10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2019

Commission file number: 000-52765

iCoreConnect Inc.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	13-4182867
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

13506 Summerport Village Pkwy #160, Windermere, FL 34786

(Address of principal executive offices) (Zip Code)

(888) 810-7706

(Registrant's Telephone Number, Including Area Code)

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. Yes x No ¨

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). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions 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	¨
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	¨

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of October 31, 2019, there were 63,967,923 shares of the registrant’s common stock issued and outstanding.

iCoreConnect Inc.

FORM 10-Q QUARTERLY REPORT

FOR THE QUARTER ENDED SEPTEMBER 30, 2019

Part I Financial Information
Item 1.	Financial Statements (Unaudited)(Rounded)
	Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Nine Months Ended September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	20
	Not applicable
Item 4.	Controls and Procedures	20
Part II Other Information
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
	Not applicable
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
	Not Applicable
Item 4.	Mine Safety Disclosures	21
	Not Applicable
Item 5.	Other Information	21
	Not Applicable
Item 6.	Exhibits	22
Signatures		23

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iCoreConnect Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2019 (UNAUDITED) AND DECEMBER 31, 2018
	September 30,			December 31,
	2019			2018
ASSETS
Cash and cash equivalents	$	31,000		$	1,000
Accounts receivable, net of allowance for doubtful accounts		110,000			224,000
Prepaid expenses		97,000			9,000
Total current assets		238,000			234,000
Property and equipment, net		7,000			11,000
Right of use lease asset - operating		68,000			-
Software development costs, net		587,000			535,000
Acquired technology, net		988,000			539,000
Goodwill and intangible assets, net		399,000			416,000
Total long-term assets		2,049,000			1,501,000
TOTAL ASSETS	$	2,287,000		$	1,735,000
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued expenses	$	483,000		$	664,000
Line of credit		-			498,000
Operating lease liability, current portion		64,000			-
Current maturities of long-term debt		1,285,000			1,361,000
Total current liabilities		1,832,000			2,523,000
Long-term debt, net of current maturities		47,000			55,000
Operating lease liability, net of current portion		6,000			-
Deferred revenue		114,000			115,000
Total long-term liabilities		167,000			170,000
TOTAL LIABILITIES		1,999,000			2,693,000
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Undesignated par value $0.001; Authorized 10,000,000 shares; none issued or outstanding		-			-
Common stock par value $0.001; 600,000,000 shares authorized; Issued and Outstanding: 63,867,923 as of September 30, 2019 and 50,864,131 as of December 31, 2018		64,000			51,000
Additional paid-in-capital		73,842,000			70,335,000
Accumulated deficit		(73,618,000	)		(71,344,000	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		288,000			(958,000	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	2,287,000		$	1,735,000

The accompanying notes are an integral part of these condensed consolidated financial statements

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iCoreConnect Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)
	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018
Revenue	$	225,000		$	271,000		$	810,000		$	893,000
Cost of sales		83,000			130,000			247,000			359,000
Gross profit		142,000			141,000			563,000			534,000
Expenses
Selling, general and administrative		741,000			606,000			2,310,000			2,817,000
Depreciation and amortization		190,000			100,000			464,000			300,000
Total operating expenses		931,000			706,000			2,774,000			3,117,000
Loss from operations		(789,000	)		(565,000	)		(2,211,000	)		(2,583,000	)
Other
Interest expense		(109,000	)		(59,000	)		(204,000	)		(169,000	)
Other (expense) income		-			8,000			-			(1,742,000	)
Gain on cacellation of liabilities		154,000			-			154,000			-
Total other		45,000			(51,000	)		(50,000	)		(1,911,000	)
Net loss	$	(744,000	)	$	(616,000	)	$	(2,261,000	)	$	(4,494,000	)
Net loss per share available to common stockholders, basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.11	)
Weighted average number of shares, basic and diluted		60,737,967			47,379,032			56,536,170			42,708,594

The accompanying notes are an integral part of these condensed consolidated financial statements

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iCoreConnect Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)
					Additional					Total
	Common stock				Paid In		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Deficit
Balances at January 1, 2018		34,318,198	$	34,000	$	64,856,000	$	(66,154,000	)	$	(1,264,000	)
Stock issued for cash		1,867,000		2,000		543,000		-			545,000
Stock issued for services		3,400,000		3,000		1,697,000		-			1,700,000
Stock compensation expense		-		-		31,000		-			31,000
Net loss		-		-		-		(2,300,000	)		(2,300,000	)
Balances at March 31, 2018		39,585,198	$	39,000	$	67,127,000	$	(68,454,000	)	$	(1,288,000	)
Stock issued for cash		2,173,215		2,000		732,000		-			734,000
Stock issued for services		3,366,440		3,000		871,000		-			874,000
Stock compensation expense		-		-		32,000		-			32,000
Net loss		-		-		-		(1,578,000	)		(1,578,000	)
Balances at June 30, 2018		45,124,853	$	44,000	$	68,762,000	$	(70,032,000	)	$	(1,226,000	)
Stock issued for cash		4,191,111		4,000		1,066,000		-			1,070,000
Stock compensation expense		-		-		78,000		-			78,000
Net loss		-		-		-		(616,000	)		(616,000	)
Balances at September 30, 2018		49,315,964	$	48,000	$	69,906,000	$	(70,648,000	)	$	(694,000	)

					Additional					Total
	Common stock				Paid In		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity (Deficit)
Balances at January 1, 2019		50,864,131	$	51,000	$	70,335,000	$	(71,344,000	)	$	(958,000	)
Cumulative adjustment for the adoption of a new accounting pronouncement (Note 6)		-		-		-		(13,000	)		(13,000	)
Stock issued for cash and conversion of notes payable		2,395,607		2,000		673,000		-			675,000
Stock compensation expense		212,500		-		208,000		-			208,000
Net loss		-		-		-		(761,000	)		(761,000	)
Balances at March 31, 2019		53,472,238	$	53,000	$	71,216,000	$	(72,118,000	)	$	(849,000	)
Stock issued for cash		1,600,152		2,000		425,000		-			427,000
Stock issued for services		66,666		-		17,000		-			17,000
Stock issued for acquisition of technology (Note 1)		2,301,007		2,000		573,000		-			575,000
Stock compensation expense		1,047,860		1,000		133,000		-			134,000
Net loss		-		-		-		(756,000	)		(756,000	)
Balances at June 30, 2019		58,487,923	$	58,000	$	72,364,000	$	(72,874,000	)	$	(452,000	)
Stock issued for cash		5,380,000		6,000		1,344,000		-			1,350,000
Stock compensation expense		-		-		134,000		-			134,000
Net loss		-		-		-		(744,000	)		(744,000	)
Balances at September 30, 2019		63,867,923	$	64,000	$	73,842,000	$	(73,618,000	)	$	288,000

The accompanying notes are an integral part of these condensed consolidated financial statements

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iCoreConnect Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)
	September 30, 2019			September 30, 2018
CASH FLOWS FROM OPERATING ACTIVITTIES:
Net loss	$	(2,261,000	)	$	(4,494,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		4,000			3,000
Amortization of software development costs		460,000			296,000
Gain on cancellation of liabilities		(154,000	)		-
Stock issued for services		17,000			-
Change in allowance for doubtful accounts		-			3,000
Stock compensation expense		476,000			2,715,000
Decrease (increase) in:
Accounts receivable		114,000			(111,000	)
Prepaid expenses		(88,000	)		5,000
Right of use asset, net of lease liability		(11,000	)		-
Accounts payable and accrued expenses		(48,000	)		(38,000	)
Deferred revenue		(1,000	)		40,000
NET CASH USED IN OPERATING ACTIVITIES		(1,492,000	)		(1,581,000	)
INVESTING ACTIVITIES
Amount paid for acquisition of ClariCare software		(50,000	)		-
Amounts paid for capitalized software development costs		(298,000	)		(251,000	)
NET CASH USED IN INVESTING ACTIVITIES		(348,000	)		(251,000	)
FINANCING ACTIVITES
Proceeds from debt		75,000			-
Payments on debt		(637,000	)		(92,000	)
Proceeds from issuance of common stock		2,432,000			2,349,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,870,000			2,257,000
NET INCREASE IN CASH		30,000			425,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		1,000			52,000
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	31,000		$	477,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	170,000		$	125,000
Stock issued for acquisition of technology	$	575,000		$	-
Stock issued for conversion of notes payable	$	20,000		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements

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iCoreConnect Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(All amounts rounded to the nearest thousand except share amounts)

1. NATURE OF OPERATIONS

iCoreConnect, Inc., (the "Company") a Nevada Corporation, builds secure cloud-based communications systems, focused on healthcare, although the core technology can be adopted to other vertical markets that require a high degree of secure data communication, such as the legal, financial and education fields. iCoreConnect’s iCoreExchange (Health Information Exchange), allows providers and health care professionals to exchange patient specific healthcare information via the internet while maintaining compliance with all Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) regulations and the current Direct protocol. Our solutions allow providers and health care professionals to use the internet in ways previously unavailable to them due to HIPAA restrictions to quickly and cost effectively exchange and share patient medical information. iCoreConnect Inc., creates communication and practice management software that allows you to share information at the highest level of security and is a national provider of secure communications for high compliance industries. Our software allows organizations and individuals to easily exchange information utilizing 2048-bit encryption in full compliance of current federal laws. The Company currently designs, engineers and sells cloud-based software for the healthcare industry, with potential application in other industries with a need for secure information communication compliance. Due to current HIPAA regulations, providers and health care professionals have been prohibited from electronically exchanging unencrypted personal health information. Until recently, there was no cost-effective platform for transferring this information in a HIPAA compliant environment. We set out to solve this problem. The Company markets several products under the iCoreConnect umbrella which solve several industry problems.

We provide customizable secure cloud-based software. iCoreConnect currently markets six different software products: iCoreExchange, iCoreCodeGenius, iCoreSecure, iCoreMD, iCoreDental and iCoreExam.

On April 30, 2019 iCoreConnect Inc., acquired technology and other certain assets of ClariCare Inc., an Indiana corporation, in exchange for (i) $50,000 in cash, (ii) 2,301,007 shares of the Company’s common stock, subject to adjustment, and (iii) the assumption of a company credit card balance not to exceed $23,000, all upon the terms and conditions set forth in the Asset Purchase Agreement dated as of April 30, 2019 (the “ClariCare Asset Purchase Agreement”) filed in the Company’s Form 8-K with the SEC. The Company is required to issue additional shares on September 30, 2020 if the stock price is less than $1.49 per share as of that date. ClariCare has created cloud-based dental analytics and practice management software to provide dentists and providers to the dental market the modern tools to run their practices more efficiently and effectively and is a complement to our current dental market product offering.

The Company accounted for the ClariCare Asset Purchase Agreement as an asset acquisition under ASC 805, which provides guidance for asset acquisitions. Under the guidance, if substantially all of the acquisition is made up of one asset or similar assets, then the acquisition is an asset acquisition. The Company believes the assets acquired from ClariCare are similar and consider them all to be acquired technology (See Note 5). Further, the Company does not believe the acquired technology constitutes a business as defined under ASC 805.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 2018, which are included in the Company’s Annual Report filed on Form 10-K with the SEC on April 1, 2019. The accompanying condensed balance sheet as of December 31, 2018 has been derived from the audited financial statements at that date, but does not include all information and footnotes required by GAAP for complete financial statements.

