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Item 8. Financial Statements and Supplementary Data

2022-03-16 compared with 2021-03-26 · 106 added, 137 removed, 274 unchanged (47% of the section changed)

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Our financial statements for the fiscal years ended December 31, 2021 and 2020 are attached hereto.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 298 )

Consolidated Financial Statements

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Consolidated Statements of Operations for the years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2020 and 2019

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020

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We have audited the accompanying consolidated balance sheets of Spine Injury Solutions, Inc.

(the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for the years then ended and the related notes (collectively referred to as the “financial statements”).

and Subsidiary (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for the years then ended and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has an accumulated deficit of $20,278,547 as of December 31, 2021 and a net loss of $140,365 for the year ended December 31, 2021.

Additionally, the Company is not generating sufficient cash flows to meet its regular working capital requirements.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans as to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has an accumulated deficit of $20,138,182 and a net loss of $297,394 as of and for the year ended December 31, 2020.

Additionally, the Company is not generating sufficient cash flows to meet its regular working capital requirements.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans as to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Audit Matters

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Cash and cash equivalents

Accounts receivable, net

Prepaid expenses

Accounts receivable, net of allowance for discounts of $ 447,126

and $ 585,257 at December 31, 2021 and 2020, respectively

Total current assets

Accounts receivable, net of allowance for doubtful accounts

of $585,257 and $589,243 at December 31, 2020 and 2019, respectively

Property and equipment, net

LIABILITIES AND STOCKHOLDERS ’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS ’ DEFICIT

Current liabilities:

Line of credit

Notes payable

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Total current liabilities

Commitments and contingencies (Note 10)

Stockholders’ equity (deficit):

Commitments and contingencies

Stockholders’ deficit:

Common stock:

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

20,240,882 shares issued and outstanding at

December 31, 2020 and 2019, respectively

20,240,882 shares issued and outstanding at both

December 31, 2021 and 2020

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

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Total revenue

Cost of providing services – provision for inventory obsolescence

Operating, general and administrative expenses

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provided by operating activities:

Provision for uncollectible accounts

Provision for inventory obsolescence

Factoring expense

Provision for impairment of goodwill

Depreciation expense

Gain on transfer of accounts receivable to extinguish debt

Gain from forgiveness of debt

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Accounts payable and accrued liabilities

Due to related party

Net cash provided by operating activities

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Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

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on October 1, 2015.

We are a technology, marketing, billing, and collection company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents.

We deliver turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents.

Our goal is to become a leader in providing technology and monetizing services to spine and orthopedic surgeons and other healthcare providers to facilitate proper treatment of their injured clients.

By monetizing the providers accounts receivable, which includes diagnostic testing and non-invasive surgical care, patients are not unnecessarily delayed or prevented from obtaining needed treatment.

By facilitating early treatment through affiliated doctors, we believe that health conditions can be prevented from escalating and injured victims can be quickly placed on the road to recovery.

Through our affiliate system, we facilitate spine surgeons, orthopedic surgeons and other healthcare providers to provide reasonable, necessary, and appropriate treatments to patients with musculo-skeletal spine injuries.

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 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.

Typically, the defendant (and/or the insurance company of the defendant) in the accident case pays the patient’s bill upon settlement or final judgment of the accident case.

The payment to us is made through the attorney of the patient.

In most cases, we must agree to the settlement price and the patient must sign off on the settlement.

Once we are paid, the patient’s attorney can receive payment for his or her legal fee.

During the fourth quarter of 2018, the decision was made to discontinue funding future medical procedures due to our cash position, and we have not funded any procedures in 2020 and will not do so unless we can access additional capital (see Note 2 below).

We are actively pursuing a merger or similar transaction with a private company where it becomes the controlling company.

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

Further, we have been in negotiations with a certain third-party candidate since December 2021.

We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock.

Although we do not presently have a binding agreement with this company or its shareholders, it is possible that a definitive agreement for the proposed transaction could be agreed to and consummated in the imminent future.

There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us.

From 2009 to 2018, we operated as a technology, marketing, billing, and collection company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents.

We delivered turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents.

Through our affiliate system, we facilitated spine surgeons, orthopedic surgeons and other healthcare providers to provide reasonable, necessary, and appropriate treatments to patients with musculo-skeletal spine injuries.

