What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2020-11-13 · 151 added, 143 removed, 199 unchanged (60% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30,

Current assets:

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses

Total current assets

Accounts receivable, net of allowance for doubtful accounts of $588,143 and $589,243 at September 30, 2020 and December 31, 2019, respectively

Accounts receivable, net of allowance for doubtful accounts

of $559,007 and $585,257 at March 31, 2021 and December 31,2020, respectively

Property and equipment, net

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS ’ DEFICIT

Current liabilities:

Note payable to a bank

Note payable to shareholder

Current portion of Paycheck Protection Program loan

Accounts payable and accrued liabilities

Total current liabilities

Paycheck Protection Program loan, net of current portion

Total liabilities

Commitments and contingencies

Stockholders’ (deficit) equity:

Stockholders’ deficit:

Preferred stock;

$0.001 par value, 10,000,000 shares authorized,

no shares issued and outstanding

Common stock:

$0.001 par value, 50,000,000 shares authorized, 20,240,882 shares issued and outstanding at both September 30, 2020 and December 31, 2019

$0.001 par value, 250,000,000 shares authorized,

20,240,882 shares issued and outstanding at March 31, 2021 and December 31, 2020

Additional paid-in capital

Accumulated deficit

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS

ENDED SEPTEMBER 30,

FOR THE NINE MONTHS

ENDED SEPTEMBER 30,

THREE MONTHS ENDED

Net service revenues

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Operating, general and administrative expenses

Impairment of goodwill

Loss from operations

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Basic/ diluted

Weighted average shares outstanding:

Weighted average shares used in loss per common share:

Basic/ diluted

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS

ENDED SEPTEMBER 30,

THREE MONTHS ENDED MARCH 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash

provided by operating activities:

Provision for bad debts, net of recoveries

Factoring expense

Provision for inventory obsolescence

Adjustments to reconcile net loss to net cash provided

by operating activities:

Depreciation expense

Impairment of goodwill

Changes in operating assets and liabilities:

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Accounts payable and accrued liabilities

Due to related party

Net cash provided by operating activities

Cash flows from financing activities:

Proceeds of Paycheck Protection Program loan

Payments of note payable to a bank

Payments of note payable to shareholder

Repayments of term loan

Repayments of note payable to shareholder

Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Interest paid

Non-cash investing and financing activities:

Exchange of note payable to a bank for note payable to shareholder

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

SPINE INJURY SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

For the nine months ended September 30 , 2020 and 2019

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (DEFICIT)

For the Three Months Ended March 31, 2021 and 2020

Stockholders ’

Equity (Deficit)

Balances, December 31, 2020

Balances, March 31, 2021 (Unaudited)

Balances, June 30, 2020 (Unaudited)

Balances, September 30, 2020 (Unaudited)

Balances, December 31, 2019

Balances, March 31, 2020 (Unaudited)

Balances, June 30, 2019 (Unaudited)

Balances, September 30, 2019 (Unaudited)

No dividends were paid for the nine months ended September 30, 2020 and 2019.

No dividends were paid for the three months ended March 31, 2021 and 2020.

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

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We assist the centers that provide the spine diagnostic injections and treatment and pay the doctors a fee for the medical procedures they performed.

After a patient is billed for the procedures performed by the affiliated doctor, we take control of the patient’s unpaid bill and oversee collection.

After a patient is billed for the procedures performed by the affiliated doctor, we take control of the patients’ unpaid bill and oversee collection.

In most instances, the patient is a plaintiff in an accident case, where the patient is represented by an attorney.

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However, we continue to actively pursue the collection of previously funded procedures.

Without additional funding, there is no guarantee that we can continue as a going concern.

We own a patented device and process by which a video recording system is attached to a fluoroscopic x-ray machine, the “four camera technology,” which we believe can attract additional physicians and patients as well as provide us with additional revenue streams with our new programs designed to assist in treatment documentation.

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Since our inception in 1998, until commencement of our spine injury diagnostic operations in August, 2009, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit from operations of $15,004,698 as of December 31, 2009.

Since that time, our accumulated deficit has increased $5,083,329 to $20,088,027 as of September 30, 2020.

We currently plan to pursue a merger with another company.