The results of operations for the nine month period ended September 30, 2019 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year. Readers of this Quarterly Report are strongly encouraged to review the risk factors relating to the Company which are set forth in the Company’s Form 10-K filed with the SEC.

7

2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

For the nine month period ended September 30, 2019 the Company generated an operating loss of $2,211,000. In addition, the Company has an accumulated deficit, total stockholders’ equity and net working capital deficit of $73,618,000, $288,000 and $1,594,000 respectively at September 30, 2019. The Company’s activities were primarily financed through private placements of equity securities. The Company intends to raise additional capital through the issuance of debt and/or equity securities to fund its operations. The Company is reliant on future fundraising to finance operations in the near future. The financing may not be available on terms satisfactory to the Company, if at all. In light of these matters, there is substantial doubt that the Company will be able to continue as a going concern.

The Company had a revolving line of credit agreement in the amount of $500,000 which had an outstanding balance of $498,000 as of June 30, 2019. All outstanding principal and interest under the line of credit was due and payable on July 15, 2019. In August 2019 the counterparty to the line of credit agreement sold its interest in the line to a limited liability company (LLC) of which at least one shareholder of the Company is a member. In September 2019 the amount owing to the LLC was paid in full and the Company was released of all of its obligations under the line of credit.

In August 2019 the Company signed a $78,000 convertible promissory note due twelve (12) months after issuance (the "Note") and received $75,000 net of closing fees. Interest at 10% per annum shall not be due until maturity. One hundred eighty (180) days following the date of funding and thereafter, the Note shall be convertible into common stock of the Company ("Common Stock"). The conversion price shall be subject to a discount of 39%. The conversion price shall be determined on the basis of the average of the three (3) lowest closing bid prices for the Common Stock during the prior fifteen (15) trading day period. There is an ascending prepayment penalty percentage applied should the Company prepay the Note during the first one hundred eighty (180) days after which the Company shall have no right of prepayment. The Note Holder will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at time of conversion at any one time.

Currently, management intends to develop a vastly improved healthcare communications system and intends to develop alliances with strategic partners to generate revenues that will sustain the Company. While management believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. Management’s ability to continue as a going concern is ultimately dependent upon its ability to continually increase the Company’s customer base and realize increased revenues from signed contracts. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”). Significant accounting principles followed by the Company and the methods of applying those principles, which materially affect the determination of financial position, results of operations and cash flows are summarized below.

Cash and Cash Equivalents

The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at United States banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit.

8

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms. We maintain an allowance for doubtful accounts for estimated losses resulting from the potential inability of certain customers to make required future payments on amounts due us. Management determines the adequacy of this allowance by periodically evaluating the aging and past due nature of individual customer receivable balances and considering the customer’s current financial situation as well as the existing industry economic conditions and other relevant factors that would be useful in assessing the risk of collectability. If the future financial condition of our customers were to deteriorate, resulting in their inability to make specific required payments, additions to the allowance for doubtful accounts may be required. In addition, if the financial condition of our customers improves and collections of amounts outstanding commence or are reasonably assured, then we may reverse previously established allowances for doubtful accounts. The Company has estimated and recorded an allowance for doubtful accounts of $12,000 at both September 30, 2019 and December 31, 2018.

Property, Equipment and Depreciation

Property, equipment, and leasehold improvements are recorded at their historical cost. Depreciation and amortization have been determined using the straight-line method over the estimated useful lives of the assets which are computers and office equipment (3 years) and for office furniture and fixtures (7 years).

Software Development Costs and Acquired Software

The Company accounts for software development costs, including costs to develop software products or the software component of products to be sold to external users. In accordance with ASC 985-730, Computer Software Research and Development, research and planning phase costs are expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs are capitalized. We have determined that technological feasibility for our products to be marketed to external users was reached before the release of those products. As a result, the development costs and related acquisition costs after the establishment of technological feasibility were capitalized as incurred. Capitalized costs for software to be sold to external users and software acquired in a business combination are amortized based on current and projected future revenue for each product with an annual minimum equal to the straight-line amortization over three years.

Impairment of Long-Lived Assets

Long lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount that the carrying amount of the asset exceeds the fair value of the asset.

Goodwill

Goodwill acquired in a business combination is not amortized, but is tested for impairment annually or between annual tests when an impairment indicator exists. If an optional qualitative goodwill impairment assessment is not performed, we are required to determine the fair value of each reporting unit. If a reporting unit’s fair value is lower than its carrying value, we must determine the amount of implied goodwill that would be established if the reporting unit were hypothetically acquired on the impairment test date. If the carrying amount of a reporting unit’s goodwill exceeds the amount of implied goodwill, an impairment loss equal to the excess would be recorded. The recoverability of indefinite lived intangible assets is assessed by comparison of the carrying value of the asset to its estimated fair value. If we determine that the carrying value of the asset exceeds its estimated fair value, an impairment loss equal to the excess would be recorded.

Revenue Recognition

The Company has three primary sources of revenue:

· Electronic Health Records (EHR) licenses and rental services

· Encrypted Secure & HIPPA Compliant email services (“Encrypted Secure email”)

· ICD Coding Software

Revenue from EHR software licensing arrangements include private cloud hosting services and post contract support provided to clients that have purchased a perpetual or specific term license to the EHR software solution and have contracted with the Company to host the software. These arrangements provide the client with a contractual right to take possession of the software at any time during the private cloud hosting period and it is feasible for the client to either use the software on its own equipment or to contract with an unrelated third party to host the software. The Company recognizes revenue from the sale of its EHR software license at the time the customer has access to use the software, with deferral of revenues associated with the cloud hosting and post contract support performance objectives, allocated based on relative fair value.

9

The Company defers revenue from the sale of its EHR software products associated with cloud hosting and post contract support performance objectives over the term of the license agreement. Cloud hosting performance objective revenues are deferred based on forecasted cloud storage costs, encrypted secure email performance objective revenues are deferred based on the forecasted sales price of those services to other customers of the Company and customer support performance objective revenues are deferred based on forecasted customer support costs based on Company experience.

Encrypted Secure email services are provided on a fee basis as software as a service (“SaaS”) arrangements and are recognized as revenue ratably over the annual contract terms beginning on the date our solutions are made available to the customer.

ICD coding services are provided on a fee basis as SaaS arrangements and are recognized as revenue ratably over the contract terms beginning on the date the Company’s solutions are made available to the customer. The length of a customer service period varies from multi-year annually renewed to monthly over which such customer has the right to use the Company’s ICD coding software solution.

Advertising Costs

Advertising costs are reported in general and administrative expenses and include advertising, marketing and promotional programs and are charged as expenses in the period or year in which incurred. Advertising costs were $31,000 and $33,000, for the nine month period ended September 30, 2019 and 2018, respectively.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding for the period. Diluted net loss per share reflects the potential dilution of securities by adding other Common Stock equivalents, including stock options, shares issuable on exercise of warrants, convertible preferred stock and convertible notes in the weighted average number of shares of common stock outstanding for a period, if dilutive. Common stock equivalents that are anti-dilutive were excluded from the computation of diluted earnings per share which consisted of all outstanding common stock options and warrants.

Stock-Based Compensation

The Company accounts for the granting of share purchase options using the fair value method whereby all awards are recorded at fair value on the date of the grant. Share based awards granted with a performance condition are measured based on the probable outcome of that performance condition during the requisite service period. Such an award with a performance condition is accrued if it is probable that the performance condition will be achieved. Compensation costs for stock-based payments that do not include performance conditions are recognized on a straight-line basis over the requisite service period. Upon exercise of share purchase options, the consideration paid by the option holder, together with the amount previously recognized in additional capital surplus, is recorded as an increase to share capital.

The fair value of restricted stock units issued are determined by the Company based on the estimated fair value of the Company’s common stock. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option pricing model. The Company estimates the fair value of its common stock using the closing stock price of its common stock on the date of the agreement. The Company estimates the volatility of its common stock at the date of grant based on its historical stock prices. The Company determines the expected life based on the Simplified Method as allowed by SAB 107. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

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Options granted during the nine months ended September 30, 2019 were vested using the following assumptions:

Expected Term (years)	2 years
Weighted average volatility		100	%
Weighted average risk free rate		2.76	%
Expected dividends	$	0

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee, in most leases, to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. The guidance requires adoption using a modified retrospective transition approach with either: 1) periods prior to the adoption date being recast, or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. The Company adopted this standard on January 1, 2019 using the cumulative-effect adjustment method and elected certain practical expedients allowed under the standard. As a result of the adoption, the Company increased assets and liabilities by approximately $112,000 and $125,000, respectively, and decreased retained earnings on January 1, 2019 by $13,000.

In July 2017, the Financial Accounting Standards Board issued ASU No. 2017-11, “Accounting for Certain Financial Instruments with Down Round Features” (“Topic 480”). This update changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. ASU 2017-11 is effective for interim and annual periods beginning after December 15, 2018. The Company has evaluated the impact of the pronouncement on the financial statements and has determined that it did not have a significant impact on the financial statements.

In June 2018, the Financial Accounting Standards Board issued ASU No. 2018-07, “Compensation-Stock Compensation (“Topic 718”): Improvements to Nonemployee Share-Based Payment Accounting.” This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees. ASU 2018-07 is effective for interim and annual periods beginning after December 15, 2018. The Company has implemented the guidance and determined the impact of the pronouncement on the financial statements did not have a significant impact on the financial statements.

The Company does not believe that any other issued, but not yet effective accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations and cash flows.

4. COMMON STOCK AND PREFERRED STOCK

Stock Issuances

During the nine month period ended September 30, 2019, the Company issued 9,375,759 shares of common stock for the conversion of a $20,000 note payable and cash proceeds totaling $2,432,000. The Company also issued 675,000 shares of restricted common stock as compensation to certain employees and directors for services performed of which 212,500 shares have vested. In addition, a total of 1,047,860 shares vested from an issuance of restricted common stock in 2018. The Company also issued 66,666 shares relating to a Settlement Agreement with our former CFO. Lastly, the Company issued 2,301,007 shares of common stock to acquire technology and other certain assets from ClariCare (See Note 1).