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

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

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

Typically, the defendant (and/or the insurance company of the defendant) in the accident case would pay the patient’s bill upon settlement or final judgment of the accident case.

The payment to us was made through the attorney of the patient.

In most cases, it was required that we agree to the settlement price and the patient must sign off on the settlement.

Once we were paid, the patient’s attorney would receive payment for his or her legal fee.

During the fourth quarter of 2018, the decision was made to discontinue our involvement in future medical procedures due to our cash position, and we were not involved in any procedures in 2021 or 2020 and have no plans to do so in the future.

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

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 and provide us with additional revenue streams with our new programs designed to assist in treatment documentation.

We have refined the technology, through research and development, resulting in a fully commercialized Quad Video Halo (“QVH”) System 3.0.

Using this technology, diagnostic and treatment procedures are recorded from four separate video feeds that capture views from both inside and outside the body, and a video is made which is given to the patient’s representative to verify the treatment received.

In September 2014, we created a wholly-owned subsidiary, Quad Video Halo, Inc.

The purpose of this entity is to hold certain company assets in connection with the QVH units.

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

We own a device and process by which a video recording system known as the Quad Video Halo (“QVH”) is used to record medical procedures.

The QVH system can simultaneously capture views and machine images, thus providing a record of internal and external views of a recorded procedure.

The QVH system has been refined and improved over the years.

The first- and second-generation systems required post-procedure file transfers, synchronizing and editing.

This involved considerable software and time for a videographer to produce a complete video.

The latest generation of the QVH referred to as NextGen 2.0 completely eliminates all of the issues associated with prior QVH approaches.

The new varifocal lens cameras allow ceiling placement which eliminates the impact of room clutter and fluoroscope movement.

The system server automatically synchronizes and renders the final videos, thus eliminating all backend processing.

We lease QVH units to customers who pay us monthly lease payments.

Presently, the majority of our total revenues are derived from these lease payments.

Our wholly-owned subsidiary, Quad Video Halo, Inc.

holds certain company assets affiliated with the QVH units.

GOING CONCERN CONSIDERATIONS

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 $5,133,484 to $20,138,182 as of December 31, 2020.

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

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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.

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

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

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

During the fourth quarter of 2018, the decision was made to discontinue funding 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 6—Notes Payable).

We did not fund any procedures in 2020 and will not do so unless we can access additional capital.

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

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

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

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

Presently, we believe this to be the best course of actions for our shareholders.

Any expectation of future profitability is likely dependent upon our ability to successfully merge with another company, of which there can be no assurances.

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

We were not involved in any procedures in 2021 and have no plans to do so in the future.

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

As part of our efforts to enter into a merger or similar transaction with a private company where it becomes the controlling company, we have been in negotiations with a certain third-party candidate since December 2021.

We are presently negotiating terms of a proposed share exchange agreement with the candidate, under which its shareholders would exchange their shares for shares of our stock.

There is no assurance that such transaction will be completed, or if completed, that the terms will be favorable to us.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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All material intercompany transactions have been eliminated upon consolidation.

Accounting Method

Basis of Accounting

Our consolidated financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S.

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The Company’s accounting for revenues is governed by two accounting standards.

The Company’s service and product sale revenue are accounted for under ASC 606, Revenue from Contracts with Customers.

The Company’s service and product sales revenue are accounted for under ASC 606, Revenue from Contracts with Customers.

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

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Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable, accrued liabilities, line of credit and notes payable as reflected in the consolidated financial statements, approximates fair value.

Cash, accounts receivable, accounts payable and accrued liabilities, and notes payable as reflected in the consolidated financial statements, approximates fair value.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.

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We have not experienced any losses on these deposits.

During the year ended December 31, 2019 the Company determined its inventory to be worthless based on advances in technology that rendered inventories obsolete.

Accordingly, during the years ended December 31, 2019, the company recognized a provision for inventory obsolescence of $116,221 to completely write-off inventory.

Property and Equipment

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Property and equipment consist of computers and equipment and are depreciated over their estimated useful lives of three years, using the straight-line method.

Intangible Assets and Goodwill

Intangible assets acquired are initially recognized at cost.

Intangible assets acquired in a business combination are recognized at their estimated fair value at the date of acquisition.

