Company’s accounting for revenues is governed by two accounting standards. The Company’s service and product sale revenue are accounted for under ASC 606, Revenue from Contracts with Customers. Additionally, the Company’s QVH rental revenues are accounted for under ASC 842, Leases.
Service and Product Sale Revenue Recognition
Historically, our net revenues included service revenues that arose from the delivery of medical diagnostic services provided to patients by medical professionals at spine injury diagnostic centers, only after the patients completed and signed required medical and financial paperwork. Service revenues were recorded as net patient service revenues based on variable consideration elements further described below. While we did collect 100% of the accounts on certain patients, our historical collection rate was used to estimate the variable consideration expected and is reflected in the carrying balance of accounts receivable and service revenue recorded. A discount rate of 48%, based on payment history, was used to reduce revenue to 52% of Current Procedural Terminology code rates (“CPT” codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services. CPT codes are developed, maintained and copyrighted by the American Medical Association). Patients were billed at the normal billing amount, based on national averages, for a particular CPT code procedure during the year ended December 31, 2018 and prior years. We recorded no revenue related to medical diagnostic services provided during the years ended December 31, 2021 and 2020 and revenue presented represents adjustments of variable consideration received for procedures performed in years prior to 2019.
Service revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” which is defined as gross amounts billed using CPT codes (“gross revenue”) less account discounts that are expected to result when individual cases are ultimately settled, which is the variable consideration associated with this revenue stream.
Our credit policy has been established based upon extensive experience by management in the industry and has been determined to ensure that collectability is reasonably assured. Payment for services are primarily made to us by a third party upon settlement of a case. As of December 31, 2021 and 2020, there were no material contract assets, contract liabilities, or deferred contract costs recorded in the consolidated financial statements.
Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.
Lease Revenues
Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease. Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned. For the QVH leases, rental related service revenues for support, maintenance and video processing, delivery, and installation are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer. These revenues are recognized on a straight-line basis over the term of the lease. As of the year ended December 31, 2021, the Company’s leases consisted solely of operating leases.
Going Concern
Since our inception in 1998, until commencement of our spine injury diagnostic operations in August, 2009, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of $20,278,547 as of December 31, 2021. During the year ended December 31, 2021, we recorded net revenue of $168,880 and a net loss of $140,365. Presently, we are trying to limit all operating expenses as much as possible. If in the future we decide to increase our service development, marketing efforts and/or brand building activities, we will need to increase our operating expenses and our general and administrative functions to support such growth in operations. No such growth in operations is presently planned. We are actively seeking a private company with which to enter into a strategic business transaction, including without limitation a merger; however, we cannot predict the ultimate outcome of our efforts. Our continued existence is dependent upon our ability to successfully merge with a financially viable company, or our ability to obtain additional capital from borrowing and/or selling securities, as needed, to fund our operations. There is no assurance that additional capital can be obtained or that it can be obtained on terms that are favorable to us and our existing stockholders. Any expectation of future profitability is likely dependent upon our ability to successfully merge with another company, of which there can be no assurances.
During the fourth quarter of 2018, the decision was made to discontinue our involvement with future medical procedures due to our cash position, which also hampered our ability to pay back existing debt to a current director and shareholder (see Note 6—Notes Payable in the consolidated financial statements). We were not involved in any procedures in 2021 and have no plans to do so in the future. The service revenue we previously earned has resulted in longer settlement times, which has created a slowdown in cash collections. Additionally, our efforts to establish a market for the Quad Video Halo has not met our expectations and we have cut back its development and operations. If we are unable to access additional capital in the near future, these recent developments could have a material negative impact on our financial performance and could have a material adverse effect on our results of operations and financial condition. The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements for the fiscal years ended December 31, 2021 and 2020 are attached hereto.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Spine Injury Solutions, Inc.
Houston, Texas
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Spine Injury Solutions, Inc. and Subsidiary (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for the years then ended and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has an accumulated deficit of $20,278,547 as of December 31, 2021 and a net loss of $140,365 for the year ended December 31, 2021. Additionally, the Company is not generating sufficient cash flows to meet its regular working capital requirements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans as to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matter arisings from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) represented especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/
We have served as the Company’s auditor since 2010.
March 16, 2022
SPINE INJURY SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
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December 31, |
December 31, |
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2020 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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| Accounts receivable, net of allowance for discounts of $ and $ |
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Total current assets |
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Property and equipment, net |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Stockholders’ deficit: |
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| Common stock: $ December 31, 2021 and 2020 |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ deficit |
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Total liabilities and stockholders’ deficit |
$ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
SPINE INJURY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2021 and 2020
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2021 |
2020 |
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Net service revenue |
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Lease revenue |
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Total revenue |
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Operating, general and administrative expenses |
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Loss from operations |
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Other income (expense): |
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Gain from forgiveness of debt |
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Other income |
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Interest expense |
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Total other income (expense), net |
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Net loss |
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$ | ( |
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Net loss per common share: |
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Basic/ diluted |
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$ | ( |
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Weighted average shares used in loss per common share: |
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The accompanying notes are an integral part of the consolidated financial statements.
SPINE INJURY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the Years Ended December 31, 2021 and 2020
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Common Stock |
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Accumulated |
Total Stockholders’ |
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Capital |
Deficit |
Equity (Deficit) |
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Balances, December 31, 2019 |
$ | $ | $ | ( |
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$ | ||||||||||||||
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Net loss |
- | - | - | ( |
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Balances, December 31, 2020 |
( |
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( |
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Net loss |
- | - | - | ( |
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( |
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Balances, December 31, 2021 |
$ | $ | $ | ( |
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$ | ( |
) |
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The accompanying notes are an integral part of the consolidated financial statements.
SPINE INJURY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2021 and 2020
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2021 |
2020 |
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Cash flows from operating activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Gain on transfer of accounts receivable to extinguish debt |
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Gain from forgiveness of debt |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Prepaid expenses |
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Repayments on notes payable |
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Proceeds from Paycheck Protection Program loan |
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Payments on line of credit |
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Net cash used in financing activities |
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Net decrease in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of year |
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Cash and cash equivalents at end of year |
$ | $ | ||||||
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Supplementary disclosure of cash flow information: |
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Interest paid |
$ | $ | ||||||
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Income taxes |
$ | $ | ||||||
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Non-cash investing and financing activities: |
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Exchange of note payable to a bank for note payable to shareholder |
$ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
NOTE 1. DESCRIPTION OF BUSINESS
Spine Injury Solutions Inc. (the “Company”, “we” or “us”) was incorporated under the laws of Delaware on March 4, 1998. We changed our name to Spine Injury Solutions Inc. on October 1, 2015.
We are actively pursuing a merger or similar transaction with a private company where it becomes the controlling company. We find this to be the best course of action for our stockholders. Further, we have been in negotiations with a certain third-party candidate since December 2021. We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock. Although we do not presently have a binding agreement with this company or its shareholders, it is possible that a definitive agreement for the proposed transaction could be agreed to and consummated in the imminent future. There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us.
From 2009 to 2018, we operated as a technology, marketing, billing, and collection company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents. We delivered turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents. Through our affiliate system, we facilitated spine surgeons, orthopedic surgeons and other healthcare providers to provide reasonable, necessary, and appropriate treatments to patients with musculo-skeletal spine injuries. We assisted the centers that provide the spine diagnostic injections and treatment and pay the doctors a fee for the medical procedures they performed. After a patient was billed for the procedures performed by the affiliated doctor, we took control of the patients’ unpaid bill and oversee collection. In most instances, the patient was a plaintiff in an accident case, where the patient was represented by an attorney. Typically, the defendant (and/or the insurance company of the defendant) in the accident case would pay the patient’s bill upon settlement or final judgment of the accident case. The payment to us was made through the attorney of the patient. In most cases, it was required that we agree to the settlement price and the patient must sign off on the settlement. Once we were paid, the patient’s attorney would receive payment for his or her legal fee.
During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, and we were not involved in any procedures in 2021 or 2020 and have no plans to do so in the future. However, we continue to actively pursue the collection of previously funded procedures. Without additional funding, there is no guarantee that we can continue as a going concern.
We own a device and process by which a video recording system known as the Quad Video Halo (“QVH”) is used to record medical procedures. The QVH system can simultaneously capture views and machine images, thus providing a record of internal and external views of a recorded procedure. The QVH system has been refined and improved over the years. The first- and second-generation systems required post-procedure file transfers, synchronizing and editing. This involved considerable software and time for a videographer to produce a complete video. The latest generation of the QVH referred to as NextGen 2.0 completely eliminates all of the issues associated with prior QVH approaches. The new varifocal lens cameras allow ceiling placement which eliminates the impact of room clutter and fluoroscope movement. The system server automatically synchronizes and renders the final videos, thus eliminating all backend processing.
We lease QVH units to customers who pay us monthly lease payments. Presently, the majority of our total revenues are derived from these lease payments. Our wholly-owned subsidiary, Quad Video Halo, Inc. holds certain company assets affiliated with the QVH units.