Our continued existence is dependent upon our ability to successfully execute our business plan and our ability to obtain additional capital from borrowing and selling securities, as needed, to fund our operations.

There is no assurance that a merger will be initiated or completed or that additional capital can be obtained or that it can be obtained on terms that are favorable to us and our existing stockholders.

Additionally, during the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, which also hampered our ability to pay back existing debt to Wells Fargo and a current director and shareholder (see Note 6—Term Loan).

We were not involved in any procedures in 2019 or 2020, and will not do so unless we can access additional capital.

The previous service revenue we have earned has resulted in longer settlement times, which has created a slowdown in cash collections.

Additionally, despite our efforts to establish a market for the Quad Video Halo, such market has not met our expectations, and we have cut back its development and operations.

If we are unable to access additional capital in the near future, these recent developments could have a material negative impact on our financial performance and could have a material adverse effect on our results of operations and financial condition.

As an alternative, we are also investigating possible strategic business transactions with third party companies.

Since that time, our accumulated deficit has increased $5,200,027 to $20,204,725 as of March 31, 2021.

Presently, we are trying to limit all operating expenses as much as possible.

If in the future we decide to increase our service development, marketing efforts and/or brand building activities, we will need to increase our operating expenses and our general and administrative functions to support such growth in operations.

No such growth in operations is presently planned.

We are also actively seeking a private company with which to enter into a strategic business transaction, including without limitation a merger;

however, we cannot predict the ultimate outcome of our efforts.

Our continued existence is dependent upon our ability to successfully merge with a financially viable company, or our ability to increase revenue from services and obtain additional capital from borrowing and selling securities, as needed, to fund our operations.

There is no assurance that additional capital can be obtained or that it can be obtained on terms that are favorable to us and our existing stockholders.

Any expectation of future profitability is dependent upon our ability to expand and develop our business, of which there can be no assurances.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, which also hampered our ability to pay back existing debt to Wells Fargo Bank, N.A.

and a current director and shareholder (see Note 5—Note Payable).

We were not involved in any procedures in 2021 and 2020 and will not do so unless we can access additional capital.

The previous service revenue we have earned has resulted in longer settlement times, which has created a slowdown in cash collections.

Additionally, our efforts to establish a market for the Quad Video Halo has not met our expectations and we have cut back its development and operations.

We are actively pursuing a merger with a private company where they become the controlling company.

We find this the best course of action for our stockholders.

We find this the best course of action for our shareholders.

Further, the COVID-19 pandemic has made it difficult for us to collect our accounts receivable, as attorney and medical offices are closed resulting in delayed settlements and medical procedures being canceled, which affects our lease revenue.

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These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2020 Annual Report as filed on Form 10-K.

In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly our financial position with respect to the interim condensed consolidated financial statements and the results of its operations for the interim period ended September 30, 2020, have been included.

The results of operations for interim periods are not necessarily indicative of the results for a full year.

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Additionally, the Company’s QVH rental revenues are accounted for under ASC 842, Leases.

Service and Product Sale Revenue Recognition

Our net revenues include service revenues.

Service revenues arise from the delivery of medical diagnostic services provided to the patient by medical professionals at the spine injury diagnostic centers, only after the patient completes and signs required medical and financial paperwork.

Service revenues are recorded as net patient service revenues based on variable consideration elements further described below and in Note 4.

Product sales arise from the sale and transfer of control of the Company’s QVH units to a consumer.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For service revenues, the patients are billed by the healthcare provider based on Current Procedural Terminology (“CPT”) codes for the medical procedure performed.

CPT codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services.

Service and Product Sale Revenue Recognition

Historically, our net revenues included service revenues that arose from the delivery of medical diagnostic services provided to patients by medical professionals at spine injury diagnostic centers, only after the patients completed and signed required medical and financial paperwork.

Service revenues were recorded as net patient service revenues based on variable consideration elements further described below and in Note 4.

While we did collect 100% of the accounts on certain patients, our historical collection rate was used to estimate the variable consideration expected and is reflected in the carrying balance of accounts receivable and service revenue recorded.

A discount rate of 48%, based on payment history, was used to reduce revenue to 52% of Current Procedural Terminology code rates (“CPT” codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services.

CPT codes are developed, maintained and copyrighted by the American Medical Association).