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Stock Options

On February 21, 2019, our Board of Directors authorized the issuance of options to certain employees to purchase 135,000 shares of Common stock, at an exercise price of $0.15, that vested upon issuance. During the nine month period ended September 30, 2019, no options expired or were exercised and 25,000 options were forfeited. A summary of option activity for the nine month period ended September 30, 2019, is presented below:

Options Outstanding						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
	Number			Exercise		Term in		Intrinsic
	of Options			Price		Years		Value
Outstanding - January 1, 2019		1,356,157		$	0.31		9.8	$	-
Granted		135,000		$	0.15		9.4
Exercised		-		$	-
Forfeited		(25,000	)	$	0.15
Balance outstanding - September 30, 2019		1,466,157		$	0.29		9.1	$	-
Exercisable - September 30, 2019		599,490		$	0.27		8.5	$	-

						Weighted
				Weighted		Average
	Number			Average grant date		Remaining Years
	of Options			Fair Value		to Vest
Nonvested - January 1, 2019		866,667		$	0.13		1.6
Granted		135,000		$	0.15
Vested		(135,000	)	$	0.15
Forfeited/expired		-
Nonvested - September 30, 2019		866,667		$	0.13		0.9

5. SOFTWARE DEVELOPMENT COSTS

The Company continued to develop its software products with significant features and enhancements during the nine month period ended September 30, 2019 and has continued to capitalize development costs during that period. A summary of the capitalization and amortization of the software development costs is as follows:

	September 30,			December 31,
	2019			2018
Development costs	$	1,811,000		$	1,513,000
Acquired technology		1,277,000			630,000
Less accumulated amortization		(1,513,000	)		(1,069,000	)
	$	1,575,000		$	1,074,000

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6. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

On November 15, 2017 the Company signed a three-year lease agreement for approximately 4,100 square feet of office space located in Winter Garden, Florida in which the Company has its headquarters. The lease provides for a one-year renewal term at the option of the Company. As of September 30, 2019, undiscounted future lease obligations for the office space are as follows:

Year Ended	Lease Amount
September 30, 2020	$	69,000
September 30, 2021		6,000
	$	75,000

On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), which requires a lessee, in most leases, to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. In arriving at the right of use lease asset as of January 1, 2019, we applied the weighted-average incremental borrowing rate of 11.9% over a weighted-average remaining lease term of 1.6 years. The Company adopted this standard using the cumulative-effect adjustment method and elected certain practical expedients allowed under the standard. As a result of the adoption, the Company increased assets and liabilities by approximately $112,000 and $125,000, respectively, and decreased retained earnings on January 1, 2019 by $13,000.

Lease costs for the nine months ended September 30, 2019 were $42,000 and cash paid for amounts included in the measurement of lease liabilities for the nine month ended September 30, 2019 were $50,000. As of September 30, 2019, the following represents the difference between the remaining undiscounted lease commitments under non-cancelable leases and the lease liabilities:

Undiscounted minimum lease commitments	$	75,000
Present value adjustment using incremental borrowing rate		(5,000	)
Lease liabilities	$	70,000

7. CONCENTRATION OF CREDIT RISK

The Company has historically provided financial terms to customers in accordance with what management views as industry norms. Financial terms range from immediate payment for access to the Company’s software products to several months for Meaningful Use consulting services. Management periodically and regularly reviews customer account activity in order to assess the adequacy of allowances for doubtful accounts, considering such factors as economic conditions and each customer’s payment history and creditworthiness. If the financial conditions of our customers were to deteriorate, or if they were otherwise unable to make payments in accordance with management’s expectations, we might have to increase our allowance for doubtful accounts, modify their financial terms and/or pursue alternative collection methods.

Revenue concentrations for the nine months ended September 30, 2019 and 2018 and the accounts receivable concentrations as of September 30, 2019 and December 31, 2018, expressed as a percentage of the Company’s revenue and accounts receivable, respectively, are as follows:

	Net Sales
	For The Nine Months Ended						Accounts Receivable at
	September 30,			September 30,			September 30,			December 31,
	2019			2018			2019			2018
Customer A		42	%		30	%		33	%		15	%
Customer B		0	%		11	%		0	%		0	%
Customer C		1	%		10	%		2	%		42	%
Customer D		4	%		0	%		15	%		1	%

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements made in this Quarterly Report on Form 10-Q, including without limitation this Management's Discussion and Analysis of Financial Condition and Operations, other than statements of historical information, are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by such words as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue" or similar words. We believe it is important to communicate our future expectations to investors. However, these forward-looking statements involve many risks and uncertainties, including the risk factors disclosed under the heading "Risk Factors" included in the Company's Form 10-K filed with the Securities and Exchange Commission ("SEC") on April 1, 2019. Our actual results could differ materially from those indicated in such forward-looking statements as a result of certain factors. We are under no duty to update any of the forward-looking statements after the date of this Report on Form 10-Q to conform these statements to actual results, other than to comply with the federal securities laws.

About the Company

iCoreConnect Inc., a Nevada corporation (the “Company”), creates communication and practice management software that allows our customers to share information at the highest level of security. We are a national provider of secure communications for high-compliance industries including healthcare and potentially for the financial and legal industries. Our software allows organizations and individuals to easily exchange information utilizing 2048-bit encryption in full compliance of current federal laws.

On April 30, 2019 iCoreConnect Inc., acquired technology and certain assets from ClariCare, Inc. ClariCare has created cloud-based dental analytics and practice management software which empower dentists and providers to run their practices more efficiently and effectively. The acquisition of ClariCare’s technology, now being marketed and further developed as iCoreHuddle deepens our portfolio of SaaS based products and has the following functionality:

1) Analytics and KPI’s -The software connects to a customer’s Practice Management System and provides simple access to their patient financials, consolidated patient history, and scheduling opportunities. This daily dashboard ensures that your clinical team and front office are always in sync and prepared. The software provides real time KPIs and provides this information in a viewer friendly dashboard allowing the team a view of practice goals and real time access to metrics that will boost their performance.

2) Insurance Eligibility Verification -Denied dental claims are routinely linked to eligibility issues – and many of those errors are rooted in either a failure to check eligibility, or the use of inaccurate data. iCoreHuddle brings connectivity to every commercial and government payer in the country, with a detailed explanation of benefits generated for patients before they come into office. We also make reactivation campaigns more effective by verifying benefits prior to patient outreach.

3) Prescription Drug Monitoring - While primary care physicians prescribe the majority of opioids, dentists prescribe them at a higher rate – and are the second highest prescribers of opioids overall. As state legislatures look at ways to combat the opioid crisis, making prescribers accountable for scripts that go out their door is a priority. With iCoreHuddle’s clinical integration into multi-state prescription drug monitoring databases, the software automates the process of checking for risk factors and provides a risk score in a dashboard that is easily identifiable to the doctor to make sound clinical decisions on Controlled Substances prescriptions.

Financing

We are currently funding our business capital requirements through revenues from product sales and consulting services, sales of our common stock, and debt arrangements. While we intend to seek additional funding, if revenue increases to a point where we are able to sustain ourselves and increase our budget to match our growth needs, we may significantly reduce the amount of investment capital we seek. The amount of funds raised and revenue generated, if any, will determine how aggressively we can grow and what additional projects we will be able to undertake. No assurance can be given that we will be able to raise additional capital when needed or at all, or that such capital, if available, will be on terms acceptable to us. If we are unable to, or do not raise additional capital in the near future or if our revenue does not begin to grow as we expect, we will have to curtail our spending and downsize our operations.

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The Company had a revolving line of credit agreement in the amount of $500,000 which had an outstanding balance of $498,000 as of June 30, 2019. All outstanding principal and interest under the line of credit was due and payable on July 15, 2019. In August 2019 the counterparty to the line of credit agreement sold its interest in the line to a limited liability company (LLC) of which at least one shareholder of the Company is a member. In September 2019 the amount owing to the LLC was paid in full and the Company was released of all of its obligations under the line of credit.

In August 2019 the Company signed a $78,000 convertible promissory note due twelve (12) months after issuance (the "Note") and received $75,000 net of closing fees. Interest at 10% per annum shall not be due until maturity.  One hundred eighty (180) days following the date of funding and thereafter, the Note shall be convertible into common stock of the Company ("Common Stock").  The conversion price shall be subject to a discount of 39%.  The conversion price shall be determined on the basis of the average of the three (3) lowest closing bid prices for the Common Stock during the prior fifteen (15) trading day period.  There is an ascending prepayment penalty percentage applied should the Company prepay the Note during the first one hundred eighty (180) days after which the Company shall have no right of prepayment. The Note Holder will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at time of conversion at any one time.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with generally accepted accounting principles as recognized in the United States of America. The preparation of these financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with generally accepted accounting principles as recognized in the United States of America. The preparation of these financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

We have three primary sources of revenue:

· Electronic Health Records (EHR) licenses

· Encrypted & HIPAA Compliant Secure email

· ICD Coding Software

Revenue from EHR software licensing arrangements include private cloud hosting services provided to clients that have purchased a perpetual or specific term license to our EHR software solution and have contracted with us to host the software. These arrangements provide the client with a contractual right to take possession of the software at any time during the private cloud hosting period without significant penalty and it is feasible for the client to either use the software on its own equipment or to contract with an unrelated third party to host the software. Private cloud hosting services are not deemed to be essential to the functionality of the software. The Company recognizes revenue from the sale of its EHR software license at the time the customer has access to use the software, with deferral of revenues associated with the cloud hosting and post contract support performance objectives, allocated based on relative fair value.

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The Company defers revenue from the sale of its EHR software products associated with cloud hosting and post contract support performance objectives over the term of the license agreement. Cloud hosting performance objective revenues are deferred based on forecasted cloud storage costs, encrypted secure email performance objective revenues are deferred based on the forecasted sales price of those services to other customers of the Company and customer support performance objective revenues are deferred based on forecasted customer support costs based on Company experience.

Encrypted Secure email services are provided on a fee basis as software as a service (“SaaS”) arrangement and are recognized as revenue ratably over the annual contract terms beginning on the date our solutions are made available to clients.

ICD Coding Software provides the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD), a medical classification list by the World Health Organization (WHO). It contains codes for diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or diseases. ICD coding services are provided on a fee basis as software as a service (“SaaS”) arrangements and are recognized as revenue ratably over the contract terms beginning on the date our solutions are made available to clients. The length of a client service period varies from multi-year annually renewed to monthly over which such client has the right to use our ICD coding software solution.

Software Development Capitalization and Amortization

We account for software development costs, including costs to develop software products or the software component of products to be marketed to external users.

In accordance with ASC 985-730, Computer Software Research and Development, research and planning phase costs should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized.

We have determined that technological feasibility for our products to be marketed to external users was reached before the release of those products. As a result, the development costs and related acquisition costs after the establishment of technological feasibility were capitalized as incurred. Capitalized costs for software to be marketed to external users are amortized based on current and projected future revenue for each product with an annual minimum equal to the straight-line amortization over three years.

Stock Based Compensation

The Company estimates the fair value of each option award on the date of grant generally using a Black-Scholes option pricing model that uses the following assumptions. The Company estimates the fair value of its shares of restricted common stock using the closing stock price of its common stock on the date of the award. The Company estimates the volatility of its common stock at the date of grant based on its historical stock prices. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

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Results of Operations

Overview. The following table sets forth our selected financial data for the periods indicated below and the percentage dollar increase (decrease) of such items from period to period:

	Three Months Ended									Nine Months Ended
	September 30,			September 30,						September 30,			September 30,
	2019			2018			% Incr/(Decr)			2019			2018			% Incr/(Decr)
Revenues	$	225,000		$	271,000			-17	%	$	810,000		$	893,000			-9	%
Cost of sales		83,000			130,000			-36	%		247,000			359,000			-31	%
Gross profit (deficit)		142,000			141,000						563,000			534,000
Expenses
Selling, General and administrative		741,000			606,000			22	%		2,310,000			2,817,000			-18	%
Depreciation and amortization		190,000			100,000			90	%		464,000			300,000			55	%
Total operating expenses		931,000			706,000			32	%		2,774,000			3,117,000			-11	%
Loss from operations		(789,000	)		(565,000	)		40	%		(2,211,000	)		(2,583,000	)		-14	%
Other
Interest expense		(109,000	)		(59,000	)		85	%		(204,000	)		(169,000	)		21	%
Other (expense) income		-			8,000			-100	%		-			(1,742,000	)		-100	%
Gain on cacellation of liabilities		154,000			-			-			154,000			-			-
Total other		45,000			(51,000	)		-188	%		(50,000	)		(1,911,000	)		-97	%
Net loss	$	(744,000	)	$	(616,000	)		21	%	$	(2,261,000	)	$	(4,494,000	)		-50	%

The accompanying “Management’s Discussion and Analysis of Financial Condition and Results of Operations” provides a comparison of the amounts listed above.