NOTE 2. GOING CONCERN CONSIDERATIONS
Since our inception in 1998, until commencement of our spine injury diagnostic operations in August, 2009, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of $
During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, which also hampered our ability to pay back existing debt to a current director and shareholder (see Note 6—Notes Payable). We were not involved in any procedures in 2021 and have no plans to do so in the future. The previous service revenues earned has resulted in longer settlement times, which has created a slowdown in cash collections.
As part of our efforts to enter into a merger or similar transaction with a private company where it becomes the controlling company, we have been in negotiations with a certain third-party candidate since December 2021. We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock. Although we do not presently have a binding agreement with this company or its shareholders, it is possible that a definitive agreement for the proposed transaction could be agreed to and consummated in the imminent future. There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of Spine Injury Solutions, Inc. and its wholly owned subsidiary, Quad Video Halo, Inc. All material intercompany transactions have been eliminated upon consolidation.
Basis of Accounting
Our consolidated financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of our financial position and results of operations.
Revenue Recognition
The Company’s accounting for revenues is governed by two accounting standards. The Company’s service and product sales revenue are accounted for under ASC 606, Revenue from Contracts with Customers. Additionally, the Company’s QVH rental revenues are accounted for under ASC 842, Leases.
Service Revenue Recognition
Historically, our net revenues included service revenues that arose from the delivery of medical diagnostic services provided to patients by medical professionals at spine injury diagnostic centers, only after the patients completed and signed required medical and financial paperwork. Service revenues were recorded as net patient service revenues based on variable consideration elements further described below and in Note 4. While we did collect 100% of the accounts on certain patients, our historical collection rate was used to estimate the variable consideration expected and is reflected in the carrying balance of accounts receivable and service revenue recorded. A discount rate of
Service revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” which is defined as gross amounts billed using CPT codes (“gross revenue”) less account discounts that are expected to result when individual cases are ultimately settled, which is the variable consideration associated with this revenue stream.
Lease Revenues
Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease. Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned. For the QVH leases, rental related services revenues for support, maintenance and video processing, delivery, and installation are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer. These revenues are recognized on a straight-line basis over the term of the lease. As of the year ended December 31, 2021, the Company’s leases consisted solely of operating leases.
Fair Value of Financial Instruments
Cash, accounts receivable, accounts payable and accrued liabilities, and notes payable as reflected in the consolidated financial statements, approximates fair value. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of liquid investments with original maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. We maintain cash and cash equivalents in banks which at times may exceed federally insured limits. We have not experienced any losses on these deposits.
Property and Equipment
Property and equipment are carried at cost. When retired or otherwise disposed of, the related carrying cost and accumulated depreciation are removed from the respective accounts, and the net difference, less any amount realized from the disposition, is recorded in operations. Maintenance and repairs are charged to operating expenses as incurred. Costs of significant improvements and renewals are capitalized.
Property and equipment consist of computers and equipment and are depreciated over their estimated useful lives of three years, using the straight-line method.
Long-Lived Assets
We periodically review and evaluate long-lived assets when events and circumstances indicate that the carrying amount of these assets may not be recoverable. In performing our review for recoverability, we estimate the future cash flows expected to result from the use of such assets and its eventual disposition. If the sum of the expected undiscounted future operating cash flows is less than the carrying amount of the related assets, an impairment loss is recognized in the consolidated statements of operations. Measurement of the impairment loss is based on the excess of the carrying amount of such assets over the fair value calculated using discounted expected future cash flows.
Concentrations of Credit Risk
Assets that expose us to credit risk consist primarily of cash and accounts receivable. Our accounts receivable arise from a diversified customer base and, therefore, we believe the concentration of credit risk is minimal. We evaluate the creditworthiness of customers before any services are provided. We record a discount based on the nature of our business, collection trends, and an assessment of our ability to fully realize amounts billed for services. Based on our analysis we established an allowance for discounts of $
Income Taxes
We account for income taxes in accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.
Uncertain Tax Positions
Accounting Standards Codification “ASC” Topic 740-10-25 defines the minimum threshold a tax position is required to meet before being recognized in the financial statements as “more likely than not” (i.e., a likelihood of occurrence greater than fifty percent). Under ASC Topic 740-10-25, the recognition threshold is met when an entity concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.
We are subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon the outcomes of such matters. When applicable, we will adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.
Under ASC Topic 740-10-25, only the portion of the liability that is expected to be paid within one year is classified as a current liability. As a result, liabilities expected to be resolved without the payment of cash (e.g. resolution due to the expiration of the statute of limitations) or are not expected to be paid within one year are not classified as current. Estimated interest and penalties are recognized as income tax expense and tax credits as a reduction in income tax expense. For the years ended December 31, 2021 and 2020, we recognized no estimated interest or penalties as income tax expense.
Legal Costs and Contingencies
In the normal course of business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received.
If a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.
Net Loss per Share
Basic and diluted net loss per common share is presented in accordance with ASC Topic 260, “Earnings per Share,” for all periods presented. During years ended December 31, 2021 and 2020, common stock equivalents from outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share in the consolidated statements of operations, because all such securities were anti-dilutive. The net loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding during the periods.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting principles (“GAAP”) and, instead, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In November 2019, the FASB issued ASU No. 2019-10 to amend the effective date for entities that had not yet adopted ASU No. 2016-13. Accordingly, the provisions of ASU No. 2016-13 are effective for annual periods beginning after December 15, 2022, with early application permitted in annual periods beginning after December 15, 2018. The amendments of ASU No. 2016-13 should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the future impact of ASU No. 2016-13 on the Company’s consolidated financial position, results of operations and disclosures.
NOTE 4. ACCOUNTS RECEIVABLE
Accounts receivable arose from patients billed by the healthcare providers based on CPT codes as described in Note 1. Our customers’ patients who received medical services at diagnostic centers, were typically patients involved in auto accidents or work injuries. Patients completed and signed medical and financial paperwork, which included an acknowledgement of each patient’s responsibility for payment for the services provided. Additionally, the paperwork generally included an assignment of benefits. The timing of collection of receivables varies depending on patient sources of payment.
Our credit policy has been established based upon extensive experience by management in the industry and has been determined to ensure that collectability is reasonably assured. Payment for services are primarily made to us by a third party and the credit policy includes terms of net 240 days for collections; however, collections occur upon settlement or judgment of cases. As of December 31, 2021 and 2020, we determined an allowance for uncollectable accounts of $
In November 2021, the Company transferred certain accounts receivable with a gross balance of $
NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 2021 and 2020:
|
2021 |
2020 |
|||||||
|
Computers and equipment |
$ | $ | ||||||
|
Less: accumulated depreciation |
( |
) |
( |
) |
||||
| $ | $ | |||||||
Depreciation expense totaling $
NOTE 6. NOTES PAYABLE
Term Loan
On September 3, 2014, we entered into a $
On the August 31, 2020 maturity date of the term loan with Wells Fargo Bank, N.A., Mr. Dalrymple paid off in full the $
During the year ended December 31, 2020, the Company recorded $
Notes payable
Upon Peter L. Dalrymple paying off the principal balance of the Wells Fargo term loan on our behalf on August 31, 2020, we issued Mr. Dalrymple a $
During the years ended December 31, 2021 and 2020, the Company recorded $
Paycheck Protection Program – SBA Loan
On April 22, 2020 we received a $
NOTE 7. STOCKHOLDERS’ EQUITY
Common Stock
During the years ended December 31, 2021 and 2020, we did not issue any common stock.
Stock Options
We recognize compensation expense related to stock options in accordance with the ASC 718, Compensation - Stock Compensation. Under ASC 718 we measured stock-based compensation expense for stock options granted, based on weighted average fair values calculated using the Black Scholes option pricing model. We issued no stock options during the years ended December 31, 2021 and 2020. At December 31, 2020, all options are fully vested and all compensation expense related to stock option awards has been recognized. During 2021, all remaining options expired.
Details of stock option activity for the years ended December 31, 2021 and 2020 is as follows:
|
Weighted- |
||||||||||||||||
|
Average |
Aggregate |
|||||||||||||||
|
Shares |
Weighted |
Remaining |
Intrinsic |
|||||||||||||
|
Underlying |
Average |
Contractual |
Value |
|||||||||||||
|
Description |
Options |
Exercise Price |
Term (Years) |
(In-the-Money) |
||||||||||||
|
Outstanding at December 31, 2019 |
$ | |||||||||||||||
|
Options expired in 2020 |
- | - | - | - | ||||||||||||
|
Outstanding at December 31, 2020 |
||||||||||||||||
|
Options expired in 2021 |
( |
) |
- | - | - | |||||||||||
|
Outstanding at December 31, 2021 |
$ | - | ||||||||||||||
NOTE 8. RELATED PARTY TRANSACTIONS
We currently maintain our executive offices at 5151 Mitchelldale A2, Houston, Texas 77092. This office space encompasses approximately
As further described in Note 6, during 2020 we borrowed $
NOTE 9. INCOME TAXES
We have no current or deferred provision for income taxes for the years ended December 31, 2021 or 2020, because we have established a full valuation allowance against our net operating loss carryforwards generated from recurring net losses as described below.