Patients are billed at the normal billing amount, based on national averages, for a particular CPT code procedure.

Additionally, service revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” which is defined as gross amounts billed using CPT codes less account discounts that are expected to result when individual cases are ultimately settled, which is the variable consideration associated with this revenue stream.

While we do collect 100% of the accounts on some patients, our historical collection rate is used to estimate the variable consideration expected and is reflected in the carrying balance of the accounts receivable and service revenue to be recorded.

A discount rate of 48%, based on payment history, was used to reduce revenue to 52% of CPT code billings.

We recorded no revenue related to service revenue funded for the three and nine months ended September 30, 2020 and 2019.

Our credit policy has been established based upon extensive experience by management in the industry and has been determined to ensure that collectability is reasonably assured.

Payment for services are primarily made to us by a third party and the credit policy includes terms of net 240 days for collections;

however, collections occur upon settlement or judgment of cases (see Note 4).

As of September 30, 2020 and December 31, 2019, there were no material contract assets, contract liabilities, or deferred contract costs recorded in the condensed consolidated financial statements.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.

Patients were billed at the normal billing amount, based on national averages, for a particular CPT code procedure during the year ended December 31, 2018 and prior years.

We recorded no revenue related to medical diagnostic services provided during the three months ended March 31, 2021 and 2020, and revenue presented represents adjustments of variable consideration received for procedures performed in years prior to 2019.

Service revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” which is defined as gross amounts billed using CPT codes (“gross revenue”) less account discounts that are expected to result when individual cases are ultimately settled, which is the variable consideration associated with this revenue stream.

Lease Revenue

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These revenues are recognized on a straight-line basis over the term of the lease.

As of the three and nine months ended September 30, 2020 the Company’s leases consisted solely of operating leases.

As of March 31, 2021, the Company’s leases consisted solely of operating leases.

As stated previously, we are uncertain on the effects of the COVID-19 pandemic on our lease revenue going forward.

The Company’s QVH unit rentals are governed by agreements that detail the lease terms and conditions.

The determination of whether these contracts with customers contain a lease generally does not require significant judgement.

The Company accounts for these rentals as operating leases.

These leases do not include material amounts of variable payments and the Company has made the accounting policy election to exclude all taxes assessed by a governmental authority.

The Company provides an option for the lessee to purchase the rented equipment upon the termination of the lease for the as then fair market value;

however, the Company has not generated material revenue from sales of equipment under such options.

Initial lease terms vary in length based upon customer needs and generally range from 12 to 39.

Customers have the option to keep equipment on rent beyond the initial lease term on a one-year successive term that auto renews unless canceled by the customer.

All of the Company’s rental products have long useful lives relative to the typical rental term with the original investment typically recovered in approximately five years.

The rental products are typically rented for a majority of the time owned and a significant portion of the original investment is recovered when sold from inventory.

The Company’s lease agreements do not contain residual value guarantees or restrictive covenants.

As of September 30, 2020, operating lease payments to be received are as follows:

Remainder of 2020

Included in property and equipment, net, as of September 30, 2020 and December 31, 2019 is equipment available for rent in the amount of $14,564 and $25,379, respectfully.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

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Long-Lived Assets

We periodically review and evaluate long-lived assets, including intangible assets, when events and circumstances indicate that the carrying amount of these assets may not be recoverable.

We periodically review and evaluate long-lived assets such as intangible assets, when events and circumstances indicate that the carrying amount of these assets may not be recoverable.

In performing our review for recoverability, we estimate the future cash flows expected to result from the use of such assets and its eventual disposition.

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Measurement of the impairment loss is based on the excess of the carrying amount of such assets over the fair value calculated using discounted expected future cash flows.

At September 30, 2020, no impairment of long-lived assets was determined to have occurred.

At March 31, 2021, no impairment of long-lived assets was determined to have occurred.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Concentrations of Credit Risk

Assets that expose us to credit risk consist primarily of accounts receivable.

Assets that expose us to credit risk consist primarily of cash and accounts receivable.

Our accounts receivable are from a diversified customer base and, therefore, we believe the concentration of credit risk is minimal.

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We record a discount based on the nature of our business, collection trends, and an assessment of our ability to fully realize amounts billed for services.