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Three Month Period Ended September 30, 2019 (“3Q 2019”) Compared to Three Month Period Ended September 30, 2018 (“3Q 2018”)

Revenues. Net revenues of $225,000 for the 3Q 2019 period decreased $46,000 or 17% compared to $271,000 for the 3Q 2018 period. The decrease between periods was due to recurring SaaS revenues increasing $34,000 combined with an $80,000 decrease in one-time EHR revenues.

Cost of sales. Cost of sales of $83,000 for the 3Q 2019 period decreased $47,000 or 36% compared to $130,000 for the 3Q 2018 period. The decrease between periods was due primarily due to a $30,000 reduction in IT development wages being classified as cost of sales.

Selling, general and administrative expenses. Selling, general and administrative expenses of $741,000 for the 3Q 2019 period increased $135,000 or 22% compared to $606,000 for the 3Q 2018 period. The increase between periods was primarily due to an increase of $52,000 in consulting fees, $40,000 increase in legal fees and a $23,000 increase in payroll expenses.

Depreciation and amortization expenses. Depreciation and amortization expenses of $190,000 for the 3Q 2019 period increased $90,000 or 90% compared to $100,000 for the 3Q 2018 period. The increase between periods was primarily due to $22,000 in increased quarterly amortization with respect to the ICD Logic acquisition to reflect a change to three (3) years of remaining useful life from the previous six (6) years. We also effectively doubled our Acquired Technology assets with the acquisition of technology from ClariCare during 2Q 2019 (as discussed previously in “Nature of Operations”), thus resulting in a $55,000 quarterly increase in the related amortization expense between periods.

Interest Expense. Interest expense of $109,000 for the 3Q 2019 period increased $50,000 or 85% compared to $59,000 in the 3Q 2018 period. The increase between periods was primarily due to a $60,000 increase stemming from late fees assessed upon paying off our line of credit facility during 3Q 2019 (see “Credit Facilities” for further discussion) combined with a $11,000 decrease in quarterly interest expense resulting from the 4Q 2018 payoff of a Stockholder Convertible note.

Other (expense) income. Other (expense) income was $0 for the 3Q 2019 and $8,000 in the 3Q 2018 period. The activity in 3Q 2018 related to a small debt forgiveness as part of a dispute resolution.

Gain on cancellation of liabilities. Gain on cancellation of liabilities income of $154,000 for the 3Q 2019 increased $154,000 compared to $0 in the 3Q 2018 period. The increase between periods was due to liabilities being cancelled in the current fiscal quarter.

Nine Month Period Ended September 30, 2019 Compared to Nine Month Period Ended September 30, 2018

Revenues. Net revenues of $810,000 for the nine month period ended September 30, 2019 decreased $83,000 or 9% when compared to net revenues of $893,000 for the nine month period ended September 30, 2018. The decrease between periods was primarily due to a $175,000 decrease in one-time EHR software revenues somewhat offset by a $105,000 increase in recurring SaaS revenues.

Cost of sales. Cost of sales of $247,000 for the nine month period ended September 30, 2019 decreased $112,000 or 31% when compared to cost of sales of $359,000 for the nine month period ended September 30, 2018. The decrease between periods was due to an additional $38,000 of expense getting capitalized and recorded on the Balance Sheet for the nine month period ended September 30, 2019, a $24,000 one-time expense being recorded in the nine month period ended September 30, 2018 and a $41,000 reduction in IT development wages being classified as cost of sales in the nine month period ended September 30, 2018.

Selling, general and administrative expenses. Selling, general and administrative expenses of $2,310,000 for the nine month period ended September 30, 2019 decreased $507,000 or 18% when compared to selling, general and administrative expenses of $2,817,000 for the nine month period ended September 30, 2018. The decrease between periods was primarily due to a decrease of $546,000 in stock compensation expense.

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Depreciation and amortization expenses. Depreciation and amortization expenses of $464,000 for the nine month period ended September 30, 2019 increased $164,000 or 55% when compared to the depreciation and amortization expenses of $300,000 for the nine month period ended September 30, 2018. The increase between periods was primarily due to $22,000 in increased quarterly amortization with respect to the ICD Logic acquisition to reflect a change to three (3) years of remaining useful life from the previous six (6) starting in 2Q 2019. We also effectively doubled our Acquired Technology assets with the acquisition of technology from ClariCare during the 2Q 2019 (as discussed previously in “Nature of Operations”) thus resulting in a quarterly increase in amortization expense of $54,000 starting in 2Q 2019.

Interest Expense. Interest expense of $204,000 for the nine month period ended September 30, 2019 increased $35,000 or 21% when compared to interest expense of $169,000 for the nine month period ended September 30, 2018. The increase between periods was primarily due to a $60,000 increase stemming from late fees assessed upon paying off our line of credit facility during 3Q 2019 (see “Credit Facilities” for further discussion) combined with a $11,000 decrease in quarterly interest expense resulting from the 4Q 2018 payoff of a Stockholder Convertible note.

Other (expense) income. Other (expense) income was $0 for the nine month period ended September 30, 2019 and $1,742,000 for the nine month period ended September 30, 2018. The change between periods was primarily due to the $1,750,000 acquisition of Electro-Fish Media, Inc. in January, 2018.

Gain on cancellation of liabilities. Gain on cancellation of liabilities of $154,000 for the nine month period ended September 30, 2019 and $0 for the nine month period ended September 30, 2018. The increase between periods was due to liabilities being cancelled in 3Q 2019.

LIQUIDITY AND CAPITAL

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

For the nine month period ended September 30, 2019 the Company generated an operating loss of $2,211,000. In addition, the Company has an accumulated deficit, total stockholders’ equity and net working capital deficit of $73,618,000, $288,000 and $1,594,000 respectively at September 30, 2019. The Company’s activities were primarily financed through private placements of equity securities. The Company intends to raise additional capital through the issuance of debt and/or equity securities to fund its operations. The Company is reliant on future fundraising to finance operations in the near future. The financing may not be available on terms satisfactory to the Company, if at all. In light of these matters, there is substantial doubt that the Company will be able to continue as a going concern. It’s worth noting the Company paid off its existing line of credit and successfully borrowed $78k in convertible debt during 3Q 2019.

Currently, management intends to develop a vastly improved healthcare communications system and intends to develop alliances with strategic partners to generate revenues that will sustain the Company. While management believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. Management’s ability to continue as a going concern is ultimately dependent upon its ability to continually increase the Company’s customer base and realize increased revenues from signed contracts. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The primary factors that influence our liquidity include, but are not limited to, the amount and timing of our equity and debt raises, revenues, cash collections from our clients, capital expenditures, and investments in research and development. The following table summarizes the impact of operating, investing and financing activities on our cash flows for the nine month periods ended September 30, 2019 and 2018 related to our operations:  

	Nine Months Ended			Nine Months Ended
	September 30,			September 30,
	2019			2018
Net cash used in operating activities	$	(1,492,000	)	$	(1,581,000	)
Net cash used in investing activities		(348,000	)		(251,000	)
Net cash provided by financing activities		1,870,000			2,257,000
Net Increase / (Decrease) in cash		30,000			425,000
Cash and cash equivalents at the beginning of the period		1,000			52,000
Cash and cash equivalents at the end of the period	$	31,000		$	477,000

The accompanying “Management’s Discussion and Analysis of Financial Condition and Results of Operations” provides a comparison of the amounts listed above.

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Operating Activities: Net cash used by operating activities of $1,492,000 for the nine month period ended September 30, 2019 was $89,000 less than the $1,581,000 cash used by operations for the nine month period ended September 30, 2018. The decrease in cash utilized by operating activities compared to the nine month period ended September 30, 2018 was attributable to a $19,000 decrease in net loss and non-cash adjustments to net loss combined with an $70,000 decrease in the cash impact of changes in operating assets and liabilities. Future spending on operating activities is expected to be funded by the sale of and issuance of additional shares of common stock.

Investing Activities: Net cash used by investing activities of $348,000 for the nine month period ended September 30, 2019 was $97,000 more than the $251,000 cash used by investing activities for the nine month period ended September 30, 2018. This was due to an increase of $47,000 in software development spending combined with the cash of $50,000 paid as part of the consideration to acquire technology from ClariCare. Future spending on investing activities is expected to be funded by the sale of and issuance of additional shares of common stock.

Financing Activities: Net cash provided by financing activities of $1,870,000 for the nine month period ended September 30, 2019 was $387,000 less than the $2,257,000 cash provided by financing activities for the nine month period ended September 30, 2018 primarily due to the $498,000 line of credit debt being paid off in 3Q 2019 (see “Credit Facilities” below for further discussion) partially offset by $83,000 more cash being raised from the issuance of common stock during the nine month period ended September 30, 2019.

Credit Facilities

The Company had a revolving line of credit agreement in the amount of $500,000 which had an outstanding balance of $498,000 as of June 30, 2019. All outstanding principal and interest under the line of credit was due and payable on July 15, 2019. In August 2019 the counterparty to the line of credit agreement sold its interest in the line to a limited liability company (LLC) of which at least one shareholder of the Company is a member. In September 2019 the amount owing to the LLC was paid in full and the Company was released of all of its obligations under the line of credit.

In August 2019 the Company signed a $78,000 convertible promissory note due twelve (12) months after issuance (the "Note") and received $75,000 net of closing fees. Interest at 10% per annum shall not be due until maturity.  One hundred eighty (180) days following the date of funding and thereafter, the Note shall be convertible into common stock of the Company ("Common Stock").  The conversion price shall be subject to a discount of 39%.  The conversion price shall be determined on the basis of the average of the three (3) lowest closing bid prices for the Common Stock during the prior fifteen (15) trading day period.  There is an ascending prepayment penalty percentage applied should the Company prepay the Note during the first one hundred eighty (180) days after which the Company shall have no right of prepayment. The Note Holder will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at time of conversion at any one time.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer, currently filling the role of Acting Chief Financial Officer, has evaluated our disclosure controls and procedures. Based on such evaluation, and after considering the controls implemented to mitigate the significant deficiency related to insufficient accounting personnel discussed in our SEC filing on Form 10-K dated December 31, 2018, he has concluded that, as of September 30, 2019, our disclosure controls and procedures were effective in ensuring that information relating to the Company required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to him and other members of our management as appropriate to allow timely decisions regarding required disclosure.

Changes to Internal Control Over Financial Reporting

We have not identified any change in our internal control over financial reporting during our most recently completed fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

20

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company from time to time, may be a party to various litigation, claims and disputes, arising in the ordinary course of business. While the ultimate impact of such actions cannot be predicted with certainty, we believe the outcome of these matters will not have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Information with respect to sales of unregistered shares of the Common Stock of the Company during the fiscal quarter ended September 30, 2019, as well as sales of unregistered shares of Common Stock of the Company during the first nine months of the current fiscal year, is set forth in the Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Nine Month Period Ended September 30, 2019 and 2018 (Unaudited) contained in Part I Financial Information. All such sales were to accredited investors and were made in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. The proceeds were used by the Company for working capital purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

21

ITEM 6. EXHIBITS

31.1*	Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
31.2*	Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1*	Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data files pursuant to Rule 405 of Regulation S-T

22

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

	iCoreConnect, Inc. (Registrant)
Date: November 14, 2019	By:	/s/ Robert McDermott
		Robert McDermott
		Chief Executive Officer
		(Principal Executive Officer)
Date: November 14, 2019	By:	/s/ Robert McDermott
		Robert McDermott
		Acting Chief Financial Officer
		(Acting Principal Accounting Officer)

23

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CEO PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) OR 15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert P. McDermott, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of iCoreConnect Inc.;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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 report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over 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.