Deferred tax assets consist of the following at December 31, 2021 and 2020:
|
2021 |
2020 |
|||||||
|
Net operating loss carryforwards |
$ | $ | ||||||
|
Allowance for doubtful accounts |
||||||||
|
Less: valuation allowance |
( |
) |
( |
) |
||||
| $ | $ | |||||||
Due to uncertainties surrounding our ability to generate future taxable income to realize these assets, a full valuation has been established to offset the net deferred income tax asset. Based on management’s assessment, utilizing an effective combined tax rate for federal and state taxes of approximately
Current income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, amounts available to offset future taxable income may be limited under Section 382 of the Internal Revenue Code.
Following is a reconciliation of the benefit for federal income taxes as reported in the accompanying consolidated statements of operations, to the expected amount at the
|
2021 |
2020 |
|||||||||||||||
|
Percentage |
Percentage |
|||||||||||||||
|
of Pre-Tax |
of Pre-Tax |
|||||||||||||||
|
Amount |
Income |
Amount |
Income |
|||||||||||||
|
Benefit for income tax at federal statutory rate |
$ |
% |
$ |
% |
||||||||||||
|
Change in available NOLs |
% |
% |
||||||||||||||
|
Change in valuation allowance |
( |
) |
( |
)% |
( |
) |
( |
)% |
||||||||
|
Total |
$ | % |
$ | % |
||||||||||||
NOTE 10. LEASE REVENUES
The Company’s QVH unit rentals are governed by agreements that detail the lease terms and conditions. The determination of whether these contracts with customers contain a lease generally does not require significant judgement. The Company accounts for these rentals as operating leases. These leases do not include material amounts of variable payments and the Company has made the accounting policy election to exclude all taxes assessed by a governmental authority. The Company provides an option of the lessee to purchase the rented equipment upon the termination of the lease for the as then fair market value; however, the Company has not generated material revenue from sales of equipment under such options. Initial lease terms vary in length based upon customer needs and generally range from
The initial terms of the Company’s two outstanding lease contracts ended in 2021, and those two customers are currently renting the QVH units on a month-to-month basis.
Included in property and equipment, net, as of December 31, 2021 and 2020 is equipment available for rent in the net amount of $
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
William Donovan, M.D., our President and Chief Executive Officer, is our principal executive officer and John Bergeron, our Chief Financial Officer, is our principal financial officer.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2021. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective and adequately designed to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to our principal executive officer and principal financial officer, in a manner that allowed for timely decisions regarding disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Our internal control over financial reporting includes those policies and procedures that:
|
(i) |
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
|
(ii) |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements; and |
|
(iii) |
provide reasonable assurance regarding prevention or timely detection of unauthorized transactions. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework and Internal Control over Financial Reporting – Guidance for Smaller Public Companies.
Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2021. Based on this evaluation, our management concluded that, as of December 31, 2021, we maintained effective internal control over financial reporting.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting during the year ended December 31, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Our management, including our principal executive officer and principal financial officer, does not expect that its disclosure controls or internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management’s override of the control. The design of any systems of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Individual persons perform multiple tasks which normally would be allocated to separate persons and therefore extra diligence must be exercised during the period these tasks are combined.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our directors and executive officers are as follows:
|
Name |
|
Age |
|
Position(s) and Office(s) |
|
William Donovan, M.D. |
|
79 |
|
Chief Executive Officer, President and Chairman |
|
John Bergeron |
|
65 |
|
Chief Financial Officer and Director |
|
Jerry Bratton |
|
69 |
|
Director |
|
Peter Dalrymple |
|
78 |
|
Director |
William F. Donovan, M.D. – Dr. Donovan has served as our Chief Executive Officer since January 2009 and as our President since May 2010. He has served as one of our directors since April 2008. He is a Board Certified Orthopedic Surgeon, and has been involved with venture funding and management for over 25 years. He was the co-founder of DRCA (later known as I.O.I) and became Chairman of this company that went from the pink sheets, to NASDAQ and then to the AMEX before being acquired by a subsidiary of the Bass Family. He was a founder of “I Need A Doc,” later changed to IP2M that was acquired by Dialog Group, a publicly traded company. He was the Chairman of House of Brussels, an international chocolate company and president of ChocoMed, a specialized confectionery company combining Nutraceuticals with chocolate bars. Dr. Donovan has been practicing as a physician in Houston, Texas since 1975. Throughout his career as a physician, he has been involved in projects with both public and private enterprises. He received his Orthopedic training at Northwestern University in Chicago. He was a Major in the United States Air Force for 2 years at Wright Patterson Air Force base in Dayton, Ohio. He established Northshore Orthopedics, Assoc. in 1975 and continues in active practice in Houston, specializing in Orthopedic Surgery.
John Bergeron, CPA – Mr. Bergeron has served as our Chief Financial Officer since October 2011 and as one of our directors since July 2010. From May 2008 through September 2014, he served as President of Jolpeg Inc., a private firm that consults on financial matters in service industries. From May 2002 until May 2008, Mr. Bergeron served as Divisional Controller of Able Manufacturing, a division of NCI Group, Inc, where his responsibilities included financial reporting, budgeting and Sarbanes-Oxley Act compliance. Prior to that, Mr. Bergeron worked as controller of different internet companies and as an accounting manager for several other private firms. He has also worked as an auditor for Arthur Andersen. Mr. Bergeron has more than thirty years’ experience in financial management and corporate development of manufacturing and service industry companies. He has extensive experience in financial reporting of public companies, risk management, business process re-engineering, structuring and implementing accounting procedures and internal control programs for Sarbanes-Oxley Act compliance. Mr. Bergeron is a Certified Public Accountant. He received a Bachelor of Business Administration in Accounting from Lamar University in 1979.
Jerry Bratton, J.D., MBA – Mr. Bratton has served as one of our directors since July 2010. He has served as President of Bratton Steel, L.P. since 2006 and previously with Bratton Steel, Inc. (its predecessor) since 1991. Bratton Steel is a structural steel fabricating company. As President, Mr. Bratton has grown the company from a startup to a company that employs up to approximately 75 employees. He has significant experience in overseeing sales, estimating, project management and contracting. Mr. Bratton served as President of the Texas Structure Steel Institute from 2007 to 2008. He is also a member of the American Institute of Steel Construction. Mr. Bratton has business and investment background in medical software, personal medical information records storage, RFID security products and energy ventures. Mr. Bratton is a licensed attorney in the State of Texas and previously served as an assistant general counsel in the construction industry. Mr. Bratton earned Juris Doctorate and Master of Business Administration degrees from Texas Tech University in 1977.
Peter L. Dalrymple – Mr. Dalrymple joined our board of directors in August 2014. Since July 2012, he has served as General Partner of LPD Investments Ltd. and Manager of DLD Oil & Gas LLC. Prior to that, he was one of the co-founders and owners of the Royal Purple Synthetic Lubricants Company, which at the time of its sale in 2012, was one of the largest synthetic lubricants companies in North America. While with Royal Purple, he was in charge of Sales and Marketing. After the company was sold to Calumet Specialty Products Partner, a New York Stock Exchange company, in July of 2012, Mr. Dalrymple became a very active investor in several companies. He is also a trustee of Norwich University, from which he holds a Bachelor of Science Degree in Engineering Management. He previously served as a Lieutenant with the United States Army Corp. of Engineers.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own beneficially more than ten percent of our common stock, to file reports of ownership and changes of ownership with the SEC. Based solely upon a review of Forms 3, 4 and 5 and amendments thereto filed electronically with the SEC during the fiscal year ended December 31, 2021, we believe that the directors, executive officers, and greater than ten percent beneficial owners have complied with all applicable filing requirements during the fiscal year ended December 31, 2021.
Code of Ethics
We have adopted a code of ethics that applies to our directors, principal executive officers, principal financial officers, principal accounting officer or controller, and persons performing similar functions. The Code of Ethics for Directors and Executive Officers can be found on our website at spineinjurysolutions.com/corporate-governance/. Further, we undertake to provide by mail to any person without charge, upon request, a copy of such code of ethics if we receive the request in writing by mail to: Spine Injury Solutions, Inc., P.O. Box 541566, Houston, Texas 77254-1566.
Audit Committee
We maintain a separately-designated standing audit committee. The Audit Committee currently consists of Peter Dalrymple and Jerry Bratton. Although the Charter of the Audit Committee provides for a majority of the Audit Committee to be independent, presently only Mr. Bratton is independent.