Additionally, we have established an allowance for doubtful accounts in the amount of $588,143 and $589,243, at September 30, 2020 and December 31, 2019, respectively.

Additionally, we have established an allowance for doubtful accounts in the amount of $559,007 and $585,257, at March 31, 2021 and December 31, 2020, respectively.

Stock Based Compensation

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We use the Black-Scholes Option Pricing Model to determine the fair-value of stock-based awards.

During the three and nine months ended September 30, 2020 and 2019, we did not issue any of our common stock in exchange for services.

During the three months ended March 31, 2021 and 2020, we did not recognize compensation expense for issuances of our common stock in exchange for services.

We account for income taxes in accordance with the liability method.

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De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We are subject to ongoing tax exposures, examinations and assessments in various jurisdictions.

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Estimated interest and penalties, if any, are recognized as income tax expense and tax credits as a reduction in income tax expense.

For the three and nine months ended September 30, 2020 and 2019, we recognized no estimated interest or penalties as income tax expense.

For the three months ended March 31, 2021 and 2020, we recognized no estimated interest or penalties as income tax expense.

Legal Costs and Contingencies

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If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net Loss per Share

Net loss per common share is presented in accordance with ASC Topic 260, “Earnings per Share,” for all periods presented.

During the three and nine months ended September 30, 2020 and 2019, common stock equivalents from outstanding stock options, warrants and convertible debt have been excluded from the calculation of the diluted earnings (loss) per share in the consolidated statements of operations, because all such securities were anti-dilutive.

During the three months ended March 31, 2021 and 2020, common stock equivalents from outstanding stock options, warrants and convertible debt have been excluded from the calculation of the diluted earnings (loss) per share in the consolidated statements of operations, because all such securities were anti-dilutive.

The loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding during the periods.

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2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

2016-13 was initially effective for annual periods beginning after December 15, 2020, with early application permitted in annual periods beginning after December 15, 2018.

In November 2019, the FASB issued ASU 2019-10, which deferred the effective date to annual periods beginning after December 15, 2022.

2016-13 is effective for annual periods beginning after December 15, 2020, with early application permitted in annual periods beginning after December 15, 2018.

The amendments of ASU No.

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Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which is optional guidance related to reference rate reform that provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued.

This guidance is applicable for our Term Loans and Revolving Credit Facility, which use LIBOR as a reference rate, and is effective immediately, but is only available through December 31, 2022 (see Note 6 for further details on our Term Loan).

The Company is currently evaluating the potential impact of this standard on our condensed and consolidated financial statements.

This guidance is effective immediately but is only available through December 31, 2022.

The Company does not expect this standard to have a material impact on its condensed consolidated financial statements.

ACCOUNTS RECEIVABLE

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Patients are billed at the normal billing amount, based on national averages, for a particular CPT code procedure.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” which is defined as gross amounts billed using CPT codes less account discounts that are expected to result when individual cases are ultimately settled.

While we do collect 100% of the accounts on some patients, our historical collection rate is used to calculate the carrying balance of the accounts receivable and the estimated revenue to be recorded.

A discount rate of 48%, based on payment history, was used to reduce revenue to 52% of CPT code billings (“gross revenue”) during the nine months ended September 30, 2020.

A discount rate of 48%, based on payment history, was used to reduce revenue to 52% of CPT code billings (“gross revenue”) during the three months ended March 31, 2021.

The patients who receive medical services at the diagnostic centers are typically patients involved in auto accidents or work injuries.

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Historical experience, through 2018, demonstrated that the collection period for individual cases may extend for two years or more.

Accordingly, we have classified receivables as current or long term based on our experience, which indicates as of September 30, 2020 and December 31, 2019 that 30% of cases will be collected within one year of a medical procedure.

Our credit policy has been established based upon extensive experience by management in the industry and has been determined to ensure that collectability is reasonably assured.

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however, collections occur upon settlement or judgment of cases.

As of September 30, 2020 and December 31, 2019, we determined an allowance for uncollectable accounts of $588,143 and $589,243, respectively was needed for those customer accounts whose collections appear doubtful.

During the nine months ended September 30, 2020 and 2019 we recorded bad debt expense, net of recoveries of $12,323 and $360,000, respectively.