Date: November 14, 2019	By:	/s/ Robert P. McDermott
		Robert P. McDermott
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CFO PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) OR 15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert P. McDermott, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of iCoreConnect Inc.;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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 report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over 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.

Date: November 14, 2019	By:	/s/ Robert P. McDermott
		Robert P. McDermott
		Acting Chief Financial Officer

EX-32.1

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

In connection with the quarterly report of iCoreConnect Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert P. McDermott, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: November 14, 2019	By:	/s/ Robert P. McDermott
		Robert P. McDermott
		President and Chief Executive Officer

EX-32.2

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

In connection with the quarterly report of iCoreConnect Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert P. McDermott, Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: November 14, 2019	By:	/s/ Robert P. McDermott
		Robert P. McDermott
		Acting Chief Financial Officer

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Allowance for doubtful accounts	$ 12,000		$ 12,000
FDIC insured limit	250,000
Advertising expenses	$ 31,000	$ 33,000
Computers and office equipment [Member]
Estimated useful life	3 years
Furniture and Fixtures [Member]
Estimated useful life	7 years
Software Development [Member]
Finite lived intangible assets, amortization period	3 years
January 1, 2019 [Member]
Increae (decrease) in assets due to adoption	$ 112,000
Increae (decrease) in liabilities due to adoption	125,000
Increae (decrease) in retained earnings due	$ (13,000)

XML

COMMITMENTS AND CONTINGENCIES (Details) - Lease [Member]	Sep. 30, 2019 USD ($)
September 30, 2020	$ 69,000
September 30, 2021	6,000
Total	$ 75,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITTIES
Net loss	$ (2,261,000)	$ (4,494,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	4,000	3,000
Amortization of software development costs	460,000	296,000
Gain on cancellation of liabilities	(154,000)
Stock issued for services	17,000
Change in allowance for doubtful accounts		3,000
Stock compensation expense	476,000	2,715,000
Decrease (increase) in:
Accounts receivable	114,000	(111,000)
Prepaid expenses	(88,000)	5,000
Right of use asset, net of lease liability	(11,000)
Accounts payable and accrued expenses	(48,000)	(38,000)
Deferred revenue	(1,000)	40,000
NET CASH USED IN OPERATING ACTIVITIES	(1,492,000)	(1,581,000)
INVESTING ACTIVITIES
Amount paid for acquisition of ClariCare software	(50,000)
Amounts paid for capitalized software development costs	(298,000)	(251,000)
NET CASH USED IN INVESTING ACTIVITIES	(348,000)	(251,000)
FINANCING ACTIVITES
Proceeds from debt	75,000
Payments on debt	(637,000)	(92,000)
Proceeds from issuance of common stock	2,432,000	2,349,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	1,870,000	2,257,000
NET INCREASE IN CASH	30,000	425,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD	1,000	52,000
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	31,000	477,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$ 170,000	$ 125,000
Stock issued for acquisition of technology	575,000
Stock issued for conversion of notes payable	$ 20,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents	$ 31,000	$ 1,000
Accounts receivable, net of allowance for doubtful accounts	110,000	224,000
Prepaid expenses	97,000	9,000
Total current assets	238,000	234,000
Property and equipment, net	7,000	11,000
Right of use lease asset - operating	68,000
Software development costs, net	587,000	535,000
Acquired technology, net	988,000	539,000
Goodwill and intangible assets, net	399,000	416,000
Total long-term assets	2,049,000	1,501,000
TOTAL ASSETS	2,287,000	1,735,000
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued expenses	483,000	664,000
Line of credit		498,000
Operating lease liability, current portion	64,000
Current maturities of long-term debt	1,285,000	1,361,000
Total current liabilities	1,832,000	2,523,000
Long-term debt, net of current maturities	47,000	55,000
Operating lease liability, net of current portion	6,000
Deferred revenue	114,000	115,000
Total long-term liabilities	167,000	170,000
TOTAL LIABILITIES	1,999,000	2,693,000
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Undesignated par value $0.001; Authorized 10,000,000 shares; none issued or outstanding
Common stock par value $0.001; 600,000,000 shares authorized; Issued and Outstanding: 63,867,923 as of September 30, 2019 and 50,864,131 as of December 31, 2018	64,000	51,000
Additional paid-in-capital	73,842,000	70,335,000
Accumulated deficit	(73,618,000)	(71,344,000)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)	288,000	(958,000)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 2,287,000	$ 1,735,000

XML

CONCENTRATION OF CREDIT RISK (Tables)

9 Months Ended

Sep. 30, 2019

GOING CONCERN

CONCENTRATION OF CREDIT RISK

	Net Sales
	For The Nine Months Ended						Accounts Receivable at
	September 30,			September 30,			September 30,			December 31,
	2019			2018			2019			2018
Customer A		42	%		30	%		33	%		15	%
Customer B		0	%		11	%		0	%		0	%
Customer C		1	%		10	%		2	%		42	%
Customer D		4	%		0	%		15	%		1	%

XML

SOFTWARE DEVELOPMENT COSTS

9 Months Ended

Sep. 30, 2019

SOFTWARE DEVELOPMENT COSTS

Note 5 - SOFTWARE DEVELOPMENT COSTS

The Company continued to develop its software products with significant features and enhancements during the nine month period ended September 30, 2019 and has continued to capitalize development costs during that period. A summary of the capitalization and amortization of the software development costs is as follows:

	September 30,			December 31,
	2019			2018
Development costs	$	1,811,000		$	1,513,000
Acquired technology		1,277,000			630,000
Less accumulated amortization		(1,513,000	)		(1,069,000	)
	$	1,575,000		$	1,074,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of option granted

Expected Term (years)	2 years
Weighted average volatility		100	%
Weighted average risk free rate		2.76	%
Expected dividends	$	0

XML

COMMON STOCK AND PREFERRED STOCK

9 Months Ended

Sep. 30, 2019

COMMON STOCK AND PREFERRED STOCK

Note 4 - COMMON STOCK AND PREFERRED STOCK

Stock Issuances

During the nine month period ended September 30, 2019, the Company issued 9,375,759 shares of common stock for the conversion of a $20,000 note payable and cash proceeds totaling $2,432,000. The Company also issued 675,000 shares of restricted common stock as compensation to certain employees and directors for services performed of which 212,500 shares have vested. In addition, a total of 1,047,860 shares vested from an issuance of restricted common stock in 2018. The Company also issued 66,666 shares relating to a Settlement Agreement with our former CFO. Lastly, the Company issued 2,301,007 shares of common stock to acquire technology and other certain assets from ClariCare (See Note 1).

Stock Options

On February 21, 2019, our Board of Directors authorized the issuance of options to certain employees to purchase 135,000 shares of Common stock, at an exercise price of $0.15, that vested upon issuance. During the nine month period ended September 30, 2019, no options expired or were exercised and 25,000 options were forfeited. A summary of option activity for the nine month period ended September 30, 2019, is presented below:

Options Outstanding						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
	Number			Exercise		Term in		Intrinsic
	of Options			Price		Years		Value
Outstanding - January 1, 2019		1,356,157		$	0.31		9.8	$	-
Granted		135,000		$	0.15		9.4
Exercised		-		$	-
Forfeited		(25,000	)	$	0.15
Balance outstanding - September 30, 2019		1,466,157		$	0.29		9.1	$	-
Exercisable - September 30, 2019		599,490		$	0.27		8.5	$	-

						Weighted
				Weighted		Average
	Number			Average grant date		Remaining Years
	of Options			Fair Value		to Vest
Nonvested - January 1, 2019		866,667		$	0.13		1.6
Granted		135,000		$	0.15
Vested		(135,000	)	$	0.15
Forfeited/expired		-
Nonvested - September 30, 2019		866,667		$	0.13		0.9

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”). Significant accounting principles followed by the Company and the methods of applying those principles, which materially affect the determination of financial position, results of operations and cash flows are summarized below.

Cash and Cash Equivalents

The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at United States banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms. We maintain an allowance for doubtful accounts for estimated losses resulting from the potential inability of certain customers to make required future payments on amounts due us. Management determines the adequacy of this allowance by periodically evaluating the aging and past due nature of individual customer receivable balances and considering the customer’s current financial situation as well as the existing industry economic conditions and other relevant factors that would be useful in assessing the risk of collectability. If the future financial condition of our customers were to deteriorate, resulting in their inability to make specific required payments, additions to the allowance for doubtful accounts may be required. In addition, if the financial condition of our customers improves and collections of amounts outstanding commence or are reasonably assured, then we may reverse previously established allowances for doubtful accounts. The Company has estimated and recorded an allowance for doubtful accounts of $12,000 at both September 30, 2019 and December 31, 2018.

Property, Equipment and Depreciation

Property, equipment, and leasehold improvements are recorded at their historical cost. Depreciation and amortization have been determined using the straight-line method over the estimated useful lives of the assets which are computers and office equipment (3 years) and for office furniture and fixtures (7 years).

Software Development Costs and Acquired Software

The Company accounts for software development costs, including costs to develop software products or the software component of products to be sold to external users. In accordance with ASC 985-730, Computer Software Research and Development, research and planning phase costs are expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs are capitalized. We have determined that technological feasibility for our products to be marketed to external users was reached before the release of those products. As a result, the development costs and related acquisition costs after the establishment of technological feasibility were capitalized as incurred. Capitalized costs for software to be sold to external users and software acquired in a business combination are amortized based on current and projected future revenue for each product with an annual minimum equal to the straight-line amortization over three years.

Impairment of Long Lived Assets

Long lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount that the carrying amount of the asset exceeds the fair value of the asset.

Goodwill

Goodwill acquired in a business combination is not amortized, but is tested for impairment annually or between annual tests when an impairment indicator exists. If an optional qualitative goodwill impairment assessment is not performed, we are required to determine the fair value of each reporting unit. If a reporting unit’s fair value is lower than its carrying value, we must determine the amount of implied goodwill that would be established if the reporting unit were hypothetically acquired on the impairment test date. If the carrying amount of a reporting unit’s goodwill exceeds the amount of implied goodwill, an impairment loss equal to the excess would be recorded. The recoverability of indefinite lived intangible assets is assessed by comparison of the carrying value of the asset to its estimated fair value. If we determine that the carrying value of the asset exceeds its estimated fair value, an impairment loss equal to the excess would be recorded.

Revenue Recognition

The Company has three primary sources of revenue:

· Electronic Health Records (EHR) licenses and rental services

· Encrypted Secure & HIPPA Compliant email services (“Encrypted Secure email”)

· ICD Coding Software

Revenue from EHR software licensing arrangements include private cloud hosting services and post contract support provided to clients that have purchased a perpetual or specific term license to the EHR software solution and have contracted with the Company to host the software. These arrangements provide the client with a contractual right to take possession of the software at any time during the private cloud hosting period and it is feasible for the client to either use the software on its own equipment or to contract with an unrelated third party to host the software. The Company recognizes revenue from the sale of its EHR software license at the time the customer has access to use the software, with deferral of revenues associated with the cloud hosting and post contract support performance objectives, allocated based on relative fair value.