Mr. Bratton is the Chairman of the Audit Committee, and the board of directors has determined that he is an audit committee financial expert as defined in Item 5(d)(5) of Regulation S-K. The primary purpose of the Audit Committee is to oversee our accounting and financial reporting processes and audits of our financial statements on behalf of the board of directors. The Audit Committee meets privately with our management and with our independent registered public accounting firm and evaluates the responses by our management both to the facts presented and to the judgments made by our outside independent registered public accounting firm.
ITEM 11. EXECUTIVE COMPENSATION
The following table provides summary information for the fiscal years ending December 31, 2021 and 2020 concerning cash and non-cash compensation paid or accrued to or on behalf of certain executive officers (“named executive officers”).
Summary Executive Compensation Table
|
Name and Principal Position |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Nonqualified Deferred Compensation ($) |
All Other Compensation ($) |
Total ($) |
||||||||||||||||||||||||||
|
William Donovan, M.D. |
2021 |
$ | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
|
CEO and President |
2020 |
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
|
John Bergeron |
2021 |
91,461 | - | - | - | - | - | - | 91,461 | |||||||||||||||||||||||||
|
CFO |
2020 |
97,789 | - | - | - | - | - | - | 97,789 | |||||||||||||||||||||||||
Employment Agreements
We do not have any employment agreements with any of our executive officers as of December 31, 2021.
Outstanding Equity Awards at Fiscal Year End
There are no equity awards outstanding at December 31, 2021.
Compensation of Directors
Currently, board members are not compensated for attending meetings nor do they receive any other form of compensation in their capacity as members of the board. We anticipate the board may revisit the issue of board member compensation at a later date.
Compensation Policies and Practices as they Relate to Risk Management
We attempt to make our compensation programs discretionary, balanced and focused on the long term. We believe goals and objectives of our compensation programs reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on a single performance measure. Our approach to compensation practices and policies applicable to employees and consultants is consistent with that followed for its executives. Based on these factors, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information, as of March 16, 2022, concerning, except as indicated by the footnotes below, (i) each person whom we know beneficially owns more than 5% of our common stock, (ii) each of our directors, (iii) each of our named executive officers and (iv) all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws. Applicable percentage ownership is based on 20,240,882 shares of common stock outstanding at March 16, 2022. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to stock options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 16, 2022. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise noted, stock options and warrants referenced in the footnotes below are currently fully vested and exercisable.
|
Name and Address of Beneficial Owner |
Number of Common Shares Beneficially Owned |
Percent of Class |
||||||
|
William F. Donovan, M.D. (1) |
3,872,427 | (2) | 19.13 |
% |
||||
|
John Bergeron (1) |
160,000 | (3) | 0.79 |
% |
||||
|
Jerry Bratton (1) |
1,556,100 | (4) | 7.69 |
% |
||||
|
Peter L. Dalrymple (1) |
2,987,276 | (5) | 14.76 |
% |
||||
|
All directors and named executive officers as a group (4 persons) |
8,575,803 | 42.37 |
% |
|||||
|
(1) |
The named individual is one of our executive officers or directors. His address is c/o Spine Injury Solutions, Inc., 5151 Mitchelldale, Suite A2, Houston, Texas 77092 |
|
(2) |
Includes 557,486 shares of common stock held indirectly through NorthShore Orthopedics, Assoc. (of which Dr. Donovan is the sole shareholder and has voting and investment authority) and 3,314,941 shares held directly by Dr. Donovan. |
|
(3) |
Includes 160,000 shares of common stock. |
|
(4) |
Includes 1,556,100 shares of common stock held by Mr. Bratton, of which Mr. Bratton has sole voting and investment authority of 320,000 shares and shared voting and investment authority with his spouse of 1,236,100 shares. |
|
(5) |
Includes (a) securities held individually by Peter L. Dalrymple, including (i) 1,000,000 shares of common stock; and (b) 1,987,276 shares of common stock held by LPD Investments Ltd. (“LPD”). Mr. Dalrymple is General Partner of LPD and has voting and investment authority over shares held by it. He is also a Limited Partner of LPD with the other Limited Partners being his wife and three trusts, of which he is trustee and his children are beneficiaries. |
Securities Authorized for Issuance under Equity Compensation Plans
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; AND DIRECTOR INDEPENDENCE
On September 3, 2014, we entered into a $2,000,000 revolving line of credit agreement with Wells Fargo Bank, N.A. Outstanding principal on the line of credit bore interest at the thirty-day London Interbank Offered Rate (“LIBOR”) plus 2%. The line of credit agreement was amended at various dates until a final amendment on September 30, 2019 converted the line of credit into a one-year term loan precluding any additional draws but retaining all other terms. The line of credit and term loan were guaranteed by Peter L. Dalrymple, a member of our board of directors, and was secured by a first lien interest in certain of his assets.
On the August 31, 2020 maturity date of the term loan with Wells Fargo Bank, N.A., Mr. Dalrymple paid off in full the entire $610,000 remaining principal balance.
Upon Peter L. Dalrymple paying off the principal balance of the Wells Fargo term loan on our behalf on August 31, 2020, we issued Mr. Dalrymple a $610,000 one-year secured promissory note. The secured promissory note bears interest of 6% per year with monthly payments of interest only due until maturity, when all unpaid interest and principal is due. This note is collateralized by all our accounts receivable and a pledge of the stock of our wholly owned subsidiary, Quad Video Halo, Inc. The secured promissory note balance was $395,000 at December 31, 2021.
We transferred to SPIN Collections LLC (an entity owned and controlled by Mr. Dalrymple) certain accounts receivable the Company owns, which accounts receivable have a gross balance of $84,865 and a carrying value of $0 in consideration of Mr. Dalrymple agreeing to reduce the balance of his promissory note by $33,946. The company recognized $33,946 as other income. The maturity date of the note has been extended to June 30, 2022.
During the year ended December 31, 2021, the Company recorded $27,357 in interest expense on the Dalrymple note, representing all interest due through that date.
Director Independence
We currently have one independent director on our board, Jerry Bratton. The definition of “independent” used herein is arbitrarily based on the independence standards of The NASDAQ Stock Market LLC. The board performed a review to determine the independence of Jerry Bratton and made a subjective determination as to each of these directors that no transactions, relationships or arrangements exist that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director of Spine Injury Solutions, Inc. In making these determinations, the board reviewed information provided by these directors with regard to each individual’s business and personal activities as they may relate to us and our management.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the fees paid or accrued by us for the audit and other services provided or to be provided by our principal independent accountants during the years ended December 31, 2021 and 2020.
|
2021 |
2020 |
|||||||
|
Audit Fees(1) |
$ | 54,000 | $ | 53,000 | ||||
|
Audit Related Fees(2) |
- | - | ||||||
|
Tax Fees(3) |
- | - | ||||||
|
Total Fees |
$ | 54,000 | $ | 53,000 | ||||
|
(1) |
Audit Fees: This category represents the aggregate fees billed for professional services rendered by the principal independent accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years. |
|
(2) |
Audit Related Fees: This category consists of the aggregate fees billed for assurance and related services by the principal independent accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” |
|
(3) |
Tax Fees: This category consists of the aggregate fees billed for professional services rendered by the principal independent accountant for tax compliance, tax advice, and tax planning. |
Pre-Approval of Audit and Non-Audit Services
All above audit services, audit-related services and tax services, for the fiscal years ended December 31, 2021 and 2020, were pre-approved by our Audit Committee, which concluded that the provision of such services was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee’s outside auditor independence policy provides for pre-approval of all services performed by the outside auditors.
PART IV
ITEM 15. EXHIBITS
|
Exhibit No. |
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Description |
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3.1 |
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3.2 |
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3.3 |
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3.4 |
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|
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3.5 |
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3.6 |
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3.7 |
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3.8 |
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10.1 |
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31.1 |
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101.INS |
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Inline XBRL Instance Document |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase |
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Inline XBRL Taxonomy Extension Definitions Linkbase |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Incorporated by reference from our previous filings with the SEC
ITEM 16. FORM 10-K SUMMARY
None.
SIGNATURES
In accordance with the requirements of Section 13 of 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 16, 2022.
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Spine Injury Solutions, Inc. |
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/s/ William F. Donovan, M.D. |
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By: William F. Donovan, M.D. |
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Chief Executive Officer |
Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons in the capacities and on the dates indicated:
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Title |
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Date |
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/s/ William F. Donovan, M.D. |
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March 16, 2022 |
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William F. Donovan, M.D. |
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Chief Executive Officer (Principal Executive Officer), President and Director |
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/s/ John Bergeron |
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March 16, 2022 |
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John Bergeron |
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Chief Financial Officer (Principal Financial and Accounting Officer) and Director |
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/s/ Jerry Bratton |
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March 16, 2022 |
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Jerry Bratton |
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Director |
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/s/ Peter Dalrymple |
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Peter Dalrymple |
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Director |
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March 16, 2022 |
Exhibit 21.1
Subsidiaries of the Registrant
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Name |
State of Organization |
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Quad Video Halo, Inc. |
Texas |
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Concussion & Spine Injury Solutions, Inc. |
Texas |
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, William F. Donovan, M.D., Chief Executive Officer of Spine Injury Solutions, Inc., certify that:
1. I have reviewed this annual report on Form 10-K of Spine Injury Solutions, Inc. for the year ended December 31, 2021;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d- 15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over the financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ William F. Donovan, M.D.