STOCKHOLDERS’ EQUITY

We did not issue any shares of common stock for the three and nine months ended September 30, 2020 and 2019.

TERM LOAN & NOTES PAYABLE

On September 3, 2014, we entered into a $2,000,000 revolving line of credit agreement with Wells Fargo Bank, N.A.

Outstanding principal on the line of credit bore interest at the 30 day London Interbank Offered Rate (“LIBOR”) plus 2%, resulting in an effective rate of 2.16% at September 30, 2020.

In September 2017, the line of credit agreement was amended, whereby the outstanding principle was due and payable in full on August 31, 2018 and the maximum amount we could borrow under the line of credit was $1,750,000.

On September 7, 2018 we entered into an Amended and Restated Revolving Line of Credit Note to extend our revolving line of credit facility, whereby the outstanding principal was due and payable in full on August 31, 2019.

On September 30, 2019 the credit line was amended into a one-year term loan precluding any additional draws on the note, but all other terms of the loan remained the same.

The term loan remained guaranteed by Peter L.

Dalrymple, a member of our Board of Directors, and was secured by a first lien interest in certain of his assets.

On August 31, 2020, Mr.

Dalrymple paid off in full the $610,000 principal balance of our term loan with Wells Fargo Bank, which was due and payable on that same date.

The term loan (which was converted from a line of credit facility) had been guaranteed by Mr.

Dalrymple and secured by a first lien interest in certain of his assets.

During the three months ended September 30, 2020 and 2019 the Company recorded $2,281 and $14,999 respectively in interest expense related to the Wells Fargo term loan, and during the nine months ended September 30, 2020 and 2019 the Company recorded $15,090 and $50,180 respectively in interest expense related to this term loan.

Notes payable

Upon Peter L.

Dalrymple paying off the principal balance of the Wells Fargo term loan on our behalf, on August 31, 2020, we issued Mr.

Dalrymple a $610,000 one-year secured promissory note, which note bears interest at a rate of 6% per annum, with monthly payments of interest only due until maturity, when all unpaid interest and principal is due.

This note is secured by collateral, which includes all our accounts receivable and a pledge of the stock of Quad Video Halo, Inc., our wholly owned subsidiary.

As of March 31, 2021 and December 31, 2020, we determined an allowance for uncollectable accounts of $559,007 and $585,257, respectively, was needed for those customer accounts whose collections appear doubtful.

SPINE INJURY SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three and nine months ended September 30, 2020 the Company recorded interest expense of $3,023 on the Peter Dalrymple note.

The Company did not record any interest expense for the three and nine months ended September 30, 2019 on this note, as the note was initiated August 31, 2020.

Paycheck Protection Program – SBA Loan

On April 22, 2020 we received an SBA loan in the amount of $64,097 under the federal Paycheck Protection Program which helps businesses keep their workforce employed during the Coronavirus crisis.

The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act signed into law in March of 2020.

The Paycheck Protection Program is a loan designed to provide direct incentive for small businesses to keep their workers on the payroll, which will be forgiven if all employees are kept on the payroll for eight weeks and the money is used for the sole purpose of payroll, rent, mortgage interest, or utilities, subject to the provisions in the program.

The loan carries an interest rate of 1% and is due in two years on April 22, 2022.

There is no collateral and no personal guarantees.

The first payment is not due until November 2020, seven months from issuance.

For the reasons discussed throughout this report, we believe current economic uncertainty relating to the Coronavirus crisis makes the loan necessary to support our ongoing operations.

While we anticipate that the entire balance of the loan will be forgiven based on our disbursements of payroll and rent, no assurance can be provided at this time.

During the three and nine months ended September 30, 2020 the Company recorded interest expense of $320 on the Paycheck Protection Program loan.

The Company did not record any interest expense for the three and nine months ended September 30, 2019 on this loan, as the loan was initiated April 22, 2020.

We have not made a provision for income taxes for the three and nine months ended September 30, 2020 or 2019, which reflects our valuation allowance established against our benefits from net operating loss carryforwards.

In addition to the Paycheck Protection Program, the CARES Act includes, among other things, provisions relating to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improved property.