Intangibles with a finite life are amortized, ratably, based on the contractual terms of the associated agreements.

Goodwill recognized in a business combination is subjective and represents the value of the excess amount given to the acquired company above the estimated fair market value of the identifiable net assets on the acquisition date.

Each year, during the fourth quarter, the goodwill amount is reviewed to determine if any impairment has occurred.

Impairment occurs when the original amount of goodwill exceeds the value of the expected future net cash flows from the business acquired.

During the year ended December 31, 2019, the Company noted significant indicators of impairment, and performed an impairment test on goodwill, noting the discounted future cash flows did not support the goodwill balance particularly because of the Company’s reduced emphasis on the marketing and development of the QVH.

The result of our analysis was a full impairment of goodwill of $170,200 as of December 31, 2019.

Long-Lived Assets

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.

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

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

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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.

Based on our analysis we established an allowance for doubtful accounts of $585,257 and $589,243, at December 31, 2020 and 2019, respectively.

Stock Based Compensation

We account for the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values.

Under authoritative guidance issued by the Financial Accounting Standards Board (“FASB”), companies are required to estimate the fair value or calculated value of share-based payment awards on the date of grant using an option-pricing model.

The value of awards that are ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations.

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

During the years ended December 31, 2020 and 2019, we did not recognize compensation expense for the issuance of our common stock in exchange for services.

Based on our analysis we established an allowance for discounts of $ 447,126 and $ 585,257 at December 31, 2021 and 2020, respectively.

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

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Accordingly, we may incur additional tax expense based upon the outcomes of such matters.

In addition, when applicable, we will adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.

When applicable, we will adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.

Under ASC Topic 740-10-25, only the portion of the liability that is expected to be paid within one year is classified as a current liability.

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resolution due to the expiration of the statute of limitations) or are not expected to be paid within one year are not classified as current.

We have recently adopted a policy of recording estimated interest and penalties as income tax expense and tax credits as a reduction in income tax expense.

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

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

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

During years ended December 31, 2020 and 2019, common stock equivalents from outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share in the statements of operations, because all such securities were anti-dilutive.

During years ended December 31, 2021 and 2020, common stock equivalents from outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share in the consolidated statements of operations, because all such securities were anti-dilutive.

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

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2016-13 on the Company’s consolidated financial position, results of operations and disclosures.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

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 consolidated financial statements.

ACCOUNTS RECEIVABLE

Accounts receivable arise from patients billed by the healthcare providers based on CPT codes as described in Note 1.

Our customers, patients who receive medical services at diagnostic centers, are typically patients involved in auto accidents or work injuries.

Patients complete and sign medical and financial paperwork, which includes an acknowledgement of each patient’s responsibility for payment for the services provided.

Additionally, the paperwork should include an assignment of benefits.

Accounts receivable arose from patients billed by the healthcare providers based on CPT codes as described in Note 1.

Our customers’ patients who received medical services at diagnostic centers, were typically patients involved in auto accidents or work injuries.

Patients completed and signed medical and financial paperwork, which included an acknowledgement of each patient’s responsibility for payment for the services provided.

Additionally, the paperwork generally included an assignment of benefits.

The timing of collection of receivables varies depending on patient sources of payment.

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

Accordingly, we have classified receivables as current or long term based on our experience, which indicates as of December 31, 2020 and 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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As of December 31, 2021 and 2020, we determined an allowance for uncollectable accounts of $ 447,126 and $ 585,257 , respectively was needed for those customer accounts whose collections appear doubtful.

During the years ended December 31, 2020 and 2019, we recorded bad debt expense, net of recoveries of $-0- and $538,577, respectively.

During the year ended December 31, 2019, we sold certain individual accounts receivable balances to a third party at a discounted rate without recourse resulting in the receipt of $136,665 and the recognition of $71,194 in factoring expense.

This factoring expense represents the discount provided to the purchaser and was recorded in an operating, general and administrative expense in the Company’s statement of operations for the year ended December 31, 2019.

For the year ended December 31, 2020, no accounts receivable balances were sold to a third party at a discount rate.

In November 2021, the Company transferred certain accounts receivable with a gross balance of $ 84,865 and a carrying value of $ 0 to SPIN Collections LLC, an entity owned and controlled by Peter Dalrymple, a director of the Company.