William F. Donovan, M.D.,
Chief Executive Officer (Principal Executive Officer)
Date: March 16, 2022
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, John Bergeron, Chief Financial Officer of Spine Injury Solutions, Inc., certify that:
1. I have reviewed this annual report on Form 10-K of Spine Injury Solutions, Inc. for the year ended December 31, 2021;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d- 15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over the financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ John Bergeron
John Bergeron,
Chief Financial Officer (Principal Financial Officer)
Date: March 16, 2022
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, William F. Donovan, M.D., Chief Executive Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Spine Injury Solutions, Inc. for the fiscal year ended December 31, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Spine Injury Solutions, Inc.
/s/ William F. Donovan, M.D.
William F. Donovan, M.D.,
Chief Executive Officer (Principal Executive Officer)
Date: March 16, 2022
The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and is not to be incorporated by reference into any filing of Spine Injury Solutions, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, John Bergeron, Chief Financial Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Spine Injury Solutions, Inc. for the fiscal year ended December 31, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Spine Injury Solutions, Inc.
/s/ John Bergeron
John Bergeron,
Chief Financial Officer (Principal Financial Officer)
Date: March 16, 2022
The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and is not to be incorporated by reference into any filing of Spine Injury Solutions, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
CONSOLIDATED BALANCE SHEETS - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Current assets: | ||
| Cash and cash equivalents | $ 16,437 | $ 41,655 |
| Accounts receivable, net of allowance for discounts of $447,126 and $585,257 at December 31, 2021 and 2020, respectively | 27,263 | 232,244 |
| Total current assets | 43,700 | 273,899 |
| Property and equipment, net | 0 | 10,959 |
| Total assets | 43,700 | 284,858 |
| Current liabilities: | ||
| Notes payable | 395,000 | 490,000 |
| Accounts payable and accrued liabilities | 37,495 | 43,288 |
| Total current liabilities | 432,495 | 533,288 |
| Commitments and contingencies | ||
| Stockholders’ deficit: | ||
| Common stock: $0.001 par value, 250,000,000 shares authorized, 20,240,882 shares issued and outstanding at both December 31, 2021 and 2020 | 20,241 | 20,241 |
| Additional paid-in capital | 19,869,511 | 19,869,511 |
| Accumulated deficit | (20,278,547) | (20,138,182) |
| Total stockholders’ deficit | (388,795) | (248,430) |
| Total liabilities and stockholders’ deficit | $ 43,700 | $ 284,858 |
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, allowance for discounts (in Dollars) | $ 447,126 | $ 585,257 |
| Common stock: par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common stock: shares authorized | 250,000,000 | 250,000,000 |
| Common stock: shares issued | 20,240,882 | 20,240,882 |
| Common stock: shares outstanding | 20,240,882 | 20,240,882 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Income Statement [Abstract] | ||
| Net service revenue | $ 64,588 | $ 76,078 |
| Lease revenue | 104,292 | 95,941 |
| Total revenue | 168,880 | 172,019 |
| Operating, general and administrative expenses | 379,883 | 507,397 |
| Loss from operations | (211,003) | (335,378) |
| Other income (expense): | ||
| Gain from forgiveness of debt | 0 | 64,097 |
| Other income | 97,497 | 533 |
| Interest expense | (26,859) | (26,646) |
| Total other income (expense), net | 70,638 | 37,984 |
| Net loss | $ (140,365) | $ (297,394) |
| Net loss per common share: | ||
| Basic/ diluted (in Dollars per share) | $ (0.01) | $ (0.01) |
| Weighted average shares used in loss per common share: | ||
| Basic/ diluted (in Shares) | 20,240,882 | 20,240,882 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|
| Balances at Dec. 31, 2019 | $ 20,241 | $ 19,869,511 | $ (19,840,788) | $ 48,964 |
| Balances (in Shares) at Dec. 31, 2019 | 20,240,882 | |||
| Net loss | (297,394) | (297,394) | ||
| Balances at Dec. 31, 2020 | $ 20,241 | 19,869,511 | (20,138,182) | $ (248,430) |
| Balances (in Shares) at Dec. 31, 2020 | 20,240,882 | 20,240,882 | ||
| Net loss | (140,365) | $ (140,365) | ||
| Balances at Dec. 31, 2021 | $ 20,241 | $ 19,869,511 | $ (20,278,547) | $ (388,795) |
| Balances (in Shares) at Dec. 31, 2021 | 20,240,882 | 20,240,882 |
DESCRIPTION OF BUSINESS |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Accounting Policies [Abstract] | |
| Nature of Operations [Text Block] | NOTE 1. DESCRIPTION OF BUSINESS
Spine Injury Solutions Inc. (the “Company”, “we” or “us”) was incorporated under the laws of Delaware on March 4, 1998. We changed our name to Spine Injury Solutions Inc. on October 1, 2015.
We are actively pursuing a merger or similar transaction with a private company where it becomes the controlling company. We find this to be the best course of action for our stockholders. Further, we have been in negotiations with a certain third-party candidate since December 2021. We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock. Although we do not presently have a binding agreement with this company or its shareholders, it is possible that a definitive agreement for the proposed transaction could be agreed to and consummated in the imminent future. There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us.
From 2009 to 2018, we operated as a technology, marketing, billing, and collection company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents. We delivered turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents. Through our affiliate system, we facilitated spine surgeons, orthopedic surgeons and other healthcare providers to provide reasonable, necessary, and appropriate treatments to patients with musculo-skeletal spine injuries. We assisted the centers that provide the spine diagnostic injections and treatment and pay the doctors a fee for the medical procedures they performed. After a patient was billed for the procedures performed by the affiliated doctor, we took control of the patients’ unpaid bill and oversee collection. In most instances, the patient was a plaintiff in an accident case, where the patient was represented by an attorney. Typically, the defendant (and/or the insurance company of the defendant) in the accident case would pay the patient’s bill upon settlement or final judgment of the accident case. The payment to us was made through the attorney of the patient. In most cases, it was required that we agree to the settlement price and the patient must sign off on the settlement. Once we were paid, the patient’s attorney would receive payment for his or her legal fee.
During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, and we were not involved in any procedures in 2021 or 2020 and have no plans to do so in the future. However, we continue to actively pursue the collection of previously funded procedures. Without additional funding, there is no guarantee that we can continue as a going concern.
We own a device and process by which a video recording system known as the Quad Video Halo (“QVH”) is used to record medical procedures. The QVH system can simultaneously capture views and machine images, thus providing a record of internal and external views of a recorded procedure. The QVH system has been refined and improved over the years. The first- and second-generation systems required post-procedure file transfers, synchronizing and editing. This involved considerable software and time for a videographer to produce a complete video. The latest generation of the QVH referred to as NextGen 2.0 completely eliminates all of the issues associated with prior QVH approaches. The new varifocal lens cameras allow ceiling placement which eliminates the impact of room clutter and fluoroscope movement. The system server automatically synchronizes and renders the final videos, thus eliminating all backend processing.
We lease QVH units to customers who pay us monthly lease payments. Presently, the majority of our total revenues are derived from these lease payments. Our wholly-owned subsidiary, Quad Video Halo, Inc. holds certain company assets affiliated with the QVH units. |
GOING CONCERN CONSIDERATIONS |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Substantial Doubt about Going Concern [Text Block] | NOTE 2. GOING CONCERN CONSIDERATIONS
Since our inception in 1998, until commencement of our spine injury diagnostic operations in August, 2009, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of $20,278,547 as of December 31, 2021. Presently, we are trying to limit all operating expenses as much as possible. If in the future we decide to increase our service development, marketing efforts and/or brand building activities, we will need to increase our operating expenses and our general and administrative functions to support such growth in operations. No such growth in operations is presently planned. We are also actively seeking a private company with which to enter into a strategic business transaction, including without limitation a merger; however, we cannot predict the ultimate outcome of our efforts. Our continued existence is dependent upon our ability to successfully merge with a financially viable company, or our ability to obtain additional capital from borrowing and/or selling securities, as needed, to fund our operations. There is no assurance that additional capital can be obtained or that it can be obtained on terms that are favorable to us and our existing stockholders. Any expectation of future profitability is likely dependent upon our ability to successfully merge with another company, of which there can be no assurances.
During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, which also hampered our ability to pay back existing debt to a current director and shareholder (see Note 6—Notes Payable). We were not involved in any procedures in 2021 and have no plans to do so in the future. The previous service revenues earned has resulted in longer settlement times, which has created a slowdown in cash collections.