We are continuing to evaluate the other impacts that the CARES Act and other stimulus measures may have on our financial condition, results of operations, or liquidity.

On August 31, 2020, Peter L.

Dalrymple, a member of our board of directors, paid-off in full the outstanding balance of a term loan we had with Wells Fargo Bank, N.A.

As consideration for Mr.

Dalrymple paying off the term loan on our behalf, we issued Mr.

Dalrymple a $610,000 one-year secured promissory note.

The secured promissory note bears interest of 6% per year with monthly payments of interest only due until maturity, when all unpaid interest and principal is due.

This note is collateralized by all our accounts receivable and a pledge of the stock of our wholly owned subsidiary, Quad Video Halo, Inc.

The secured promissory note balance was $470,000 and $490,000 at March 31, 2021 and December 31, 2020, respectively.

During the three months ended March 31, 2021, the Company recorded $6,765 in interest expense on the Dalrymple note, representing all interest due through that date.

STOCKHOLDERS ’ EQUITY

The total number of authorized shares of our common stock is 250,000,000 shares, $0.001 par value per share.

As of March 31, 2021, there were 20,240,882 common shares issued and outstanding.

We did not issue any shares of common stock for the quarter ended March 31, 2021.

On January 19, 2021, our stockholders approved the filing of an amendment to our certificate of incorporation authorizing 10,000,000 shares of preferred stock with a par value of $0.001 per share.

Such amendment was filed on January 20, 2021.

We did not issue any shares of preferred stock for the quarter ended March 31, 2021.

We have not made a provision for income taxes for the three months ended March 31, 2021 or 2020, which reflects our valuation allowance established against our benefits from net operating loss carryforwards.

LEASE REVENUES

The Company’s QVH unit rentals are governed by agreements that detail the lease terms and conditions.

The determination of whether these contracts with customers contain a lease generally does not require significant judgement.

The Company accounts for these rentals as operating leases.

These leases do not include material amounts of variable payments and the Company has made the accounting policy election to exclude all taxes assessed by a governmental authority.

The Company provides an option of the lessee to purchase the rented equipment upon the termination of the lease for the as then fair market value;

however, the Company has not generated material revenue from sales of equipment under such options.

Initial lease terms vary in length based upon customer needs and generally range from twelve to thirty-six months.

Customer have the option to keep equipment on rent beyond the initial lease term on a one-year successive term that auto renews unless canceled by the customer.

All of the Company’s rental products have long useful lives relative to the typical rental term with the original investment typically recovered in approximately five years.

The rental products are typically rented for a majority of the time owned and a significant portion of the original investment is recovered when sold from inventory.

The Company’s lease agreements do not contain residual value guarantees or restrictive covenants.

All of the Company’s outstanding lease contracts as of March 31, 2021, are scheduled to mature in 2021 with expected operating lease payments to be received totaling approximately $40,000.

Included in property and equipment, net, as of March 31, 2021 and December 31, 2020 is equipment available for rent in the amount of $7,354 and $10,959, respectively.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes to the financial statements included in this Form 10-Q.

Critical Accounting Policies

See Note 3 of the accompanying notes to unaudited condensed consolidated financial statements, which note is incorporated herein by reference.

Management Overview

Shareholder Meeting

On January 19, 2021, we held an Annual Meeting of Stockholders of Spine Injury Solutions, Inc.

at our corporate offices.

In addition to electing our current directors, ratifying our independent registered accounting firm and approving a non-binding advisory resolution on executive compensation, stockholders approved the following proposals:

The filing of an amendment to our certificate of incorporation to increase the number of authorized shares of common stock from 50,000,000 to 250,000,000;

The filing of an amendment to our certificate of incorporation to increase the number of authorized shares of preferred stock from none to 10,000,000;

Authorizing our board of directors, without further stockholder approval, to effect a reverse stock split of all our outstanding common stock, by the filing of a certificate of amendment to our certificate of incorporation with the Secretary of State of Delaware, in a ratio of between one-for-two and one-for-1,000, with our board of directors having the discretion as to whether or not the reverse split is to be effected, and with the exact exchange ratio of any reverse split to be set at a whole number within the above range as determined by the board of directors in its sole discretion, at any time before the earlier of (a) January 19, 2022;

and (b) the date of our next annual meeting of stockholders;

A certificate of amendment was filed with the Secretary of State of Delaware on January 20, 2021 to effect the increase in the number of shares of common and preferred stock.