In exchange, Mr.

Dalrymple reduced the amount the Company owed him under a promissory note (see Note 6.

Notes Payable) by $ 33,946 .

The Company recognized a gain on transfer of accounts receivable to extinguish debt in the amount of $ 33,946 which is included in other income in the accompanying consolidated statements of operations.

PROPERTY AND EQUIPMENT

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Depreciation expense totaling $ 10,959 and $ 14,420 was charged to operating, general and administrative expenses during the years ended December 31, 2021 and 2020, respectively.

During the year ended December 31, 2021, the Company wrote-off fully depreciated assets with a cost of $ 22,931 due to them no longer being used in operations.

NOTES PAYABLE

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On the August 31, 2020 maturity date of the term loan with Wells Fargo Bank, N.A., Mr.

Dalrymple paid off in full the entire $610,000 remaining principal balance.

During the twelve months ended December 31, 2020 and 2019, the Company recorded $15,090 and $61,808 respectively in interest expense related to the Wells Fargo term loan.

Dalrymple paid off in full the $ 610,000 remaining principal balance.

During the year ended December 31, 2020, the Company recorded $ 15,090 in interest expense related to the Wells Fargo term loan.

Notes payable

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

In November 2021, the Company transferred certain accounts receivable to an entity owned by Mr.

Dalrymple in exchange for a reduction in the outstanding balance of the note in the amount of $ 33,946 (see Note 4.

Accounts Receivable for additional discussion).

The secured promissory note balance was $ 395,000 at December 31, 2021.

During the year ended December 31, 2020, the Company recorded $11,058 in interest expense on the Dalrymple note, representing all interest due through that date.

The maturity date of the note has been extended to June 30, 2022.

During the years ended December 31, 2021 and 2020, the Company recorded $ 26,859 and $ 11,058 , respectively, in interest expense on the Dalrymple note, representing all interest due through that date.

Paycheck Protection Program – SBA Loan

On April 22, 2020 we received a $64,097 SBA loan under the federal Paycheck Protection Program, a program designed to help businesses keep their workforce employed during the COVID 19 pandemic.

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

The Paycheck Protection Program provides a direct incentive for small businesses to keep their workers on the payroll and loans granted under the program are forgivable if employment levels maintained for specified periods and proceeds are used for payroll and other approved expenses (rent, mortgage interest, utilities, and certain other expenses) provided for under the program.

On April 22, 2020 we received a $ 64,097 Small Business Administration (“SBA”) loan under the federal Paycheck Protection Program (“PPP”), a program designed to help businesses keep their workforce employed during the COVID 19 pandemic.

The PPP was established under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act signed into law in March of 2020.

The PPP provides a direct incentive for small businesses to keep their workers on the payroll and loans granted under the program are forgivable if employment levels are maintained for specified periods and proceeds are used for payroll and other approved expenses (rent, mortgage interest, utilities, and certain other expenses) provided for under the program.

Loans provided under the program are uncollateralized, include no guarantees, bear interest of 1 % per year and mature two years from the date of receipt.

The first payment of our loan was originally due in November 2020, seven months from issuance.

For the reasons discussed throughout this report, we believe current economic uncertainty related to the COVID 19 pandemic and our inability to obtain financing though other means made the loan necessary to support our ongoing operations.

We applied for forgiveness of our loan in 2020 and on December 31, 2020 the entire balance of the loan was forgiven and recognized in other income as gain on forgiveness of debt in our Statements of Operations.

For the reasons discussed throughout this report, we believe current economic uncertainty related to the COVID 19 pandemic and our inability to obtain financing through other means made the loan necessary to support our ongoing operations.

We applied for forgiveness of our loan in 2020 and on December 31, 2020 the entire balance of the loan was forgiven and recognized in other income as a gain on forgiveness of debt in our consolidated statements of operations.

STOCKHOLDERS ’ EQUITY

During the year ended December 31, 2020 and 2019 we did not issue any common stock.

During the years ended December 31, 2021 and 2020, we did not issue any common stock.

Stock Options

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Under ASC 718 we measured stock-based compensation expense for stock options granted, based on weighted average fair values calculated using the Black Scholes option pricing model.

We issued no stock options and recognized no related expense during the years ended December 31, 2020 and 2019.