As part of our efforts to enter into a merger or similar transaction with a private company where it becomes the controlling company, we have been in negotiations with a certain third-party candidate since December 2021. We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock. Although we do not presently have a binding agreement with this company or its shareholders, it is possible that a definitive agreement for the proposed transaction could be agreed to and consummated in the imminent future. There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Accounting Policies [Abstract] | |
| Significant Accounting Policies [Text Block] | NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of Spine Injury Solutions, Inc. and its wholly owned subsidiary, Quad Video Halo, Inc. All material intercompany transactions have been eliminated upon consolidation.
Basis of Accounting
Our consolidated financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of our financial position and results of operations.
Revenue Recognition
The Company’s accounting for revenues is governed by two accounting standards. The Company’s service and product sales revenue are accounted for under ASC 606, Revenue from Contracts with Customers. Additionally, the Company’s QVH rental revenues are accounted for under ASC 842, Leases.
Service Revenue Recognition
Historically, our net revenues included service revenues that arose from the delivery of medical diagnostic services provided to patients by medical professionals at spine injury diagnostic centers, only after the patients completed and signed required medical and financial paperwork. Service revenues were recorded as net patient service revenues based on variable consideration elements further described below and in Note 4. While we did collect 100% of the accounts on certain patients, our historical collection rate was used to estimate the variable consideration expected and is reflected in the carrying balance of accounts receivable and service revenue recorded. A discount rate of 48%, based on payment history, was used to reduce revenue to 52% of Current Procedural Terminology code rates (“CPT” codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services. CPT codes are developed, maintained and copyrighted by the American Medical Association). Patients were billed at the normal billing amount, based on national averages, for a particular CPT code procedure during the year ended December 31, 2018 and prior years. We recorded no revenue related to medical diagnostic services provided during the years ended December 31, 2021 and 2020 and revenue presented represents adjustments of variable consideration received for procedures performed in years prior to 2019.
Service revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” which is defined as gross amounts billed using CPT codes (“gross revenue”) less account discounts that are expected to result when individual cases are ultimately settled, which is the variable consideration associated with this revenue stream.
Lease Revenues
Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease. Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned. For the QVH leases, rental related services revenues for support, maintenance and video processing, delivery, and installation are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer. These revenues are recognized on a straight-line basis over the term of the lease. As of the year ended December 31, 2021, the Company’s leases consisted solely of operating leases.
Fair Value of Financial Instruments
Cash, accounts receivable, accounts payable and accrued liabilities, and notes payable as reflected in the consolidated financial statements, approximates fair value. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of liquid investments with original maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. We maintain cash and cash equivalents in banks which at times may exceed federally insured limits. We have not experienced any losses on these deposits.
Property and Equipment
Property and equipment are carried at cost. When retired or otherwise disposed of, the related carrying cost and accumulated depreciation are removed from the respective accounts, and the net difference, less any amount realized from the disposition, is recorded in operations. Maintenance and repairs are charged to operating expenses as incurred. Costs of significant improvements and renewals are capitalized.
Property and equipment consist of computers and equipment and are depreciated over their estimated useful lives of three years, using the straight-line method.
Long-Lived Assets
We periodically review and evaluate long-lived assets when events and circumstances indicate that the carrying amount of these assets may not be recoverable. In performing our review for recoverability, we estimate the future cash flows expected to result from the use of such assets and its eventual disposition. If the sum of the expected undiscounted future operating cash flows is less than the carrying amount of the related assets, an impairment loss is recognized in the consolidated statements of operations. Measurement of the impairment loss is based on the excess of the carrying amount of such assets over the fair value calculated using discounted expected future cash flows.
Concentrations of Credit Risk
Assets that expose us to credit risk consist primarily of cash and accounts receivable. Our accounts receivable arise from a diversified customer base and, therefore, we believe the concentration of credit risk is minimal. We evaluate the creditworthiness of customers before any services are provided. We record a discount based on the nature of our business, collection trends, and an assessment of our ability to fully realize amounts billed for services. Based on our analysis we established an allowance for discounts of $447,126 and $585,257 at December 31, 2021 and 2020, respectively.
Income Taxes
We account for income taxes in accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.
Uncertain Tax Positions
Accounting Standards Codification “ASC” Topic 740-10-25 defines the minimum threshold a tax position is required to meet before being recognized in the financial statements as “more likely than not” (i.e., a likelihood of occurrence greater than fifty percent). Under ASC Topic 740-10-25, the recognition threshold is met when an entity concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.
We are subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon the outcomes of such matters. When applicable, we will adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.
Under ASC Topic 740-10-25, only the portion of the liability that is expected to be paid within one year is classified as a current liability. As a result, liabilities expected to be resolved without the payment of cash (e.g. resolution due to the expiration of the statute of limitations) or are not expected to be paid within one year are not classified as current. Estimated interest and penalties are recognized as income tax expense and tax credits as a reduction in income tax expense. For the years ended December 31, 2021 and 2020, we recognized no estimated interest or penalties as income tax expense.
Legal Costs and Contingencies
In the normal course of business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received.
If a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.
Net Loss per Share
Basic and diluted net loss per common share is presented in accordance with ASC Topic 260, “Earnings per Share,” for all periods presented. During years ended December 31, 2021 and 2020, common stock equivalents from outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share in the consolidated statements of operations, because all such securities were anti-dilutive. The net loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding during the periods.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting principles (“GAAP”) and, instead, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In November 2019, the FASB issued ASU No. 2019-10 to amend the effective date for entities that had not yet adopted ASU No. 2016-13. Accordingly, the provisions of ASU No. 2016-13 are effective for annual periods beginning after December 15, 2022, with early application permitted in annual periods beginning after December 15, 2018. The amendments of ASU No. 2016-13 should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the future impact of ASU No. 2016-13 on the Company’s consolidated financial position, results of operations and disclosures. |
ACCOUNTS RECEIVABLE |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Receivables [Abstract] | |
| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 4. ACCOUNTS RECEIVABLE
Accounts receivable arose from patients billed by the healthcare providers based on CPT codes as described in Note 1. Our customers’ patients who received medical services at diagnostic centers, were typically patients involved in auto accidents or work injuries. Patients completed and signed medical and financial paperwork, which included an acknowledgement of each patient’s responsibility for payment for the services provided. Additionally, the paperwork generally included an assignment of benefits. The timing of collection of receivables varies depending on patient sources of payment. Historical experience, through 2018, demonstrated that the collection period for individual cases may extend for two years or more.
Our credit policy has been established based upon extensive experience by management in the industry and has been determined to ensure that collectability is reasonably assured. Payment for services are primarily made to us by a third party and the credit policy includes terms of net 240 days for collections; however, collections occur upon settlement or judgment of cases. As of December 31, 2021 and 2020, we determined an allowance for uncollectable accounts of $447,126 and $585,257, respectively was needed for those customer accounts whose collections appear doubtful.
In November 2021, the Company transferred certain accounts receivable with a gross balance of $84,865 and a carrying value of $0 to SPIN Collections LLC, an entity owned and controlled by Peter Dalrymple, a director of the Company. In exchange, Mr. Dalrymple reduced the amount the Company owed him under a promissory note (see Note 6. Notes Payable) by $33,946. The Company recognized a gain on transfer of accounts receivable to extinguish debt in the amount of $33,946 which is included in other income in the accompanying consolidated statements of operations. |
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| Property, Plant and Equipment Disclosure [Text Block] | NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 2021 and 2020:
Depreciation expense totaling $10,959 and $14,420 was charged to operating, general and administrative expenses during the years ended December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, the Company wrote-off fully depreciated assets with a cost of $22,931 due to them no longer being used in operations. |
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NOTES PAYABLE |
12 Months Ended |
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Dec. 31, 2021 | |
| Debt Disclosure [Abstract] | |
| Debt Disclosure [Text Block] | NOTE 6. NOTES PAYABLE
Term Loan
On September 3, 2014, we entered into a $2,000,000 revolving line of credit agreement with Wells Fargo Bank, N.A. Outstanding principal on the line of credit bore interest at the thirty-day London Interbank Offered Rate (“LIBOR”) plus 2%. The line of credit agreement was amended at various dates until a final amendment on September 30, 2019 converted the line of credit into a one-year term loan precluding any additional draws but retaining all other terms. The line of credit and term loan were guaranteed by Peter L. Dalrymple, a member of our board of directors, and was secured by a first lien interest in certain of his assets.
On the August 31, 2020 maturity date of the term loan with Wells Fargo Bank, N.A., Mr. Dalrymple paid off in full the $610,000 remaining principal balance.
During the year ended December 31, 2020, the Company recorded $15,090 in interest expense related to the Wells Fargo term loan.
Notes payable
Upon Peter L. Dalrymple paying off the principal balance of the Wells Fargo term loan on our behalf on August 31, 2020, we issued Mr. Dalrymple a $610,000 one-year secured promissory note. The secured promissory note bears interest of 6% per year with monthly payments of interest only due until maturity, when all unpaid interest and principal is due. This note is collateralized by all our accounts receivable and a pledge of the stock of our wholly owned subsidiary, Quad Video Halo, Inc. In November 2021, the Company transferred certain accounts receivable to an entity owned by Mr. Dalrymple in exchange for a reduction in the outstanding balance of the note in the amount of $33,946 (see Note 4. Accounts Receivable for additional discussion). The secured promissory note balance was $395,000 at December 31, 2021. The maturity date of the note has been extended to June 30, 2022.
During the years ended December 31, 2021 and 2020, the Company recorded $26,859 and $11,058, respectively, in interest expense on the Dalrymple note, representing all interest due through that date.
Paycheck Protection Program – SBA Loan
On April 22, 2020 we received a $64,097 Small Business Administration (“SBA”) loan under the federal Paycheck Protection Program (“PPP”), a program designed to help businesses keep their workforce employed during the COVID 19 pandemic. The PPP was established under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act signed into law in March of 2020. The PPP provides a direct incentive for small businesses to keep their workers on the payroll and loans granted under the program are forgivable if employment levels are maintained for specified periods and proceeds are used for payroll and other approved expenses (rent, mortgage interest, utilities, and certain other expenses) provided for under the program. Loans provided under the program are uncollateralized, include no guarantees, bear interest of 1% per year and mature two years from the date of receipt. For the reasons discussed throughout this report, we believe current economic uncertainty related to the COVID 19 pandemic and our inability to obtain financing through other means made the loan necessary to support our ongoing operations. We applied for forgiveness of our loan in 2020 and on December 31, 2020 the entire balance of the loan was forgiven and recognized in other income as a gain on forgiveness of debt in our consolidated statements of operations. |
STOCKHOLDERS' EQUITY |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note Disclosure [Text Block] | NOTE 7. STOCKHOLDERS’ EQUITY
Common Stock
During the years ended December 31, 2021 and 2020, we did not issue any common stock.
Stock Options
We recognize compensation expense related to stock options in accordance with the ASC 718, Compensation - Stock Compensation. Under ASC 718 we measured stock-based compensation expense for stock options granted, based on weighted average fair values calculated using the Black Scholes option pricing model. We issued no stock options during the years ended December 31, 2021 and 2020. At December 31, 2020, all options are fully vested and all compensation expense related to stock option awards has been recognized. During 2021, all remaining options expired.
Details of stock option activity for the years ended December 31, 2021 and 2020 is as follows:
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RELATED PARTY TRANSACTIONS |
12 Months Ended |
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Dec. 31, 2021 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions Disclosure [Text Block] | NOTE 8. RELATED PARTY TRANSACTIONS
We currently maintain our executive offices at 5151 Mitchelldale A2, Houston, Texas 77092. This office space encompasses approximately 200 square feet and is provided to us at the rental rate of $1,000 per month under a month-to-month agreement with Northshore Orthopedics, Assoc. (“NSO”), a company owned by William Donovan, M.D., our director and Chief Executive Officer. The rent includes the use of the telephone system, computer server, and copy machines. We discontinued paying rent in December 2021 due to a lack of funds, and since then NSO has provided us this office space rent free.
As further described in Note 6, during 2020 we borrowed $610,000 from Peter Dalrymple, a director of the Company, under a secured promissory note. As further discussed in Note 4, the Company transferred certain accounts receivable with a carrying amount of $0 to an entity owned and controlled by Mr. Dalrymple in exchange for a reduction in the amount due under the promissory note in the amount of $33,946. The outstanding balance of the note was $395,000 at December 31, 2021. |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Text Block] | NOTE 9. INCOME TAXES
We have no current or deferred provision for income taxes for the years ended December 31, 2021 or 2020, because we have established a full valuation allowance against our net operating loss carryforwards generated from recurring net losses as described below.
Deferred tax assets consist of the following at December 31, 2021 and 2020:
Due to uncertainties surrounding our ability to generate future taxable income to realize these assets, a full valuation has been established to offset the net deferred income tax asset. Based on management’s assessment, utilizing an effective combined tax rate for federal and state taxes of approximately 21%, we have determined that it is not currently more likely than not that we will realize our deferred income tax assets of approximately $2,594,000 and $2,480,000 attributable predominantly to the future utilization of the approximate $11,903,000 and $11,625,000 in eligible net operating loss carryforwards, and the allowance for doubtful accounts, as of December 31, 2021 and 2020, respectively. We will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforwards will begin to expire in varying amounts from year 2021 to 2039, with those net operating losses generated during the year ended December 31, 2021 set to never expire based on the provisions of the Tax Reform Act.
Current income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, amounts available to offset future taxable income may be limited under Section 382 of the Internal Revenue Code.
Following is a reconciliation of the benefit for federal income taxes as reported in the accompanying consolidated statements of operations, to the expected amount at the 21% federal statutory rate:
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LEASE REVENUES |
12 Months Ended |
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Dec. 31, 2021 | |
| Disclosure Text Block [Abstract] | |
| Lessor, Operating Leases [Text Block] | NOTE 10. LEASE REVENUES
The Company’s QVH unit rentals are governed by agreements that detail the lease terms and conditions. The determination of whether these contracts with customers contain a lease generally does not require significant judgement. The Company accounts for these rentals as operating leases. These leases do not include material amounts of variable payments and the Company has made the accounting policy election to exclude all taxes assessed by a governmental authority. The Company provides an option of the lessee to purchase the rented equipment upon the termination of the lease for the as then fair market value; however, the Company has not generated material revenue from sales of equipment under such options. Initial lease terms vary in length based upon customer needs and generally range from 12 to 36 months. Customers have the option to keep equipment on rent beyond the initial lease term on a month-to-month basis. All of the Company’s rental products have long useful lives relative to the typical rental term with the original investment typically recovered in approximately five years. The rental products are typically rented for a majority of the time owned and a significant portion of the original investment is recovered when sold from inventory. The Company’s lease agreements do not contain residual value guarantees or restrictive covenants.
The initial terms of the Company’s two outstanding lease contracts ended in 2021, and those two customers are currently renting the QVH units on a month-to-month basis.
Included in property and equipment, net, as of December 31, 2021 and 2020 is equipment available for rent in the net amount of $0 and $10,959 respectively. |
Accounting Policies, by Policy (Policies) |
12 Months Ended |
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Dec. 31, 2021 | |
| Accounting Policies [Abstract] | |
| Consolidation, Policy [Policy Text Block] | Basis of Consolidation
The accompanying consolidated financial statements include the accounts of Spine Injury Solutions, Inc. and its wholly owned subsidiary, Quad Video Halo, Inc. All material intercompany transactions have been eliminated upon consolidation.
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| Basis of Accounting, Policy [Policy Text Block] | Basis of Accounting
Our consolidated financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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| Use of Estimates, Policy [Policy Text Block] | Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of our financial position and results of operations.
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| Revenue [Policy Text Block] | Revenue Recognition
The Company’s accounting for revenues is governed by two accounting standards. The Company’s service and product sales revenue are accounted for under ASC 606, Revenue from Contracts with Customers. Additionally, the Company’s QVH rental revenues are accounted for under ASC 842, Leases.
Service Revenue Recognition
Historically, our net revenues included service revenues that arose from the delivery of medical diagnostic services provided to patients by medical professionals at spine injury diagnostic centers, only after the patients completed and signed required medical and financial paperwork. Service revenues were recorded as net patient service revenues based on variable consideration elements further described below and in Note 4. While we did collect 100% of the accounts on certain patients, our historical collection rate was used to estimate the variable consideration expected and is reflected in the carrying balance of accounts receivable and service revenue recorded. A discount rate of 48%, based on payment history, was used to reduce revenue to 52% of Current Procedural Terminology code rates (“CPT” codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services. CPT codes are developed, maintained and copyrighted by the American Medical Association). Patients were billed at the normal billing amount, based on national averages, for a particular CPT code procedure during the year ended December 31, 2018 and prior years. We recorded no revenue related to medical diagnostic services provided during the years ended December 31, 2021 and 2020 and revenue presented represents adjustments of variable consideration received for procedures performed in years prior to 2019.
Service revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” which is defined as gross amounts billed using CPT codes (“gross revenue”) less account discounts that are expected to result when individual cases are ultimately settled, which is the variable consideration associated with this revenue stream.
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| Revenue Recognition, Leases [Policy Text Block] | Lease Revenues
Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease. Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned. For the QVH leases, rental related services revenues for support, maintenance and video processing, delivery, and installation are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer. These revenues are recognized on a straight-line basis over the term of the lease. As of the year ended December 31, 2021, the Company’s leases consisted solely of operating leases.
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| Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments
Cash, accounts receivable, accounts payable and accrued liabilities, and notes payable as reflected in the consolidated financial statements, approximates fair value. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
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| Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents
Cash and cash equivalents consist of liquid investments with original maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. We maintain cash and cash equivalents in banks which at times may exceed federally insured limits. We have not experienced any losses on these deposits.
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| Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment
Property and equipment are carried at cost. When retired or otherwise disposed of, the related carrying cost and accumulated depreciation are removed from the respective accounts, and the net difference, less any amount realized from the disposition, is recorded in operations. Maintenance and repairs are charged to operating expenses as incurred. Costs of significant improvements and renewals are capitalized.
Property and equipment consist of computers and equipment and are depreciated over their estimated useful lives of three years, using the straight-line method.
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| Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Long-Lived Assets
We periodically review and evaluate long-lived assets when events and circumstances indicate that the carrying amount of these assets may not be recoverable. In performing our review for recoverability, we estimate the future cash flows expected to result from the use of such assets and its eventual disposition. If the sum of the expected undiscounted future operating cash flows is less than the carrying amount of the related assets, an impairment loss is recognized in the consolidated statements of operations. Measurement of the impairment loss is based on the excess of the carrying amount of such assets over the fair value calculated using discounted expected future cash flows.
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| Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations of Credit Risk
Assets that expose us to credit risk consist primarily of cash and accounts receivable. Our accounts receivable arise from a diversified customer base and, therefore, we believe the concentration of credit risk is minimal. We evaluate the creditworthiness of customers before any services are provided. We record a discount based on the nature of our business, collection trends, and an assessment of our ability to fully realize amounts billed for services. Based on our analysis we established an allowance for discounts of $447,126 and $585,257 at December 31, 2021 and 2020, respectively.
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| Income Tax, Policy [Policy Text Block] | Income Taxes
We account for income taxes in accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.
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| Income Tax Uncertainties, Policy [Policy Text Block] | Uncertain Tax Positions
Accounting Standards Codification “ASC” Topic 740-10-25 defines the minimum threshold a tax position is required to meet before being recognized in the financial statements as “more likely than not” (i.e., a likelihood of occurrence greater than fifty percent). Under ASC Topic 740-10-25, the recognition threshold is met when an entity concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.
We are subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon the outcomes of such matters. When applicable, we will adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.
Under ASC Topic 740-10-25, only the portion of the liability that is expected to be paid within one year is classified as a current liability. As a result, liabilities expected to be resolved without the payment of cash (e.g. resolution due to the expiration of the statute of limitations) or are not expected to be paid within one year are not classified as current. Estimated interest and penalties are recognized as income tax expense and tax credits as a reduction in income tax expense. For the years ended December 31, 2021 and 2020, we recognized no estimated interest or penalties as income tax expense.
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| Legal Costs, Policy [Policy Text Block] | Legal Costs and Contingencies
In the normal course of business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received.
If a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.
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| Earnings Per Share, Policy [Policy Text Block] | Net Loss per Share
Basic and diluted net loss per common share is presented in accordance with ASC Topic 260, “Earnings per Share,” for all periods presented. During years ended December 31, 2021 and 2020, common stock equivalents from outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share in the consolidated statements of operations, because all such securities were anti-dilutive. The net loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding during the periods.
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| New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting principles (“GAAP”) and, instead, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In November 2019, the FASB issued ASU No. 2019-10 to amend the effective date for entities that had not yet adopted ASU No. 2016-13. Accordingly, the provisions of ASU No. 2016-13 are effective for annual periods beginning after December 15, 2022, with early application permitted in annual periods beginning after December 15, 2018. The amendments of ASU No. 2016-13 should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the future impact of ASU No. 2016-13 on the Company’s consolidated financial position, results of operations and disclosures. |
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| Property, Plant and Equipment [Table Text Block] | Property and equipment consisted of the following at December 31, 2021 and 2020:
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| Share-based Payment Arrangement, Option, Activity [Table Text Block] | Details of stock option activity for the years ended December 31, 2021 and 2020 is as follows:
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | Deferred tax assets consist of the following at December 31, 2021 and 2020:
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| Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | Following is a reconciliation of the benefit for federal income taxes as reported in the accompanying consolidated statements of operations, to the expected amount at the 21% federal statutory rate:
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GOING CONCERN CONSIDERATIONS (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2009 |
|---|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
| Retained Earnings (Accumulated Deficit) | $ (20,278,547) | $ (20,138,182) | $ (20,278,547) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Accounting Policies [Abstract] | ||
| Account Receivable, Discount Rate | 48.00% | |
| Account Receivable, Percentage of Gross Revenue | 52.00% | |
| Accounts Receivable, Allowance for Credit Loss | $ 447,126 | $ 585,257 |
ACCOUNTS RECEIVABLE (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Receivables [Abstract] | ||
| Accounts Receivable, Additional Narrative Disclosure | Historical experience, through 2018, demonstrated that the collection period for individual cases may extend for two years or more. | |
| Accounts Receivable, Allowance for Credit Loss | $ 447,126 | $ 585,257 |
| Accounts Receivable, Sale | 84,865 | |
| Accounts Receivable, Related Parties | 0 | |
| Debt Instrument, Increase (Decrease), Net | (33,946) | |
| Gain (Loss) on Sale of Accounts Receivable | $ 33,946 | $ 0 |
PROPERTY AND EQUIPMENT (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation | $ 10,959 | $ 14,420 |
| Tangible Asset Impairment Charges | $ 22,931 | |
PROPERTY AND EQUIPMENT (Details) - Property, Plant and Equipment - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Computers and equipment | $ 45,587 | $ 68,518 |
| Less: accumulated depreciation | (45,587) | (57,559) |
| $ 0 | $ 10,959 |
STOCKHOLDERS' EQUITY (Details) - Share-based Payment Arrangement, Option, Activity - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2021 |
|
| Share-based Payment Arrangement, Option, Activity [Abstract] | |||
| Shares Underlying Options | 20,000 | 20,000 | 0 |
| Weighted Average Exercise Price (in Dollars per share) | $ 0.4 | $ 0.4 | $ 0 |
| Weighted-Average Remaining Contractual Term | 1 year 6 months | 6 months | |
| Aggregate Intrinsic Value (in Dollars) | $ 0 | $ 0 | $ 0 |
| Shares Underlying Options | (20,000) |
RELATED PARTY TRANSACTIONS (Details) |
12 Months Ended | ||
|---|---|---|---|
|
Dec. 31, 2021
USD ($)
ft²
|
Aug. 31, 2020
USD ($)
|
Apr. 22, 2020
USD ($)
|
|
| RELATED PARTY TRANSACTIONS (Details) [Line Items] | |||
| Area of Real Estate Property (in Square Feet) | ft² | 200 | ||
| Debt Instrument, Face Amount | $ 610,000 | $ 64,097 | |
| Accounts Receivable, Related Parties | $ 0 | ||
| Chief Executive Officer [Member] | |||
| RELATED PARTY TRANSACTIONS (Details) [Line Items] | |||
| Payments for Rent | 1,000 | ||
| Director [Member] | |||
| RELATED PARTY TRANSACTIONS (Details) [Line Items] | |||
| Debt Instrument, Face Amount | $ 610,000 | ||
| Increase (Decrease) in Notes Payable, Related Parties | (33,946) | ||
| Notes Payable, Related Parties | $ 395,000 |
INCOME TAXES (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Income Tax Disclosure [Abstract] | ||
| Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% |
| Deferred Tax Assets, Valuation Allowance | $ 2,593,571 | $ 2,480,486 |
| Operating Loss Carryforwards | $ 11,903,000 | $ 11,625,000 |
INCOME TAXES (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Schedule of Deferred Tax Assets and Liabilities [Abstract] | ||
| Net operating loss carryforwards | $ 2,499,675 | $ 2,357,583 |
| Allowance for doubtful accounts | 93,896 | 122,903 |
| Less: valuation allowance | (2,593,571) | (2,480,486) |
| $ 0 | $ 0 |
INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
| Benefit for income tax at federal statutory rate, Amount | $ 29,477 | $ 62,453 |
| Benefit for income tax at federal statutory rate, Percentage of Pre-Tax Income | 21.00% | 21.00% |
| Change in available NOLs, Amount | $ 0 | $ 0 |
| Change in available NOLs, Percentage of Pre-Tax Income | 0.00% | 0.00% |
| Change in valuation allowance, Amount | $ (29,477) | $ (62,453) |
| Change in valuation allowance, Percentage of Pre-Tax Income | (21.00%) | (21.00%) |
| Total, Amount | $ 0 | $ 0 |
| Total, Percentage of Pre-Tax Income | 0.00% | 0.00% |
LEASE REVENUES (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| LEASE REVENUES (Details) [Line Items] | ||
| Property, Plant, and Equipment, Lessor Asset under Operating Lease, before Accumulated Depreciation | $ 0 | $ 10,959 |
| Minimum [Member] | ||
| LEASE REVENUES (Details) [Line Items] | ||
| Lessor, Operating Lease, Term of Contract | 12 months | |
| Maximum [Member] | ||
| LEASE REVENUES (Details) [Line Items] | ||
| Lessor, Operating Lease, Term of Contract | 36 months |
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