The Company defers revenue from the sale of its EHR software products associated with cloud hosting and post contract support performance objectives over the term of the license agreement. Cloud hosting performance objective revenues are deferred based on forecasted cloud storage costs, encrypted secure email performance objective revenues are deferred based on the forecasted sales price of those services to other customers of the Company and customer support performance objective revenues are deferred based on forecasted customer support costs based on Company experience.

Encrypted Secure email services are provided on a fee basis as software as a service (“SaaS”) arrangements and are recognized as revenue ratably over the annual contract terms beginning on the date our solutions are made available to the customer.

ICD coding services are provided on a fee basis as SaaS arrangements and are recognized as revenue ratably over the contract terms beginning on the date the Company’s solutions are made available to the customer. The length of a customer service period varies from multi-year annually renewed to monthly over which such customer has the right to use the Company’s ICD coding software solution.

Advertising Costs

Advertising costs are reported in general and administrative expenses and include advertising, marketing and promotional programs and are charged as expenses in the period or year in which incurred. Advertising costs were $31,000 and $33,000, for the nine month period ended September 30, 2019 and 2018, respectively.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding for the period. Diluted net loss per share reflects the potential dilution of securities by adding other Common Stock equivalents, including stock options, shares issuable on exercise of warrants, convertible preferred stock and convertible notes in the weighted average number of shares of common stock outstanding for a period, if dilutive. Common stock equivalents that are anti-dilutive were excluded from the computation of diluted earnings per share which consisted of all outstanding common stock options and warrants.

Stock-Based Compensation

The Company accounts for the granting of share purchase options using the fair value method whereby all awards are recorded at fair value on the date of the grant. Share based awards granted with a performance condition are measured based on the probable outcome of that performance condition during the requisite service period. Such an award with a performance condition is accrued if it is probable that the performance condition will be achieved. Compensation costs for stock-based payments that do not include performance conditions are recognized on a straight-line basis over the requisite service period. Upon exercise of share purchase options, the consideration paid by the option holder, together with the amount previously recognized in additional capital surplus, is recorded as an increase to share capital.

The fair value of restricted stock units issued are determined by the Company based on the estimated fair value of the Company’s common stock. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option pricing model. The Company estimates the fair value of its common stock using the closing stock price of its common stock on the date of the agreement. The Company estimates the volatility of its common stock at the date of grant based on its historical stock prices. The Company determines the expected life based on the Simplified Method as allowed by SAB 107. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

Options granted during the nine months ended September 30, 2019 were vested using the following assumptions:

Expected Term (years)	2 years
Weighted average volatility		100	%
Weighted average risk free rate		2.76	%
Expected dividends	$	0

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee, in most leases, to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. The guidance requires adoption using a modified retrospective transition approach with either: 1) periods prior to the adoption date being recast, or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. The Company adopted this standard on January 1, 2019 using the cumulative-effect adjustment method and elected certain practical expedients allowed under the standard. As a result of the adoption, the Company increased assets and liabilities by approximately $112,000 and $125,000, respectively, and decreased retained earnings on January 1, 2019 by $13,000.

In July 2017, the Financial Accounting Standards Board issued ASU No. 2017-11, “Accounting for Certain Financial Instruments with Down Round Features” (“Topic 480”). This update changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. ASU 2017-11 is effective for interim and annual periods beginning after December 15, 2018. The Company has evaluated the impact of the pronouncement on the financial statements and has determined that it did not have a significant impact on the financial statements.

In June 2018, the Financial Accounting Standards Board issued ASU No. 2018-07, “Compensation-Stock Compensation (“Topic 718”): Improvements to Nonemployee Share-Based Payment Accounting.” This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees. ASU 2018-07 is effective for interim and annual periods beginning after December 15, 2018. The Company has implemented the guidance and determined the impact of the pronouncement on the financial statements did not have a significant impact on the financial statements.

The Company does not believe that any other issued, but not yet effective accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations and cash flows.

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2019

COMMITMENTS AND CONTINGENCIES

Schedule of components of lease investments

Year Ended	Lease Amount
September 30, 2020	$	69,000
September 30, 2021		6,000
	$	75,000

Schedule of undiscounted lease commitments

Undiscounted minimum lease commitments	$	75,000
Present value adjustment using incremental borrowing rate		(5,000	)
Lease liabilities	$	70,000

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NATURE OF OPERATIONS

9 Months Ended

Sep. 30, 2019

NATURE OF OPERATIONS

Note 1 - NATURE OF OPERATIONS

iCoreConnect, Inc., (the "Company") a Nevada Corporation, builds secure cloud-based communications systems, focused on healthcare, although the core technology can be adopted to other vertical markets that require a high degree of secure data communication, such as the legal, financial and education fields. iCoreConnect’s iCoreExchange (Health Information Exchange), allows providers and health care professionals to exchange patient specific healthcare information via the internet while maintaining compliance with all Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) regulations and the current Direct protocol. Our solutions allow providers and health care professionals to use the internet in ways previously unavailable to them due to HIPAA restrictions to quickly and cost effectively exchange and share patient medical information. iCoreConnect Inc., creates communication and practice management software that allows you to share information at the highest level of security and is a national provider of secure communications for high compliance industries. Our software allows organizations and individuals to easily exchange information utilizing 2048-bit encryption in full compliance of current federal laws. The Company currently designs, engineers and sells cloud-based software for the healthcare industry, with potential application in other industries with a need for secure information communication compliance. Due to current HIPAA regulations, providers and health care professionals have been prohibited from electronically exchanging unencrypted personal health information. Until recently, there was no cost-effective platform for transferring this information in a HIPAA compliant environment. We set out to solve this problem. The Company markets several products under the iCoreConnect umbrella which solve several industry problems.

We provide customizable secure cloud-based software. iCoreConnect currently markets six different software products: iCoreExchange, iCoreCodeGenius, iCoreSecure, iCoreMD, iCoreDental and iCoreExam.

On April 30, 2019 iCoreConnect Inc., acquired technology and other certain assets of ClariCare Inc., an Indiana corporation, in exchange for (i) $50,000 in cash, (ii) 2,301,007 shares of the Company’s common stock, subject to adjustment, and (iii) the assumption of a company credit card balance not to exceed $23,000, all upon the terms and conditions set forth in the Asset Purchase Agreement dated as of April 30, 2019 (the “ClariCare Asset Purchase Agreement”) filed in the Company’s Form 8-K with the SEC. The Company is required to issue additional shares on September 30, 2020 if the stock price is less than $1.49 per share as of that date. ClariCare has created cloud-based dental analytics and practice management software to provide dentists and providers to the dental market the modern tools to run their practices more efficiently and effectively and is a complement to our current dental market product offering.

The Company accounted for the ClariCare Asset Purchase Agreement as an asset acquisition under ASC 805, which provides guidance for asset acquisitions. Under the guidance, if substantially all of the acquisition is made up of one asset or similar assets, then the acquisition is an asset acquisition. The Company believes the assets acquired from ClariCare are similar and consider them all to be acquired technology (See Note 5). Further, the Company does not believe the acquired technology constitutes a business as defined under ASC 805.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 2018, which are included in the Company’s Annual Report filed on Form 10-K with the SEC on April 1, 2019. The accompanying condensed balance sheet as of December 31, 2018 has been derived from the audited financial statements at that date, but does not include all information and footnotes required by GAAP for complete financial statements.

The results of operations for the nine month period ended September 30, 2019 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year. Readers of this Quarterly Report are strongly encouraged to review the risk factors relating to the Company which are set forth in the Company’s Form 10-K filed with the SEC.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, shares par value	$ 0.001	$ 0.001
Preferred stock, shares Authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, shares par value	$ 0.001	$ 0.001
Common stock, shares authorized	600,000,000	600,000,000
Common stock, shares Issued	63,867,923	50,864,131
Common stock, shares Outstanding	63,867,923	50,864,131

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Stock option [Member]	9 Months Ended
	Sep. 30, 2019 $ / shares
Expected Term (years)	2 years
Weighted average volatility	100.00%
Weighted average risk free rate	2.76%
Expected dividends	$ 0.00

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SOFTWARE DEVELOPMENT COSTS (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Acquired technology	$ 988,000	$ 539,000
Software development costs, net of accumulated amortization	587,000	535,000
Software Development [Member]
Development costs	1,811,000	1,513,000
Acquired technology	1,277,000	630,000
Less accumulated amortization	(1,513,000)	(1,069,000)
Software development costs, net of accumulated amortization	$ 1,575,000	$ 1,074,000

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2019

COMMITMENTS AND CONTINGENCIES

Note 6 - COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

On November 15, 2017 the Company signed a three-year lease agreement for approximately 4,100 square feet of office space located in Winter Garden, Florida in which the Company has its headquarters. The lease provides for a one-year renewal term at the option of the Company. As of September 30, 2019, undiscounted future lease obligations for the office space are as follows:

Year Ended	Lease Amount
September 30, 2020	$	69,000
September 30, 2021		6,000
	$	75,000

On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), which requires a lessee, in most leases, to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. In arriving at the right of use lease asset as of January 1, 2019, we applied the weighted-average incremental borrowing rate of 11.9% over a weighted-average remaining lease term of 1.6 years. The Company adopted this standard using the cumulative-effect adjustment method and elected certain practical expedients allowed under the standard. As a result of the adoption, the Company increased assets and liabilities by approximately $112,000 and $125,000, respectively, and decreased retained earnings on January 1, 2019 by $13,000.

Lease costs for the nine months ended September 30, 2019 were $42,000 and cash paid for amounts included in the measurement of lease liabilities for the nine month ended September 30, 2019 were $50,000. As of September 30, 2019, the following represents the difference between the remaining undiscounted lease commitments under non-cancelable leases and the lease liabilities:

Undiscounted minimum lease commitments	$	75,000
Present value adjustment using incremental borrowing rate		(5,000	)
Lease liabilities	$	70,000

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COMMON STOCK AND PREFERRED STOCK (Tables)

9 Months Ended

Sep. 30, 2019

COMMON STOCK AND PREFERRED STOCK

Schedule of stock option

Options Outstanding						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
	Number			Exercise		Term in		Intrinsic
	of Options			Price		Years		Value
Outstanding - January 1, 2019		1,356,157		$	0.31		9.8	$	-
Granted		135,000		$	0.15		9.4
Exercised		-		$	-
Forfeited		(25,000	)	$	0.15
Balance outstanding - September 30, 2019		1,466,157		$	0.29		9.1	$	-
Exercisable - September 30, 2019		599,490		$	0.27		8.5	$	-

						Weighted
				Weighted		Average
	Number			Average grant date		Remaining Years
	of Options			Fair Value		to Vest
Nonvested - January 1, 2019		866,667		$	0.13		1.6
Granted		135,000		$	0.15
Vested		(135,000	)	$	0.15
Forfeited/expired		-
Nonvested - September 30, 2019		866,667		$	0.13		0.9

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED) - USD ($)	Total	Common stock Shares	Additional Paid In Capital	Accumulated Deficit
Balances, Shares at Jan. 01, 2018		34,318,198
Balances, Amonut at Jan. 01, 2018	$ (1,264,000)	$ 34,000	$ 64,856,000	$ (66,154,000)
Stock issued for cash, Shares		1,867,000
Stock issued for services, Shares		3,400,000
Stock compensation expense, Shares
Net loss	(2,300,000)			(2,300,000)
Stock issued for cash, Amonut	545,000	2,000	543,000
Stock issued for services, Amonut	1,700,000	3,000	1,697,000
Stock compensation expense, Amonut	31,000		31,000
Balances, Shares at Mar. 31, 2018		39,585,198
Balances, Amonut at Mar. 31, 2018	(1,288,000)	$ 39,000	67,127,000	(68,454,000)
Stock issued for cash, Shares		2,173,215
Stock issued for services, Shares		3,366,440
Stock compensation expense, Shares
Net loss	(1,578,000)			(1,578,000)
Stock issued for cash, Amonut	734,000	2,000	732,000
Stock issued for services, Amonut	874,000	3,000	871,000
Stock compensation expense, Amonut	32,000		32,000
Balances, Shares at Jun. 30, 2018		45,124,853
Balances, Amonut at Jun. 30, 2018	(1,226,000)	$ 44,000	68,762,000	(70,032,000)
Stock issued for cash, Shares		4,191,111
Stock compensation expense, Shares
Net loss	(616,000)			(616,000)
Stock issued for cash, Amonut	1,070,000	4,000	1,066,000
Stock compensation expense, Amonut	78,000		78,000
Balances, Shares at Sep. 30, 2018		49,315,964
Balances, Amonut at Sep. 30, 2018	(694,000)	$ 48,000	69,906,000	(70,648,000)
Balances, Shares at Jan. 01, 2019		50,864,131
Balances, Amonut at Jan. 01, 2019	(958,000)	$ 51,000	70,335,000	(71,344,000)
Stock compensation expense, Shares		212,500
Net loss	(761,000)			(761,000)
Cumulative adjustment for the adoption of a new accounting pronouncement (Note 6)	(13,000)			(13,000)
Stock issued for cash and conversion of notes payable, Shares		2,395,607
Stock compensation expense, Amonut	208,000		208,000
Stock issued for cash and conversion of notes payable, Amonut	675,000	$ 2,000	673,000
Balances, Shares at Mar. 31, 2019		53,472,238
Balances, Amonut at Mar. 31, 2019	(849,000)	$ 53,000	71,216,000	(72,118,000)
Stock issued for cash, Shares		1,600,152
Stock issued for services, Shares		66,666
Stock compensation expense, Shares		1,047,860
Net loss	(756,000)			(756,000)
Stock issued for acquisition of technology (Note 1), Shares		2,301,007
Stock issued for cash, Amonut	427,000	$ 2,000	425,000
Stock issued for services, Amonut	17,000		17,000
Stock compensation expense, Amonut	134,000	1,000	133,000
Stock issued for acquisition of technology (Note 1), Amonut	575,000	$ 2,000	573,000
Balances, Shares at Jun. 30, 2019		58,487,923
Balances, Amonut at Jun. 30, 2019	(452,000)	$ 58,000	72,364,000	(72,874,000)
Stock issued for cash, Shares		5,380,000
Stock compensation expense, Shares
Net loss	(744,000)			(744,000)
Stock issued for cash, Amonut	1,350,000	6,000	1,344,000
Stock compensation expense, Amonut	134,000		134,000
Balances, Shares at Sep. 30, 2019		63,867,923
Balances, Amonut at Sep. 30, 2019	$ 288,000	$ 64,000	$ 73,842,000	$ (73,618,000)

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Document And Entity Information
Entity Registrant Name	iCoreConnect Inc.
Entity Central Index Key	0001408057
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2019
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019
Entity Common Stock Shares Outstanding		63,967,923

XML

COMMITMENTS AND CONTINGENCIES (Details 1) - Lease [Member]	Sep. 30, 2019 USD ($)
Undiscounted minimum lease commitments	$ 75,000
Present value adjustment using incremental borrowing rate	(5,000)
Lease liabilities	$ 70,000

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NATURE OF OPERATIONS (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
	Apr. 30, 2019	Sep. 30, 2019
State of incorporation		Nevada
ClariCare Inc [Member]
Business acquisition consideration transferred, cash	$ 50,000
Business acquisition consideration transferred, shares issued	2,301,007	2,301,007
Business acquisition consideration transferred, credit card	$ 23,000
Description for assumption of credit card balance	the assumption of a company credit card balance not to exceed $23,000, all upon the terms and conditions set forth in the Asset Purchase Agreement dated as of April 30, 2019 (the "ClariCare Asset Purchase Agreement") filed in the Company Form 8-K with the SEC

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”). Significant accounting principles followed by the Company and the methods of applying those principles, which materially affect the determination of financial position, results of operations and cash flows are summarized below.

Cash and Cash Equivalents

The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at United States banks are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms. We maintain an allowance for doubtful accounts for estimated losses resulting from the potential inability of certain customers to make required future payments on amounts due us. Management determines the adequacy of this allowance by periodically evaluating the aging and past due nature of individual customer receivable balances and considering the customer’s current financial situation as well as the existing industry economic conditions and other relevant factors that would be useful in assessing the risk of collectability. If the future financial condition of our customers were to deteriorate, resulting in their inability to make specific required payments, additions to the allowance for doubtful accounts may be required. In addition, if the financial condition of our customers improves and collections of amounts outstanding commence or are reasonably assured, then we may reverse previously established allowances for doubtful accounts. The Company has estimated and recorded an allowance for doubtful accounts of $12,000 at both September 30, 2019 and December 31, 2018.

Property, Equipment and Depreciation

Property, equipment, and leasehold improvements are recorded at their historical cost. Depreciation and amortization have been determined using the straight-line method over the estimated useful lives of the assets which are computers and office equipment (3 years) and for office furniture and fixtures (7 years).

Software Development Costs and Acquired Software

The Company accounts for software development costs, including costs to develop software products or the software component of products to be sold to external users. In accordance with ASC 985-730, Computer Software Research and Development, research and planning phase costs are expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs are capitalized. We have determined that technological feasibility for our products to be marketed to external users was reached before the release of those products. As a result, the development costs and related acquisition costs after the establishment of technological feasibility were capitalized as incurred. Capitalized costs for software to be sold to external users and software acquired in a business combination are amortized based on current and projected future revenue for each product with an annual minimum equal to the straight-line amortization over three years.

Impairment of Long-Lived Assets

Long lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount that the carrying amount of the asset exceeds the fair value of the asset.

Goodwill

Goodwill acquired in a business combination is not amortized, but is tested for impairment annually or between annual tests when an impairment indicator exists. If an optional qualitative goodwill impairment assessment is not performed, we are required to determine the fair value of each reporting unit. If a reporting unit’s fair value is lower than its carrying value, we must determine the amount of implied goodwill that would be established if the reporting unit were hypothetically acquired on the impairment test date. If the carrying amount of a reporting unit’s goodwill exceeds the amount of implied goodwill, an impairment loss equal to the excess would be recorded. The recoverability of indefinite lived intangible assets is assessed by comparison of the carrying value of the asset to its estimated fair value. If we determine that the carrying value of the asset exceeds its estimated fair value, an impairment loss equal to the excess would be recorded.

Revenue Recognition

The Company has three primary sources of revenue:

· Electronic Health Records (EHR) licenses and rental services

· Encrypted Secure & HIPPA Compliant email services (“Encrypted Secure email”)

· ICD Coding Software

Revenue from EHR software licensing arrangements include private cloud hosting services and post contract support provided to clients that have purchased a perpetual or specific term license to the EHR software solution and have contracted with the Company to host the software. These arrangements provide the client with a contractual right to take possession of the software at any time during the private cloud hosting period and it is feasible for the client to either use the software on its own equipment or to contract with an unrelated third party to host the software. The Company recognizes revenue from the sale of its EHR software license at the time the customer has access to use the software, with deferral of revenues associated with the cloud hosting and post contract support performance objectives, allocated based on relative fair value.

The Company defers revenue from the sale of its EHR software products associated with cloud hosting and post contract support performance objectives over the term of the license agreement. Cloud hosting performance objective revenues are deferred based on forecasted cloud storage costs, encrypted secure email performance objective revenues are deferred based on the forecasted sales price of those services to other customers of the Company and customer support performance objective revenues are deferred based on forecasted customer support costs based on Company experience.

Encrypted Secure email services are provided on a fee basis as software as a service (“SaaS”) arrangements and are recognized as revenue ratably over the annual contract terms beginning on the date our solutions are made available to the customer.

ICD coding services are provided on a fee basis as SaaS arrangements and are recognized as revenue ratably over the contract terms beginning on the date the Company’s solutions are made available to the customer. The length of a customer service period varies from multi-year annually renewed to monthly over which such customer has the right to use the Company’s ICD coding software solution.

Advertising Costs

Advertising costs are reported in general and administrative expenses and include advertising, marketing and promotional programs and are charged as expenses in the period or year in which incurred. Advertising costs were $31,000 and $33,000, for the nine month period ended September 30, 2019 and 2018, respectively.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding for the period. Diluted net loss per share reflects the potential dilution of securities by adding other Common Stock equivalents, including stock options, shares issuable on exercise of warrants, convertible preferred stock and convertible notes in the weighted average number of shares of common stock outstanding for a period, if dilutive. Common stock equivalents that are anti-dilutive were excluded from the computation of diluted earnings per share which consisted of all outstanding common stock options and warrants.

Stock-Based Compensation

The Company accounts for the granting of share purchase options using the fair value method whereby all awards are recorded at fair value on the date of the grant. Share based awards granted with a performance condition are measured based on the probable outcome of that performance condition during the requisite service period. Such an award with a performance condition is accrued if it is probable that the performance condition will be achieved. Compensation costs for stock-based payments that do not include performance conditions are recognized on a straight-line basis over the requisite service period. Upon exercise of share purchase options, the consideration paid by the option holder, together with the amount previously recognized in additional capital surplus, is recorded as an increase to share capital.

The fair value of restricted stock units issued are determined by the Company based on the estimated fair value of the Company’s common stock. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option pricing model. The Company estimates the fair value of its common stock using the closing stock price of its common stock on the date of the agreement. The Company estimates the volatility of its common stock at the date of grant based on its historical stock prices. The Company determines the expected life based on the Simplified Method as allowed by SAB 107. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

Options granted during the nine months ended September 30, 2019 were vested using the following assumptions:

Expected Term (years)	2 years
Weighted average volatility		100	%
Weighted average risk free rate		2.76	%
Expected dividends	$	0

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee, in most leases, to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. The guidance requires adoption using a modified retrospective transition approach with either: 1) periods prior to the adoption date being recast, or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. The Company adopted this standard on January 1, 2019 using the cumulative-effect adjustment method and elected certain practical expedients allowed under the standard. As a result of the adoption, the Company increased assets and liabilities by approximately $112,000 and $125,000, respectively, and decreased retained earnings on January 1, 2019 by $13,000.

In July 2017, the Financial Accounting Standards Board issued ASU No. 2017-11, “Accounting for Certain Financial Instruments with Down Round Features” (“Topic 480”). This update changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. ASU 2017-11 is effective for interim and annual periods beginning after December 15, 2018. The Company has evaluated the impact of the pronouncement on the financial statements and has determined that it did not have a significant impact on the financial statements.

In June 2018, the Financial Accounting Standards Board issued ASU No. 2018-07, “Compensation-Stock Compensation (“Topic 718”): Improvements to Nonemployee Share-Based Payment Accounting.” This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees. ASU 2018-07 is effective for interim and annual periods beginning after December 15, 2018. The Company has implemented the guidance and determined the impact of the pronouncement on the financial statements did not have a significant impact on the financial statements.

The Company does not believe that any other issued, but not yet effective accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations and cash flows.

XML

COMMON STOCK AND PREFERRED STOCK (Details)	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Options Outstanding
Number of Options/Warrants Outstanding, Beginning	1,356,157
Number of Options Outstanding, Granted	135,000
Number of Options Outstanding, Exercised
Number of Options Outstanding, Forfeited/expired	(25,000)
Number of Options/Warrants Outstanding, Ending	1,466,157
Number of Options Outstanding, Exercisable Ending	599,490
Weighted Average Exercise Price, Beginning | $ / shares	$ 0.31
Weighted Average Exercise Price, Granted | $ / shares	0.15
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Forfeited/expired | $ / shares	0.15
Weighted Average Exercise Price, Ending | $ / shares	0.29
Weighted Average Exercise Price, Exercisable Ending | $ / shares	$ 0.27
Weighted Average Remaining Contractual Term in Years, Beginning	9 years 9 months 18 days
Weighted Average Remaining Contractual Term in Years, Granted	9 years 4 months 24 days
Weighted Average Remaining Contractual Term in Years, Ending	9 years 1 month 6 days
Weighted Average Remaining Contractual Term in Years, Exercisable Ending	8 years 6 months
Aggregate Intrinsic Value, Beginning | $
Aggregate Intrinsic Value, Ending | $
Aggregate Intrinsic Value, Exercisable Ending | $
Nonvested Options
Number of Options Nonvested, Beginning	866,667
Number of Options Nonvested, Granted	135,000
Number of Options Nonvested, Vested	(135,000)
Number of Options Nonvested, Forfeited/expired
Number of Options Nonvested, Ending	866,667
Weighted Average grant date Fair Value Nonvested, Beginning | $ / shares	$ 0.13
Weighted Average grant date Fair Value Granted | $ / shares	0.15
Weighted Average grant date Fair Value Vested | $ / shares	0.15
Weighted Average grant date Fair Value Nonvested, Ending | $ / shares	$ 0.13
Weighted Average Remaining Years to vest Nonvested, Beginning	1 year 7 months 6 days
Weighted Average Remaining Years to vest Nonvested, Ending	10 months 25 days

XML

GOING CONCERN (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended			6 Months Ended	9 Months Ended
	Aug. 01, 2019	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2018	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Net income (loss)		$ (744,000)	$ (616,000)	$ (1,578,000)	$ (3,878,000)	$ (2,261,000)	$ (4,494,000)
Operating income loss		(789,000)	$ (565,000)			(2,211,000)	$ (2,583,000)
Accumulated deficit		(73,618,000)				(73,618,000)		$ (71,344,000)
Working capital deficit		(1,594,000)				(1,594,000)
Stockholders equity		288,000		$ (1,226,000)	$ (1,226,000)	288,000		(958,000)	$ (1,288,000)	$ (1,264,000)
Line of credit								498,000
Convertible promissory note [Member]
Conversion of stock description	One hundred eighty (180) days following the date of funding and thereafter, the Note shall be convertible into common stock of the Company ("Common Stock"). The conversion price shall be subject to a discount of 39%. The conversion price shall be determined on the basis of the average of the three (3) lowest closing bid prices for the Common Stock during the prior fifteen (15) trading day period. There is an ascending prepayment penalty percentage applied should the Company prepay the Note during the first one hundred eighty (180) days after which the Company shall have no right of prepayment. The Note Holder will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at time of conversion at any one time.
Convertible promissory note	$ 78,000
Due period	12 months
closing fees received	$ 75,000
Interest rate	10.00%
Revolving Credit Facility [Member]
Line of credit								$ 498,000
Revolving line of credit						$ 500,000

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GOING CONCERN

9 Months Ended

Sep. 30, 2019

GOING CONCERN

Note 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

For the nine month period ended September 30, 2019 the Company generated an operating loss of $2,211,000. In addition, the Company has an accumulated deficit, total stockholders’ equity and net working capital deficit of $73,618,000, $288,000 and $1,594,000 respectively at September 30, 2019. The Company’s activities were primarily financed through private placements of equity securities. The Company intends to raise additional capital through the issuance of debt and/or equity securities to fund its operations. The Company is reliant on future fundraising to finance operations in the near future. The financing may not be available on terms satisfactory to the Company, if at all. In light of these matters, there is substantial doubt that the Company will be able to continue as a going concern.

The Company had a revolving line of credit agreement in the amount of $500,000 which had an outstanding balance of $498,000 as of June 30, 2019. All outstanding principal and interest under the line of credit was due and payable on July 15, 2019. In August 2019 the counterparty to the line of credit agreement sold its interest in the line to a limited liability company (LLC) of which at least one shareholder of the Company is a member. In September 2019 the amount owing to the LLC was paid in full and the Company was released of all of its obligations under the line of credit.

In August 2019 the Company signed a $78,000 convertible promissory note due twelve (12) months after issuance (the "Note") and received $75,000 net of closing fees. Interest at 10% per annum shall not be due until maturity. One hundred eighty (180) days following the date of funding and thereafter, the Note shall be convertible into common stock of the Company ("Common Stock"). The conversion price shall be subject to a discount of 39%. The conversion price shall be determined on the basis of the average of the three (3) lowest closing bid prices for the Common Stock during the prior fifteen (15) trading day period. There is an ascending prepayment penalty percentage applied should the Company prepay the Note during the first one hundred eighty (180) days after which the Company shall have no right of prepayment. The Note Holder will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at time of conversion at any one time.

Currently, management intends to develop a vastly improved healthcare communications system and intends to develop alliances with strategic partners to generate revenues that will sustain the Company. While management believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. Management’s ability to continue as a going concern is ultimately dependent upon its ability to continually increase the Company’s customer base and realize increased revenues from signed contracts. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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COMMON STOCK AND PREFERRED STOCK (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended	12 Months Ended
	Apr. 30, 2019	Sep. 30, 2019	Dec. 31, 2018	Feb. 21, 2019
Number of Options Outstanding, Forfeited/expired		25,000
Notes payable [Member]
Debt conversion converted instrument shares issued		9,375,759
Debt conversion amount converted		$ 20,000
Proceeds from conversion of debt		$ 2,432,000
ClariCare Inc [Member]
Business acquisition consideration transferred, shares issued	2,301,007	2,301,007
Settlement agreement [Member] | CFO [Member]
Shares issued upon extinguishment of debt		66,666
Employees and Directors [Member]
Restricted common stock issued for services		675,000
Restricted common stock shares vested		212,500	1,047,860
Board of Directors [Member] | Options
Shares reserved for future issuance				135,000
Exercise price				$ 0.15

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Revenue	$ 225,000	$ 271,000	$ 810,000	$ 893,000
Cost of sales	83,000	130,000	247,000	359,000
Gross profit	142,000	141,000	563,000	534,000
Expenses
Selling, general and administrative	741,000	606,000	2,310,000	2,817,000
Depreciation and amortization	190,000	100,000	464,000	300,000
Total operating expenses	931,000	706,000	2,774,000	3,117,000
Loss from operations	(789,000)	(565,000)	(2,211,000)	(2,583,000)
Other
Interest expense	(109,000)	(59,000)	(204,000)	(169,000)
Other (expense) income		8,000		(1,742,000)
Gain on cacellation of liabilities	154,000		154,000
Total other	45,000	(51,000)	(50,000)	(1,911,000)
Net loss	$ (744,000)	$ (616,000)	$ (2,261,000)	$ (4,494,000)
Net loss per share available to common stockholders, basic and diluted	$ (0.01)	$ (0.01)	$ (0.04)	$ (0.11)
Weighted average number of shares, basic and diluted	60,737,967	47,379,032	56,536,170	42,708,594

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2019	Nov. 15, 2017
Lease [Member]
Operating lease, term		3 years
Operating lease, renewal term		1 year
Operating lease liabilities, weighted-average incremental borrowing rate	11.90%
Operating lease liabilities, weighted-average remaining lease term	1 year 7 months 6 days
Operating lease liabilities, lease costs	$ 42,000
Cash paid for amounts included in the measurement of lease liabilities	50,000
January 1, 2019 [Member]
Increae (decrease) in assets due to adoption	112,000
Increae (decrease) in liabilities due to adoption	125,000
Increae (decrease) in retained earnings due to adoption	$ (13,000)

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CONCENTRATION OF CREDIT RISK

9 Months Ended

Sep. 30, 2019

GOING CONCERN

Note 7 - CONCENTRATION OF CREDIT RISK

The Company has historically provided financial terms to customers in accordance with what management views as industry norms. Financial terms range from immediate payment for access to the Company’s software products to several months for Meaningful Use consulting services. Management periodically and regularly reviews customer account activity in order to assess the adequacy of allowances for doubtful accounts, considering such factors as economic conditions and each customer’s payment history and creditworthiness. If the financial conditions of our customers were to deteriorate, or if they were otherwise unable to make payments in accordance with management’s expectations, we might have to increase our allowance for doubtful accounts, modify their financial terms and/or pursue alternative collection methods.

Revenue concentrations for the nine months ended September 30, 2019 and 2018 and the accounts receivable concentrations as of September 30, 2019 and December 31, 2018, expressed as a percentage of the Company’s revenue and accounts receivable, respectively, are as follows:

	Net Sales
	For The Nine Months Ended						Accounts Receivable at
	September 30,			September 30,			September 30,			December 31,
	2019			2018			2019			2018
Customer A		42	%		30	%		33	%		15	%
Customer B		0	%		11	%		0	%		0	%
Customer C		1	%		10	%		2	%		42	%
Customer D		4	%		0	%		15	%		1	%

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SOFTWARE DEVELOPMENT COSTS (Tables)

9 Months Ended

Sep. 30, 2019

SOFTWARE DEVELOPMENT COSTS (Tables)

Summary of the capitalization and amortization of the software development costs

	September 30,			December 31,
	2019			2018
Development costs	$	1,811,000		$	1,513,000
Acquired technology		1,277,000			630,000
Less accumulated amortization		(1,513,000	)		(1,069,000	)
	$	1,575,000		$	1,074,000

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CONCENTRATION OF CREDIT RISK (Details)	9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Sales Revenue, Net [Member] | Customer A member [Member]
Concentration Risk, Percentage	42.00%	30.00%
Sales Revenue, Net [Member] | Customer B member [Member]
Concentration Risk, Percentage	0.00%	11.00%
Sales Revenue, Net [Member] | Customer C member [Member]
Concentration Risk, Percentage	1.00%	10.00%
Sales Revenue, Net [Member] | Customer D member [Member]
Concentration Risk, Percentage	4.00%	0.00%
Accounts Receivable [Member] | Customer A member [Member]
Concentration Risk, Percentage	33.00%		15.00%
Accounts Receivable [Member] | Customer B member [Member]
Concentration Risk, Percentage	0.00%		0.00%
Accounts Receivable [Member] | Customer C member [Member]
Concentration Risk, Percentage	2.00%		42.00%
Accounts Receivable [Member] | Customer D member [Member]
Concentration Risk, Percentage	15.00%		1.00%