Details of stock option activity for the years ended December 31, 2020 and 2019 follows:

We issued no stock options during the years ended December 31, 2021 and 2020.

At December 31, 2020, all options are fully vested and all compensation expense related to stock option awards has been recognized.

During 2021, all remaining options expired.

Details of stock option activity for the years ended December 31, 2021 and 2020 is as follows:

Exercise Price

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Outstanding at December 31, 2021

The following summarizes outstanding stock options and their respective exercise prices at December 31, 2020:

Term (in years)

Employee Options

At December 31, 2020 and 2019 all options were fully vested and all compensation expense related to stock option awards has been recognized.

RELATED PARTY TRANSACTIONS

We currently maintain our executive offices at 5151 Mitchelldale A2, Houston, Texas 77092.

This office space encompasses approximately 200 square feet and is provided to us at the rental rate of $1,875 per month on a monthly basis by Northshore Orthopedics, Assoc.

This office space encompasses approximately 200 square feet and is provided to us at the rental rate of $ 1,000 per month under a month-to-month agreement with Northshore Orthopedics, Assoc.

(“NSO”), a company owned by William Donovan, M.D., our director and Chief Executive Officer.

The rent includes the use of the telephone system, computer server, and copy machines.

We discontinued paying rent in December 2021 due to a lack of funds, and since then NSO has provided us this office space rent free.

As further described in Note 6, during 2020 we borrowed $ 610,000 from Peter Dalrymple, a director of the Company, under a secured promissory note.

As further discussed in Note 4, the Company transferred certain accounts receivable with a carrying amount of $ 0 to an entity owned and controlled by Mr.

Dalrymple in exchange for a reduction in the amount due under the promissory note in the amount of $ 33,946 .

The outstanding balance of the note was $ 395,000 at December 31, 2021.

We have no current or deferred provision for income taxes for the years ended December 31, 2020 or 2019, because we have net operating loss carryforwards generated from recurring net losses offset by a full valuation allowance as described below.

We have no current or deferred provision for income taxes for the years ended December 31, 2021 or 2020, because we have established a full valuation allowance against our net operating loss carryforwards generated from recurring net losses as described below.

Deferred tax assets consist of the following at December 31, 2021 and 2020:

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Therefore, amounts available to offset future taxable income may be limited under Section 382 of the Internal Revenue Code.

Following is a reconciliation of the (provision) benefit for federal income taxes as reported in the accompanying consolidated statements of operations, to the expected amount at the 21% federal statutory rate:

Following is a reconciliation of the benefit for federal income taxes as reported in the accompanying consolidated statements of operations, to the expected amount at the 21 % federal statutory rate:

Benefit for income tax at federal statutory rate

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Change in valuation allowance

COMMITMENTS AND CONTINGENCIES

Lease Commitments

We previously leased office space under a month-to-month lease, with monthly lease payments of $6,000, through May 2019.

We also previously leased a 2,400 square foot warehouse/office in Clear Lake Shores, Texas where we assembled, developed, tested, and marketed the Quad Video Halo.

This warehouse lease was on a month-to-month basis, with a monthly rent of $1,950, and ended in February 2019 when we vacated the space.

In June 2019, we moved into our current offices and now maintain a month-to-month lease, with monthly lease payments of $1,875, for office space.

LEASE REVENUES

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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.

Initial lease terms vary in length based upon customer needs and generally range from 12 to 36 months.

Customers have the option to keep equipment on rent beyond the initial lease term on a month-to-month basis.

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

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

All of the Company’s outstanding lease contracts as of December 31, 2020, are scheduled to mature in 2021 with expected operating lease payments to be received totaling approximately $66,000.

Included in property and equipment, net, as of December 31, 2020 and 2019 is equipment available for rent in the amount of $10,959 and $25,379, respectively.

SUBSEQUENT EVENTS

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 21, 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 annual report, and has no present plans to do so.

The initial terms of the Company’s two outstanding lease contracts ended in 2021, and those two customers are currently renting the QVH units on a month-to-month basis.

Included in property and equipment, net, as of December 31, 2021 and 2020 is equipment available for rent in the net amount of $ 0 and $ 10,959 respectively.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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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-K

Item 8. Financial Statements and Supplementary Data