The board of directors has not yet effected a reverse stock split as of the date of this quarterly report, and has no present plans to do so.

During the fourth quarter of 2018, the decision was made to discontinue involvement in future medical procedures due to our cash position, which also hampers our ability to pay back existing debt to a current director and shareholder.

We did not perform any procedures in 2021 thus far or 2020 and will not do so unless we can access additional capital.

The service revenue we have earned has resulted in longer settlement times, which has created a slowdown in cash collections.

Additionally, despite our efforts to establish a market for the Quad Video Halo, such market has not met our expectations and we have cut back its development and operations.

Moving forward, our main focus will be collecting accounts receivable, paying down debt and leveraging our position as a fully reporting public company for other investing opportunities.

There can be no guarantee of us continuing as a going concern if we cannot obtain additional funds.

We are actively pursuing a merger with a private company where they become the controlling company.

We find this to be the best course of action for our shareholders.

Additionally, the COVID-19 pandemic has made it difficult for us to collect our accounts receivable, as attorney and medical offices are closed resulting in delayed settlements and medical procedures being canceled, which affects our lease revenue.

We are uncertain how this pandemic will affect our ability to collect in the future or its overall effect on our lease revenue.

Comparison of the three-month period ended March 31, 2021 with the three month-period ended March 31, 2020.

The revenue for the three months ended March 31, 2021 consisted of $4,818 related to excess collections for previously funded procedures coupled with $26,073 in lease revenues.

The revenue for the three months ended March 31, 2020 consisted of $29,948 related to excess collections for previously funded procedures coupled with $25,873 in lease revenues.

For the three months ended March 31, 2021 and 2020, we were not involved in any new procedures with spine injury diagnostic centers.

During the three months ended March 31, 2021, we incurred $90,671 of operating, general and administrative expenses compared to $84,448 for the same period in 2020.

Operating, general and administrative expenses were higher for the 2021 quarter compared to 2020 primarily because of a decrease of $36,000 in recoveries on accounts previously written off which are treated as a credit to operating expenses, partially offset by decreases in payroll ($16,000), consulting fees ($13,000) and insurance expense ($6,000).

As a result of the foregoing, we had net loss of $66,543 for the three months ended March 31, 2021, compared to a net loss of $36,577 for the three months ended March 31, 2020.

Liquidity and Capital Resources

For the three months ended March 31, 2021, cash provided in operations was $32,593 which primarily included collections of accounts receivable of $112,945, partially offset by the net loss of $66,543.

For the three months ended March 31, 2020, cash provided in operations was $205,629 which primarily included collections of accounts receivable of $235,480, decreases in prepaid expenses of $8,306, and accounts payable of $6,541, along with non-cash depreciation expenses totaling $4,961.

Cash used in financing activities consisted of repayments on our note payable to shareholder of $20,000 during the three months ended March 31, 2021 and repayments on our term note of $205,000 during the three months ended March 31, 2020.

Going Concern Considerations

Since that time, our accumulated deficit has increased $5,200,027 to $20,204,725 as of March 31, 2021.

During the three months ended March 31, 2021, we realized net revenue of $30,891 and net loss of $66,543.

Successful business operations and our ability to generate cash flows from operations, sufficient to meet our debt obligations are dependent upon obtaining additional financing and achieving a level of collections adequate to support our cost structure.

Considering the nature of our business, we are not generating immediate liquidity and sufficient working capital within a reasonable period of time to fund our planned operations and strategic business plan through March 31, 2022.

There can be no assurances that there will be adequate financing available to us.

Additionally, during the fourth quarter of 2018, the decision was made to discontinue involvement with future medical procedures due to our cash position, which also hampers our ability to pay back our current shareholder (see Note 5—Note payable).

We were not involved with any procedures in 2021 or 2020 and will not do so unless we can access additional capital.

The service revenue we have earned has resulted in longer settlement times, which has created a slowdown in cash collections.

Additionally, despite our efforts to establish a market for the Quad Video Halo, such market has not met our expectations and we have cut back its development and operations.

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern.

This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business.

The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements