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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One) 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2024

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from________ to ___________

 

Commission File No. 000-54090

 

crvw20240331_10qimg001.jpg

 

 

CAREVIEW COMMUNICATIONS, INC. 

(Exact name of registrant as specified in its charter)

 

Nevada

95-4659068

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

405 State Highway 121, Suite B-240, Lewisville, TX 75067

(Address of principal executive offices)

 

(972) 943-6050

(Registrant’s telephone number)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share CRVW OTC Markets

 

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 ☑  No ☐

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☑  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

  

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 ☑

 

The number of shares outstanding of each of the issuer’s classes of Common Stock as of August 14, 2024 was 583,880,748.

 

 

 

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

INDEX

 

       

Page

PART I - FINANCIAL INFORMATION

   
         
 

Item. 1

Financial Statements

   
         
   

Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023

 

3

         
   

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)

 

4

         
   

Condensed Consolidated Statements of Changes in Stockholders' Deficit for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)

 

5

         
   

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)

 

6

         
   

Notes to the Condensed Consolidated Financial Statements

 

7

         
 

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

 

17

         
 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

22

         
 

Item 4.

Controls and Procedures

 

22

         

PART II - OTHER INFORMATION

   
         
 

Item 1.

Legal Proceedings

 

24

         
 

Item 1A.

Risk Factors

 

24

         
 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

24

         
 

Item 3.

Defaults Upon Senior Securities

 

24

         
 

Item 4.

Mine Safety Disclosures

 

24

         
 

Item 5.

Other Information

 

24

         
 

Item 6.

Exhibits

 

24

 

 

 

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

  

June 30,

     
  

2024

  

December 31,

 
  

(unaudited)

  

2023

 

ASSETS

        

Current Assets:

        

Cash and restricted cash

 $1,738,994  $1,145,871 

Accounts receivable

  1,342,847   1,167,934 

Inventory

  309,371   294,435 

Other current assets

  437,341   335,091 

Total current assets

  3,828,553   2,943,331 
         

Property and equipment, net

  238,794   317,626 
         

Other Assets:

        

Intangible assets, net

  407,983   406,301 

Operating lease asset

  213,317   292,990 

Other assets, net

  350,038   302,010 

Total other assets

  971,338   1,001,301 

Total assets

 $5,038,685  $4,262,258 
         
         

LIABILITIES AND STOCKHOLDERS' DEFICIT

        

Current Liabilities:

        

Accounts payable

 $436,125   598,095 

Notes payable

  20,000,000   20,000,000 

Notes payable - related parties

  700,000   700,000 

Deferred revenue

  3,150,192   1,752,061 

Operating lease liability

  193,634   188,184 

Accrued interest payable

  18,083,389   16,479,139 

Other current liabilities

  556,789   489,497 

Total current liabilities

  43,120,129   40,206,976 
         

Long-term Liabilities:

        

Operating lease liability

  46,311   139,099 

Other liabilities

  52,771   178,907 

Total long-term liabilities

  99,082   318,006 

Total liabilities

  43,219,211   40,524,982 
         
         

Stockholders' Deficit:

        
         

Preferred stock - par value $0.001; 20,000,000 shares authorized; no shares issued and outstanding

  -   - 

Common stock - par value $0.001; 800,000,000 shares authorized; 583,880,748 issued and outstanding

  583,881   583,881 

Additional paid in capital

  171,250,044   171,038,349 

Accumulated deficit

  (210,014,451)  (207,884,954)

Total stockholders' deficit

  (38,180,526)  (36,262,724)

Total liabilities and stockholders' deficit

 $5,038,685  $4,262,258 

 

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

 

 

 

 

CAREVIEW COMMUNICATIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE three and six months ended June 30, 2024 and 2023
(Unaudited)

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30, 2024

   

June 30, 2023

   

June 30, 2024

   

June 30, 2023

 

Revenues

                               

Subscription-based lease revenue

  $ 1,008,345     $ 1,113,887     $ 2,019,145     $ 2,320,984  

Sales-based equipment package revenue

    246,620       1,837,088       816,815       1,996,785  

Sales-based software bundle revenue

    718,674       759,134       1,340,918       1,174,599  

Total revenues

    1,973,639       3,710,109       4,176,878       5,492,368  
                                 

Operating expenses:

                               

Cost of equipment

    42,460       224,997       91,644       256,929  

Network operations

    640,685       763,487       1,483,986       1,468,530  

General and administration

    789,509       1,051,953       1,407,293       1,749,720  

Sales and marketing

    236,533       230,814       564,217       399,233  

Research and development

    515,234       515,374       1,042,709       1,034,006  

Depreciation and amortization

    68,271       103,797       139,468       280,628  

Total operating expense

    2,292,692       2,890,422       4,729,317       5,189,046  
                                 

Operating income (loss)

    (319,053 )     819,687       (552,439 )     303,322  
                                 

Other income and (expense)

                               

Interest expense

    (802,125 )     (865,627 )     (1,604,250 )     (1,696,961 )

Interest income

    13,907       1,133       27,192       2,020  

Total other expense

    (788,218 )     (864,494 )     (1,577,058 )     (1,694,941 )
                                 

Loss before taxes

    (1,107,271 )     (44,807 )     (2,129,497 )     (1,391,619 )
                                 

Provision for income taxes

    -       -       -       -  
                                 

Net loss

  $ (1,107,271 )   $ (44,807 )   $ (2,129,497 )   $ (1,391,619 )
                                 

Net loss per share

  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                 

Weighted average number of common shares outstanding, basic, and diluted

    583,880,748       463,880,748       583,880,748       304,336,304  

 

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

 

 

 

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
FOR THE three and six months ended June 30, 2024 and 2023
(Unaudited)

 

          

Additional

         
  

Common Stock

  

Paid in

  

Accumulated

     
  

Shares

  

Amount

  

Capital

  

Deficit

  

Total

 
                     

Balance, January 1, 2023

  141,880,748  $141,881  $127,130,055  $(203,932,665) $(76,660,729)

Stock based compensation

  -   -   62,260   -   62,260 

Debt to equity conversion at $0.10

  262,000,000   262,000   25,938,000   -   26,200,000 

Net loss

  -   -   -   (1,346,812)  (1,346,812)
                     

Balance, March 31, 2023

  403,880,748  $403,881  $153,130,315  $(205,279,477) $(51,745,281)

Stock based compensation

  -   -   54,796   -   54,796 

Debt to equity conversion at $0.10

  180,000,000   180,000   17,820,000   -   18,000,000 

Net loss

  -   -   -   (44,807)  (44,807)
                     

Balance, June 30, 2023

  583,880,748  $583,881  $171,005,111  $(205,324,284) $(33,735,292)
                     

Balance, January 1, 2024

  583,880,748  $583,881  $171,038,349  $(207,884,954) $(36,262,724)

Stock based compensation

  -   -   53,271   -   53,271 

Net loss

  -   -   -   (1,022,226)  (1,022,226)
                     

Balance, March 31, 2024

  583,880,748  $583,881  $171,091,620  $(208,907,180) $(37,231,679)

Stock based compensation

  -   -   158,424   -   158,424 

Net loss

  -   -   -   (1,107,271)  (1,107,271)
                     

Balance, June 30, 2024

  583,880,748  $583,881  $171,250,044  $(210,014,451) $(38,180,526)

 

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

 

 

 

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE six months ended June 30, 2024 and 2023

(Unaudited)

 

   

Six Months Ended

 
   

June 30, 2024

   

June 30, 2023

 
                 

CASH FLOWS FROM OPERATING ACTIVITES

               

Net loss

  $ (2,129,497 )   $ (1,391,619 )

Adjustments to reconcile net loss to net cash flows used in operating activities:

               

Depreciation

    108,710       194,619  

Amortization of intangible assets

    20,577       70,697  

Amortization of deferred installation costs

    10,182       15,312  

Non-cash lease expense

    79,674       67,859  

Stock based compensation

    211,695       117,056  

Changes in operating assets and liabilities:

               

Accounts receivable

    (174,913 )     (1,061,428 )

Inventory

    (14,936 )     153,773  

Other current assets

    (102,250 )     (375,601 )

Accounts payable

    (161,970 )     (75,286 )

Accrued interest

    1,604,250       1,604,250  

Other current liabilities

    67,292       481,398  

    Deferred revenue

    1,286,061       480,156  

    Deferred sales commissions

    31,794       (12,550 )

Operating lease liability

    (87,338 )     (72,352 )

Net cash flows provided by operating activities

    749,331       196,284  
                 

CASH FLOWS FROM INVESTING ACTIVITIES

               

Purchase of property and equipment

    (29,878 )     (1,943 )

Patent, trademark, and other intangible asset costs

    (120,459 )     -  

Net cash flows used in investing activities

    (150,337 )     (1,943 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Repayment of vehicle loan

    (5,871 )     (7,162 )

Net cash flows used in financing activities

    (5,871 )     (7,162 )
                 

Increase in cash

    593,123       187,179  

Cash, beginning of period

    1,145,871       520,166  

Cash and restricted cash, end of period

  $ 1,738,994     $ 707,345  
                 

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITES

               

Non-cash debt-to-equity conversion

  $ -     $ 44,200,000  

 

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

 

 

6

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE 1 BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

Interim Financial Statements

 

The accompanying unaudited interim condensed consolidated financial statements of CareView Communications, Inc. (“CareView”, the “Company”, “we”, “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 29, 2024.

 

Revenue Recognition

 

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”). For our subscription service contracts, we have employed the practical expedient discussed in ASC 606-10-55-18 related to invoicing as we have the right to consideration from our customers in the amount that corresponds directly with the value to the customer of our performance completed to date and therefore, we recognize revenue upon invoicing as further discussed below.

 

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. For those customers for which we are required to collect sales taxes, we record such sales taxes on a net basis which has no effect on the amount of revenue or expenses recognized as the sales taxes are a flow through to the taxing authority.

 

We enter into contracts with customers that may provide multiple combinations of our products, software solutions, and other related services, which are generally capable of being distinct and accounted for as separate performance obligations. Performance obligations that are not distinct at contract inception are combined.

 

Customer contract fulfillment typically involves multiple procurement promises, which may include various equipment, software subscription, project-related installation and training services, and support. We allocate the transaction price to each performance obligation based on estimated relative standalone selling price. Revenue is then recognized for each performance obligation upon transferring control of the hardware, software, and services to the customer and in an amount that reflects the consideration we expect to receive and the estimated benefit the customer receives over the term of the contract.

 

Generally, we recognize revenue under each of our performance obligations as follows:

 

 

Subscription services – We recognize subscription revenues monthly over the contracted license period.

 

Equipment packages – We recognize equipment revenues when control of the devices has been transferred to the client (“point in time”).

 

Software bundle and related services related to sales-based contracts – We recognize our software subscription, installation, training, and other services on a straight-line basis over the estimated contracted license period (“over time”).

 

The Company earns sales-based contract revenue from services rendered under specific agreements, which hinge on a third-party reseller who possesses the exclusive authority to engage directly with veteran-owned hospitals. Evaluating the Company’s role in these contracts necessitates assessing whether it functions as the principal or agent, a determination that involves analyzing the extent of control the Company wields over the contracts.

 

7

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

Following its assessment, the Company reports revenue from services provided under such contracts on a gross basis. This decision is justified by the Company’s primary responsibility to fulfill the contractual obligations, including delivery and installation of equipment and software, training, and its control over other services within the contract period. Furthermore, the Company directly sets the contract price with its customers based on the services outlined in the statement of work. As the Company is responsible for fulling this promise and maintains control, the Company is acting as the principal.

 

Disaggregation of Revenue 

 

The following presents net revenues disaggregated by our business models:

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Sales-based contract revenue

        

Equipment package, net (point in time)

 $816,815  $1,996,785 

Software bundle (over time)

  1,340,918   1,174,599 

Total sales-based contract revenue

  2,157,733   3,171,384 
         

Subscription-based lease revenue

  2,019,145   2,320,984 

Net revenue

 $4,176,878  $5,492,368 

 

Contract Liabilities

 

Our subscription-based contracts payment arrangements are required to be paid monthly which are recognized into revenue when received. Some customers choose to pay their subscription fee in advance. Customer payments received in advance of satisfaction of the related performance obligations are deferred as contract liabilities. These amounts are recorded as “deferred revenue” in our condensed consolidated balance sheets and recognized into revenues over time.

 

Our sales-based contract payment arrangements with our customers typically include an initial equipment payment due upon signing of the contract and subsequent payments when certain performance obligations are completed. Customer payments received in advance of satisfaction of related performance obligations are deferred as contract liabilities. These amounts are recorded as “deferred revenue” in our condensed consolidated balance sheets and recognized into revenues as either a point in time or over time.

 

During the six months ended June 30, 2024 and 2023, a total of $0 and $16,094, respectively, of subscription-based deferred contract liability was recognized as revenue. The table below details the subscription-based contract liability activity during the six months ended June 30, 2024 and 2023, included in the Other current liabilities.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $  $21,145 

Additions

      

Transfer to revenue

     (16,094)

Balance, end of period

 $  $5,051 

 

During the six months ended June 30, 2024 and 2023, a total of $1,322,919 and $822,974, respectively, of sales-based deferred contract liability was recognized as revenue. The table below details the sales-based contract liability activity during the six months ended June 30, 2024 and 2023, included in the Other current liabilities.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $1,922,925  $869,485 

Additions

  2,600,786   1,319,224 

Transfer to revenue

  (1,322,919)  (822,974)

Balance, end of period

 $3,200,792  $1,365,735 

 

8

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

As of June 30, 2024, the aggregate amount of deferred revenue from subscription-based contracts and sales-based contracts allocated to performance obligations that are unsatisfied or partially satisfied is approximately $3,200,792 and will be recognized into revenue over time as follows:

 

Years Ending December 31,

 

Amount

 

2024

 $1,877,116 

2025

  1,323,676 

Thereafter

   
  $3,200,792 

 

We defer and capitalize all costs associated with the installation of the CareView System into a healthcare facility until the CareView System is fully operational and accepted by the healthcare facility. Installation costs are specifically identifiable based on the amounts we are charged from third party installers or directly identifiable labor hours incurred for each installation. Upon acceptance, the associated costs are expensed on a straight-line basis over the life of the contract with the healthcare facility. These costs are included in network operations on the accompanying consolidated statements of operations.

 

The table below details the activity in these deferred installation costs during the periods ended June 30, 2024 and 2023, included in other assets in the accompanying unaudited consolidated balance sheet.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $48,309  $33,461 

Additions

  98,200    

Transfer to expense

  (10,181)  (15,312)

Balance, end of period

 $136,328  $18,149 

 

Significant Judgements When Applying Topic 606

 

Contracts with our customers are typically structured similarly and include various combinations of our products, software solutions, and related services. Determining whether the various contract promises are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

 

Contract transaction price is allocated to distinct performance obligations using estimated standalone selling price. We determine standalone selling price maximizing observable inputs such as standalone sales, competitor standalone sales, or substantive renewal prices charged to customers when they exist. In instances where standalone selling price is not observable, we utilize an estimate of standalone selling price. Such estimates are derived from various methods that include cost plus margin, and historical pricing practices. Judgment may be required to determine standalone selling prices for each performance obligation and whether it depicts the amount we expect to receive in exchange for the related good or service.

 

Contract modifications occur when we and our customers agree to modify existing customer contracts to change the scope or price (or both) of the contract or when a customer terminates some, or all, of the existing services provided by us. When a contract modification occurs, it requires us to exercise judgment to determine if the modification should be accounted for as a separate contract, the termination of the original contract and creation of a new contract, a cumulative catch-up adjustment to the original contract, or a combination.

 

Contracts with our customers include a limited warranty on our products covering materials, workmanship, or design for the duration of the contract. We do not offer paid additional extended or lifetime warranty packages. We determined the limited warranty in our contract is not a distinct performance obligation. We do not believe our estimates of warranty costs to be significant to our determination of revenue recognition, and therefore, did not reserve for warranty costs.

 

Leases

 

The Company has an operating lease primarily consisting of office space with a remaining lease term of 14 months. At the lease commencement date, an operating lease liability and related operating lease asset are recognized. The operating lease liabilities are calculated using the present value of lease payments. The discount rate used is either the rate implicit in the lease, when known, or our estimated incremental borrowing rate. Operating lease assets are valued based on the initial operating lease liabilities plus any prepaid rent and direct costs from executing the leases.

 

9

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

Earnings (Loss) Per Share

 

We calculate earnings per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of common shares outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants to purchase our Common Stock (the “Warrants”) and convertible debt. Potential common shares totaling 73,621,280 and 46,711,922 on June 30, 2024 and 2023, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. The 73,621,280 potential common shares consist of 67,926,835 stock options and 5,694,445 warrants.

 

Accounting Standards Update (ASU)

 

ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. We as a smaller reporting company as defined by the SEC will adopt ASU 2020-06 effective for fiscal year 2024. As of 2024, the Company does not have any preferred stock or convertible debt.

 

ASU 2022-03 clarifies that a “contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security” and is not included in the equity security’s unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by the ASU). In addition, the ASU prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. Under the existing guidance in ASC 820-10-35-6B, “although a reporting entity must be able to access the market, the reporting entity does not need to be able to sell the particular asset or transfer the particular liability on the measurement date to be able to measure fair value on the basis of the price in that market.” ASU 2022-03 clarifies that an entity should apply this existing guidance when measuring the fair value of equity securities that are subject to contractual sale restrictions (i.e., a contractual sale restriction on the reporting entity that prevents the sale of an equity security in the market does not prevent the entity from measuring the fair value of the equity security on the basis of the price in that principal market). ASU 2022-03 for the Company will be effective for fiscal year 2024. For 2024, no contractual sale restriction exists with the Company.

 

ASU 2023-09 requires public business entities to disclose percentages and amounts in their reporting currency for certain categories in a tabular format with qualitative disclosures on an annual basis. ASU 2023-09 requires the use of the following categories to assist investors with assessing risks and opportunities related to effective tax rates over time and for multiple entities:

 

State and local income tax, net of federal (national) income tax effect

Foreign tax effect

Effect of changes in tax laws or rates enacted in the current period

Effect of cross-border tax laws

Tax credits

Changes in valuation allowances

Nontaxable or nondeductible items

Changes in unrecognized tax benefits

 

The new reporting guidance is effective for the Company for annual periods beginning after December 15, 2024.

 

 

NOTE 2 GOING CONCERN, LIQUIDITY AND MANAGEMENTS PLAN

 

Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year after the date of the filing of this Form 10-Q (“evaluation period”). In evaluating the Company’s ability to continue as a going concern, management considers the conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months after the Company issues its financial statements. For the six months ended June 30, 2024, management considers the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations due within 12 months of the date these financial statements are issued.

 

The Company is subject to risks like those of healthcare technology companies whereby revenues are generated based on both sales-based and subscription-based models, which assume dependence on key individuals, uncertainty of product development, generation of revenues, positive cash flow, dependence on outside sources of capital, risks associated with research, development, and successful testing of its products, successful protection of intellectual property, ability to maintain and grow its customer base, and susceptibility to infringement on the proprietary rights of others. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill the Company’s growth and operating activities and generating a level of revenues adequate to support the Company’s cost structure.

 

10

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

As of June 30, 2024, the Company had a working capital deficit of $39,291,576. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date the consolidated financial statements were issued. While management will look to continue funding operations by increased sales volumes and raising additional capital from sources such as sales of its debt or equity securities or loans to meet operating cash requirements, there is no assurance that management’s plans will be successful.

 

On March 30, 2023, noteholders owning Replacement Notes in an aggregate of $26,200,000, entered into a Replacement Note Conversion Agreement, wherein the Replacement Notes were converted into shares of the Company’s common stock at a conversion price of $0.10 per share, resulting in the issuance of an aggregate of 262,000,000 shares (the “Conversion Shares”). 

 

Upon this conversion, and as of March 31, 2023, the Company’s officers and board of directors held the majority of the Company’s outstanding voting stock. With controlling interest of the majority of outstanding shares, the Company’s majority shareholders voted to amend its articles of incorporation to increase the authorized shares available for issuance from 500,000,000 to 800,000,000, with an effective date of May 22, 2023.

 

On May 24, 2023, noteholder owning Replacement Notes in the aggregate of $18,000,000, presented Conversion Notices, per the terms of the Replacement Notes, to the Company to convert the Replacement Notes into 180,000,000 shares of the Company’s common stock at a conversion price of $0.10 per share. The shares bear a lock-up legend that expires December 31, 2023.

 

Management continues to monitor the immediate and future cash flows needs of the company in a variety of ways which include forecasted net cash flows from operations, capital expenditure control, new inventory orders, debt modifications, increases in sales outreach, streamlining and controlling general and administrative costs, competitive industry pricing, sale of equities, debt conversions, new product or services offerings, and new business partnerships.

 

The Company’s net losses, cash outflows, and working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the Company’s cost structure.

 

 

NOTE 3 STOCKHOLDERS EQUITY

 

Warrants to Purchase Common Stock of the Company

 

We use the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of Warrants. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant.

 

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants and is calculated by using the average daily historical stock prices through the day preceding the grant date. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of our stock prices (and that of peer entities whose stock prices were publicly available) over a period equal to the expected life of the awards.

 

A summary of our Warrants activity and related information follows:

 

                           

Weighted

 
                   

Weighted

   

Average

 
   

Number of

   

Range of

   

Average

   

Remaining

 
   

Shares Under

   

Warrant Price

   

Exercise

   

Contractual

 
   

Warrant

   

Per Share

   

Price

   

Life

 

Balance at December 31, 2023

    5,694,445    

0.011 -0.0303

    $ 0.024       2.6  

Granted

                       

Expired

                       

Canceled

                       

Balance at June 30, 2024

    5,694,445    

0.011 -0.0303

    $ 0.024       2.1  

 

Options to Purchase Common Stock of the Company

 

During the six months ended June 30, 2024, 30,277,858 options to purchase our Common Stock were granted having a fair value of $1,816,521 and exercise price of $0.06 per share.

 

11

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

A summary of our stock option activity and related information follows:

 

                   

Weighted

         
           

Weighted

   

Average

         
   

Number of

   

Average

   

Remaining

   

Aggregate

 
   

Shares Under

   

Exercise

   

Contractual

   

Intrinsic

 
   

Options

   

Price

   

Life

   

Value

 

Balance at December 31, 2023

    38,483,977     $ 0.09       5.2     $ 314,925  

Granted

    30,277,858       0.06       9.4        

Forfeited/Expired

    (835,000 )     0.58              

Exercised

                       

Balance at June 30, 2024

    67,926,835     $ 0.07       7.0     $ 104,475  

Vested and Exercisable at June 30, 2024

    36,718,977     $ 0.08       4.7     $ 104,475  

 

Share-based compensation expense for Options charged to our operating results for the six months ended June 30, 2024 and 2023 were $211,695 and $117,056, respectively. The estimate of forfeitures is to be recorded at the time of grant and revised in subsequent periods if actual forfeitures differ from the estimates. We have not included an adjustment to our stock-based compensation expense based on the nominal amount of the historical forfeiture rate. We do, however, revise our stock-based compensation expense based on actual forfeitures during each reporting period.

 

At June 30, 2024, total unrecognized estimated compensation expense related to non-vested Options granted prior to that date was approximately $1,663,565, which is expected to be recognized over a weighted-average period of 2.6 years. No tax benefit was realized due to a continued pattern of operating losses.

 

 

NOTE 4 OTHER CURRENT ASSETS

 

Other current assets consist of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Prepaid insurance

  $ 304,005     $ 180,267  

Other prepaid expenses

    41,355       62,843  

Sales tax overpayment

    91,981       91,981  

TOTAL OTHER CURRENT ASSETS

  $ 437,341     $ 335,091  

 

 

NOTE 5 INVENTORY

 

Inventory is valued at the lower of cost, determined on a first-in, first-out (FIFO), or net realizable value. Inventory items are analyzed to determine cost and net realizable value and appropriate valuation adjustments are then established.

 

Inventory consists of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Equipment components

  $ 309,371     $ 294,435  

TOTAL INVENTORY

  $ 309,371     $ 294,435  

 

12

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 

NOTE 6 PROPERTY AND EQUIPMENT

 

Property and equipment consist of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Network equipment

  $ 9,218,247     $ 9,204,511  

Office equipment

    258,096       241,955  

Vehicles

    133,617       133,616  

Test equipment

    230,365       230,365  

Furniture

    92,097       92,097  

Warehouse equipment

    18,788       18,788  

Leasehold improvements

    5,121       5,121  
      9,956,331       9,926,453  

Less: accumulated depreciation

    (9,717,537 )     (9,608,827 )

TOTAL PROPERTY AND EQUIPMENT, NET

  $ 238,794     $ 317,626  

 

Depreciation expense for the six months ended June 30, 2024 and 2023 was $108,710 and $194,619, respectively.

 

 

NOTE 7 INTANGIBLE AND OTHER ASSETS, NET

 

Intangible assets consist of the following:

 

   

June 30, 2024

 
   

Cost

   

Accumulated Amortization

   

Net

 

Patents and trademarks

  $ 888,690     $ 496,151     $ 392,539  

Other intangible assets

    33,299       17,855       15,444  

TOTAL INTANGIBLE ASSETS

  $ 921,989     $ 514,006     $ 407,983  

 

   

December 31, 2023

 
   

Cost

   

Accumulated Amortization

   

Net

 

Patents and trademarks

  $ 879,492     $ 478,250     $ 401,242  

Other intangible assets

    20,237       15,178       5,059  

TOTAL INTANGIBLE ASSETS

  $ 899,729     $ 493,428     $ 406,301  

 

13

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

Other assets consist of the following:

 

   

June 30, 2024

 
   

Cost

   

Accumulated Amortization

   

Net

 

Deferred installation costs

  $ 1,495,920     $ 1,359,592     $ 136,328  

Deferred sales commissions

    553,464       425,496       127,968  

Prepaid license fee

    249,999       210,381       39,618  

Security deposit

    46,124             46,124  

TOTAL OTHER ASSETS

  $ 2,345,507     $ 1,995,469     $ 350,038  

 

   

December 31, 2023

 
   

Cost

   

Accumulated Amortization

   

Net

 

Deferred installation costs

  $ 1,397,720     $ 1,349,410     $ 48,310  

Deferred sales commissions

    439,221       279,459       159,762  

Prepaid license fee

    249,999       202,185       47,814  

Security deposit

    46,124             46,124  

TOTAL OTHER ASSETS

  $ 2,133,064     $ 1,831,054     $ 302,010  

 

 

NOTE 8 OTHER CURRENT LIABILITIES

 

Other current liabilities consist of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Allowance for system removal

    54,802       54,802  

Accrued paid time off

    129,221       164,566  

Deferred officer compensation (1)

    49,528       49,528  

Other accrued liabilities

    323,238       220,601  

TOTAL OTHER CURRENT LIABILITIES

  $ 556,789     $ 489,497  

 


(1)

Remaining salary payable for Steve Johnson, CEO, between February 15, 2018 and September 30, 2020.

 

 

NOTE 9 AGREEMENT WITH PDL BIOPHARMA, INC.

 

On June 26, 2015, we entered into a Credit Agreement (as subsequently amended) with PDL BioPharma, Inc. (“PDL”), as administrative agent and lender (“the Lender”) (the “PDL Credit Agreement”). Under the PDL Credit Agreement the Lender made available to us up to $40 million in two tranches of $20 million each. Tranche One was funded on October 8, 2015 (the “Tranche One Loan”). Pursuant to the terms of the PDL Credit Agreement and having not met the Tranche Two Milestones by July 26, 2017, the Tranche Two funding was terminated in full.

 

On February 28, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Eighth Amendment to Modification Agreement (the “Twenty-Eighth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and March 31, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until March 30, 2023 (the end of the extended Modification Period).

 

On March 31, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Ninth Amendment to Modification Agreement (the “Twenty-Ninth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and April 30, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until April 30, 2023 (the end of the extended Modification Period). Under debt modification/troubled debt guidance, we determined that the first of the eight amendments had no cash flow impact, and therefore, had no impact on accounting. Amendments nine through ten qualified for modification accounting, while the final nineteen amendments qualified for troubled debt restructuring accounting. As appropriate, we expensed the legal costs paid to third parties. For the six months ended June 30, 2024 and 2023, pursuant to the terms of the PDL Modification Agreement, as amended, $1,604,250 was recorded as interest expense on the accompanying unaudited condensed consolidated financial statements.

 

14

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

On April 29, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Thirtieth Amendment to Modification Agreement (the “Thirtieth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and May 31, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until May 31, 2023 (the end of the extended Modification Period).

 

On May 31, 2023 (the “Effective Date”), the Company, the Borrower, the Lender, Steven G. Johnson, President and Chief Executive Officer of the Company, and Dr. James R. Higgins, a director of the Company, entered into a Seventh Amendment to Credit Agreement (the “Seventh Credit Agreement Amendment”), pursuant to which the parties agreed to amend the Credit Agreement to, among other things, (i) provide that, after the Effective Date, all accrued but unpaid interest (including interest accrued but unpaid prior to the Effective Date and excluding interest payable on the Maturity Date, in connection with any prepayment, or in the event of an Event of Default, which interest will be payable in cash) accruing on Tranche One Loans and Tranche Three Loans will be paid-in-kind on each Interest Payment Date by being added to the aggregate principal balance of the respective loans in arrears on each Interest Payment Date; (ii) require certain mandatory prepayments of the loans by the Company, including (A) quarterly prepayments in the amount, if any, that the Company’s Excess Cash Flow exceeds $600,000, (B) monthly transfers to the Inventory Reserve Account in the amount, if any, the Company’s cash exceeds $1,200,000, (C) prepayment in the amount, if any, the Company’s Inventory Reserve Account exceeds $600,000, and (D) prepayment in the amount, if any, of 100% of the gross proceeds of any indebtedness incurred by the Company (other than permitted indebtedness); and (iii) extend the Maturity Date to  December 31, 2024.

 

On September 30, 2023 (the “Effective Date”), the Company, the Borrower, the Lender, Steven G. Johnson, President and Chief Executive Officer of the Company, and Dr. James R. Higgins, a director of the Company, entered into an Eighth Amendment to Credit Agreement (the “Eighth Credit Agreement Amendment”), pursuant to which the parties agreed to amend the Credit Agreement to modify certain texts originating within the Seventh Credit Agreement. Stricken texts include “all accrued but unpaid interest (including interest accrued but unpaid prior to the Effective Date and excluding interest payable on the Maturity Date, in connection with any prepayment, or in the event of an Event of Default, which interest will be payable in cash) accruing on Tranche One Loans and Tranche Three Loans will be paid-in-kind on each Interest Payment Date by being added to the aggregate principal balance of the respective loans in arrears on each Interest Payment Date.” Additional texts include Release of Claims, which “in consideration of the Lender’s and Agent’s agreements contained in this Amendment, each of Holdings, the Borrower and the Subsidiary Guarantor hereby releases and discharges the Lender and the Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all other claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which Holdings, the Borrower or the Subsidiary Guarantor ever had or now has against the Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of the Agent, any Lender or any other Released Person relating to the Credit Agreement or any other Loan Document on or prior to the date hereof.”

 

Accounting Treatment

 

In connection with the PDL Credit Agreement, as amended, we issued the PDL Warrant to the Lender. As of June 30, 2024, the Amended PDL Warrant has not been exercised.

 

Due to the PDL Eighth Credit Agreement Amendment, the calculations for the “interest paid-in-kind” and quarterly “prepayment(s)” were removed effective with the year ending on December 31, 2023. The Company concluded that the Company is encountering financial hardship and that a concession was not granted. As the Lender has not granted a concession, the guidance contained in ASC 470-50 Modification and Extinguishment was applied. Given the present value of the cash flows under the Eighth Credit Agreement Amendment differed by less than 10% from the present value of the remaining cash flows under the terms of the prior debt agreement, the debt was determined to be not substantially different which resulted in modification accounting. The Company did not have any debt issuance costs, only legal expenses.

 

 

NOTE 10 AGREEMENT WITH HEALTHCOR

 

On April 21, 2011, we entered into a Note and Warrant Purchase Agreement (as subsequently amended) with HealthCor Partners Fund, LP (“HealthCor Partners”) and HealthCor Hybrid Offshore Master Fund, LP (“HealthCor Hybrid” and, together with HealthCor Partners, “HealthCor”) (the “HealthCor Purchase Agreement”). Pursuant to the terms of the HealthCor Purchase Agreement, we sold and issued Senior Secured Convertible Notes to HealthCor in the principal amount of $9,316,000 and $10,684,000, respectively (collectively the “2011 HealthCor Notes”). The 2011 HealthCor Notes have a maturity date of  April 20, 2021. We also issued Warrants to HealthCor for the purchase of an aggregate of up to 5,488,456 and 6,294,403 shares, respectively, of our Common Stock at an exercise price of $1.40 per share (collectively the “2011 HealthCor Warrants”). So long as no event of default has occurred, the outstanding principal balances of the 2011 HealthCor Notes accrue interest from April 21, 2011 through April 20, 2016 (the “First Five-Year Note Period”) at the rate of 12.5% per annum, compounding quarterly and shall be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar quarter. Interest accruing from April 21, 2016 through April 20, 2021 (the “Second Five Year Note Period”) at a rate of 10% per annum, compounding quarterly, may be paid quarterly in arrears in cash or, at our option, such interest may be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar quarter. For the period from April 21, 2016 through September 30, 2018 interest has been added to the outstanding principal balance. Pursuant to the terms of the Ninth Amendment, the accrual of interest has been suspended after September 30, 2018. From the date any event of default occurs, the interest rate, then applicable, shall be increased by five percent (5%) per annum. HealthCor has the right, upon an event of default, to declare due and payable any unpaid principal amount of the 2011 HealthCor Notes then outstanding, plus previously accrued but unpaid interest and charges, together with the interest then scheduled to accrue (calculated at the default rate described in the immediately preceding sentence) through the end of the First Five Year Note Period or the Second Five Year Note Period, as applicable. Subject to the terms of the Ninth Amendment as discussed below, HealthCor’s ability to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2011 HealthCor Notes into fully paid and nonassessable shares of our Common Stock has been eliminated. The warrants issued with this Note were cancelled with the Ninth-Amendment dated July 10, 2018.

 

15

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 

On March 30, 2023, HealthCor noteholders owning an aggregate of $36,000,000 Replacement Notes, entered into a Replacement Note Conversion Agreement, wherein half, fifty percent, of the HealthCor Replacement Notes were converted into shares of the Company’s common stock at a conversion price of $0.10 per share, resulting in the issuance of an aggregate of 180,000,000 shares. The other related and non-related parties Replacement Notes of $8,200,000 were likewise converted into shares of the Company’s common stock at a conversion price of $0.10 per share, resulting in the issuance of a combined total aggregate of 262,000,000 shares (the “Conversion Shares”). The shares bear a lockup legend that expires December 31, 2023.

 

On May 24, 2023, HealthCor noteholders owning an aggregate of $18,000,000 Replacement Notes, presented Conversion Notices, pursuant to the terms of the Replacement Note, for the conversion of the Replacement Notes into 180,000,000 shares of the Company’s common stock at a conversion price of $0.10 per share. The shares bear a lockup legend that expires December 31, 2023.

 

Accounting Treatment 

 

When issuing debt or equity securities convertible into common stock at a discount to the fair value of the common stock at the date the debt or equity financing is committed, a company is required to record a beneficial conversion feature (“BCF”) charge. We had three separate issuances of equity securities convertible into common stock that qualify under this accounting treatment, (i) the 2011 HealthCor Notes, (ii) the 2012 HealthCor Notes and (iii) the 2014 HealthCor Notes. Because the conversion option and the 2011 HealthCor Warrants on the 2011 HealthCor Notes were originally classified as a liability when issued due to the down round provision and the removal of the provision requiring liability treatment, and subsequently reclassified to equity on December 31, 2011 when the 2011 HealthCor Notes were amended, only the accrued interest capitalized as payment in kind (’‘PIK’’) since reclassification qualifies under this accounting treatment. We recorded an aggregate of $0 and $0 in interest for the years ended December 31, 2023 and 2022, respectively, related to these transactions. For the years ended December 31, 2023, and 2022, we recorded $0 and $0, respectively, of PIK related to the notes included in the HealthCor Purchase Agreement. The face amount of the 2012 HealthCor Notes, 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes and all accrued PIK interest also qualify for BCF treatment as discussed above. Under the accounting standards, we determined that the restructuring of the HealthCor notes, pursuant to the terms of the Ninth Amendment, resulted in a troubled debt restructuring. As the future cash flows were greater than the carrying amount of the debt at the date of the amendment, we accounted for the change prospectively using the new effective interest rate.

 

Warrants were issued with the Fourth, Fifth, Eighth, Ninth, and Allonge 3 Amendment Notes and the proceeds were allocated to the instruments based on relative fair value as the warrants did not contain any features requiring liability treatment and therefore were classified as equity. At each amendment date, the warrants were recorded as debt discount, as a reduction of the net carrying amount of the debt. The debt discounts are amortized into interest expense each period under the effective interest method. The value allocated to the Ninth Amendment Warrants was $378,000. The value allocated to the Allonge 3 Amendment Warrants was $420,000.

 

NOTE 11 LEASE

 

Under ASC Topic 842, Leases (“ASC 842”), operating lease expense is generally recognized evenly over the term of the lease. The Company has an operating lease primarily consisting of office space with a remaining lease term of 14 months (Lease through  August 31, 2025). 

 

On March 4, 2020, we entered into the Fourth Amendment to Commercial Lease Agreement (the “Lease Extension”), wherein we extended the Lease through  August 31, 2025. The Lease Extension contains a renewal provision under which the Lease has been extended for an additional five-year period under the same terms and conditions of the original Lease Agreement. Management has identified this extension as a reassessment event, as we have elected to exercise the Lease Extension option even though the Company had previously determined that it was not reasonably certain to do so.

 

The Company has further concluded that the Lease Extension has no effects on the classification of the Lease. Rent expense for the six months ended June 30, 2024 and 2023 was $151,900 and $147,894, respectively.

 

Undiscounted Cash Flows

 

Future lease payments included in the measurement of operating lease liability on the condensed consolidated balance sheet as of June 30, 2024, for the following five fiscal years and thereafter as follows:

 

Quarter ending

 

Operating

 

June 30, 2024

 

Leases

 

Remaining 2024

    112,168  

2025

    150,679  

Total minimum lease payments

  $ 262,847  

Less effects of discounting

    (22,902 )

Present value of future minimum lease payments

  $ 239,945  

 

 

NOTE 12 SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through August 14, 2024, the date of filing of this Form 10-Q.

 

 

16

 
 

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

 

General

 

The following discussion and analysis provide information which our management believes to be relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read together with our financial statements and the notes to the financial statements, which are included in this Quarterly Report on Form 10-Q (the “Report”). This information should also be read in conjunction with the information contained in our Form 10-K filed with the Securities and Exchange Commission (the “SEC”) filed on August 14, 2024. The reported results will not necessarily reflect future results of operations or financial condition.

 

Throughout this Quarterly Report on Form 10-Q (the “Report”), the terms “we,” “us,” “our,” “CareView,” or “Company” refers to CareView Communications, Inc., a Nevada corporation, and unless otherwise specified, includes our wholly owned subsidiaries, CareView Communications, Inc., a Texas corporation (“CareView-TX”) and CareView Operations, LLC, a Nevada limited liability company (“CareView Operations”) (collectively known as the “Company’s Subsidiaries”). 

 

We maintain a website at www.care-view.com and our Common Stock trades on the OTCQB under the symbol “CRVW.’’

 

Company Overview and Recent Developments

 

As a leader in turnkey patient video monitoring solutions, CareView is redefining the standard of patient safety in hospitals and healthcare facilities across the country. For over a decade, CareView has relentlessly pursued innovative ways to increase patient protection, providing next generation solutions that lower operational costs and foster a culture of safety among patients, staff, and hospital leadership. With installations in more than 150 hospitals, CareView has proven that its innovative technology is creating a culture of patient safety where patient falls have decreased by 80% and sitter costs reduced by more than 65%. Anchored by the CareView Patient Safety System® and CareView Patient Care SystemTM, this modular, scalable solution delivers flexible configurations to fit any facility while significantly increasing patient safety, care, and operational savings. All configurations feature HD cameras, high-fidelity 2-way audio/video, LCD displays for the ultimate in capability, flexibility, and affordability.

 

SitterView® and TeleMedView™ allows hospital staff to use CareView’s high-quality video cameras with pan-tilt-zoom and 2-way video functionality to observe and communicate with patients remotely. With CareView, hospitals are safely monitoring more patients while providing a higher level of care by leveraging CareView’s patented technology, a portfolio that includes 40 patents. TeleMedView leverages the CareView Mobile Controller’s built-in monitor and can work with the CareView Portable Controller as well. Usage of SitterView and TeleMedView has increased in response to a growing demand for remote patient monitoring driven by increasing demands for care and staffing shortages in the healthcare industry.

 

The CareView Patient Safety System enables virtual nursing workflows for patient observation, companionship, care concierge, and administrative tasks can ease workloads and improve care delivery. Hybrid patient care, the combination of bedside and virtual care, allows hospitals to keep nurses working at the top of their licenses and creates flexible and scalable workforce options. CareView’s integrations with existing clinical workflow and patient engagement tools allow providers to access patient rooms virtually from within the EHR workflow. CareView then becomes the centralized hub for a patient-centric, interconnected virtual care system.

 

In October 2022, CareView received Innovative Technology Designation after the Innovative Technology Exchange in Dallas, Texas. Every year, healthcare experts serving on the member-led councils of Vizient, Inc., (“Vizient”), the nation’s largest healthcare performance improvement company, review select products and technologies for their potential to enhance clinical care, patient safety, healthcare worker safety or to improve business operations of healthcare organizations. Vizient’s diverse membership and customer base includes academic medical centers, pediatric facilities, community hospitals, integrated health delivery networks, and non-acute health care providers, and represents more than $130 billion in annual purchase volume. Technology designations are awarded to previously contracted products to signal to healthcare providers the impact of these innovations on patient care and business models of healthcare organizations.

 

CareView Patient Safety System

 

Our CareView Patient Safety System provides innovative ways to increase patient protection, provides advanced solutions that lower operational costs, and helps hospitals foster a culture of safety among patients, staff, and hospital leadership. We understand the importance of providing high quality patient care in a safe environment and believe in partnering with hospitals to improve the quality of patient care and safety by providing a system that monitors continuously. We are committed to providing an affordable video monitoring tool to improve the practice of nursing, create a better work environment and make the patient’s hospital stay more satisfying. Our suite of products and services can simplify and streamline the task of preventing and managing patients’ falls, enhance patient safety, improve quality of care, and reduce costs. Our products and services can be used in all types of hospitals, nursing homes, adult living centers, and selected outpatient care facilities domestically and internationally.

 

The CareView Patient Safety System includes CareView’s SitterView, providing a clear picture of up to 40 patients at once, allowing staff to intervene and document patient risks more quickly. SitterView features intuitive decision support pathway, guiding staff alarm response and pan- tilt-zoom functionality, allowing staff to home in on areas of interest. CareView’s new Analytics Dashboard provides real-time metrics on utilization, compliance, and outcome data by day, week, month, and quarter. Outcomes are automatically compared to organizational goals to evaluate real-time ROI.

 

CareView’s next generation of in-room camera; the CareView Controller features an HD camera, high-fidelity 2-way audio, and an LCD display, harnessing increased performance to deliver the ultimate in capability, flexibility, and affordability for all types of hospitals. Building on top of CareView’s patented Virtual Bed Rails® and Virtual Chair Rails® predictive technology, the CareView Controller uses machine learning to differentiate between normal patient movements and behaviors of a patient at risk. This technology results in less false alarms, faster staff intervention, and a significant reduction in patient falls.

 

The CareView Controller is available in multiple configurations for permanent or temporary situations; the CareView Mobile, Portable, and Fixed Controller. For situations that demand that the camera come to the patient, the CareView Mobile Controller on wheels comes with an uninterrupted external power supply for situations where power may not be readily available and can operate on the facility’s wireless network. For monitoring patients within a general care unit, the CareView Portable Controller can be easily removed from mounts and moved where the workflow dictates, making this application perfect for general use. For high-risk patient rooms where behavior and self-harm may be a factor, or where a patient must be continuously monitored, the CareView Fixed Controller can be installed seamlessly in the ceiling tiles leaving no exposed wiring making it ligature resistant.

 

The CareView Patient Safety System can be easily configured to meet the individual privacy and security requirements of any hospital or nursing facility. CareView is compliant with the Health Insurance Portability and Accountability Act (“HIPAA”) and certified by HITRUST. Additional HIPAA-compliant features allow privacy options to be enabled at any time by the patient, nurse, or physician.

 

  CareView Patient Safety System Products and Services Agreement with Healthcare Facilities

 

CareView’s subscription-based model is offered to healthcare facilities through a Products and Services Agreement (the “P&S Agreement(s)”). During the term of the P&S Agreement, we provide continuous monitoring of the CareView Patient Safety System products and services deployed to a healthcare facility and maintain and service all equipment installed by us. Under the subscription-based model, terms of each P&S Agreement require the healthcare facility to pay us a monthly fee based on the number of selected, installed, and activated services. None of the services provided through the Primary Package are paid or reimbursed by any third-party provider including insurance companies, Medicare, or Medicaid. We also enter into corporate-wide agreements with healthcare companies (the “Master Agreement(s)”), wherein the healthcare companies enter into individual facility level agreements that are substantially like our P&S Agreements. 

 

Master Agreements and P&S Agreements are currently negotiated for a period of three years with a provision for automatic renewal. P&S Agreements specific to pilot programs (“P&S Pilot Agreements”) contain pricing terms substantially like P&S Agreements, are generally three or six-months in length and can be extended on a month-to-month basis as required. Regarding the subscription-based model, we own all rights, title, and interest in and to the equipment we install at each location and agree to maintain and repair it; although, we may charge for repairs or replacements due to damage or misuse. We are not responsible for maintaining data arising from use of the CareView Patient Safety System or for transmission errors, corruption or compromise of data carried over local or interchange telecommunication carriers. We grant each healthcare facility a limited, revocable, non-transferable, and nonexclusive license to use the software, network facilities, content, and documentation on and in the CareView Patient Safety System to the extent, and only to the extent, necessary to access, explore and otherwise use the CareView Patient Safety System in real time. Such non-exclusive license expires upon termination of the P&S Agreement. 

 

We use specific terminology to better define and track the staging and billing of the individual components of the CareView Patient Safety System. The CareView Patient Safety System includes three components which are separately billed; the CareView Controller (previously known as RCP), the CareView SitterView Monitor, and the CareView Application Server (each component referred to as a “unit”). The term “bed” refers to each healthcare facility bed as part of the overall potential volume that a healthcare facility represents. For example, if a healthcare facility has 200 beds, the aggregate of those beds is the overall potential volume of that healthcare facility. The term “bed” is often used interchangeably with “CareView Controller” as this component of the CareView Patient Safety System consistently resides within each room where the “bed” is located. On average, there are six SitterView Monitors for each 100 beds. The term “deployed” means that the units have been delivered to the healthcare facility but have not yet been installed at their respective locations within the facility. The term “installed” means that the units have been mounted and are operational. The term “billable” refers to the aggregate of all units on which we charge fees. Units become billable once they are installed and the required personnel have been trained in their use. Units are only deployed upon the execution of a P&S Agreement or P&S Pilot Agreement.

 

 CareView Patent Safety System Sales-Based Model

 

CareView’s sales-based model commenced with the introduction of our updated technology. CareView has also aligned its contracting model to meet the preferred acquisition model in the hospital industry. CareView now sells its proprietary equipment to facilities in lieu of lending the equipment as defined under the subscription-based model. In doing so, the facility is billed for the hardware on acceptance of the contract. After CareView’s equipment is delivered to the facility, CareView begins the process of installing and securely integrating the equipment and software. Upon completion of installation, training, and “go-live”; referring to all systems in full operation, CareView bills the facility for the installation, training, and an annual software license fee. CareView will continue to bill the facility an annual software license fee until the end of the contract. The shift to the sales-based model has an immediate impact on our operations resulting in greater cash flow within 30 days of contract signing.

 

CareView continues its dedication to provide service and support on a 24x7x365 basis for every customer under every contract.

 

CareView Connect

 

Our mission is to be the leading provider of resident monitoring products and services for the long-term care industry. We took what we learned in our medical facility business and applied it to developing a product to serve the long-term care market. With CareView Connect Quality of Life® System (“CareView Connect”), CareView has again positioned itself as a technology leader with its innovative suite of products specifically designed for all aspects of the long-term care market, including Nursing Care, Home Care, Assisted Living and Independent Living.

 

With this mission in mind, in the second quarter of 2018, the Company introduced a new sensor product with application in both the assisted living center market and the home health market. CareView Connect leverages both passive and active sensors to track the activities of daily life. CareView Connect provides peace of mind by using data from the resident’s activity, existing conditions, and environment to notify a caregiver of potential emergencies and identify the need for dignified support. CareView Connect consists of a small emergency assist button, two motion sensors, one sleep sensor, and one event sensor. Resident activity levels, medication administration, sleep patterns, and requests for assistance can all be monitored depending on which options are selected.

 

The skilled nursing home market consists of approximately 2,000,000 beds, which is double the size of the current hospital/healthcare facility bed market. The assisted living center market is even larger at approximately 3,000,000 beds. Our products flow naturally into the nursing home space as it is substantially the same setting as hospital rooms.

 

CareView Connect is a platform consisting of several products and applications targeted at improving the level of care and efficiency. CareView built a cohesive and tightly integrated solution that solves several problems that long-term care facilities face. We offer an array of wearable and stationary buttons that allow a resident to summon help either for an emergency or assistance, which can be anything from toileting help to assistance putting on their shoes. We offer a mobile app capable of delivering an alert to the caregiver and allows them to document information around that alert, how long before the alert was handled and, what was the cause of the alert, and if it was not acknowledged in a timely manner then the alert is escalated to another individual or group. This ensures that every alert is responded to timely and is verifiable.

 

Alert Management and Monitoring System

 

CareView Connect provides a suite of hardware and software that facilitate a data-driven solution for alert management and monitoring. CareView Connect’s solution provides additional context, including location of the resident, which improves response time by the staff. The alert system includes a documentation platform that allows the facility’s staff to classify the reason for alerts and provides metrics around response time. CareView Connect’s solution involves several passive sensors that monitor the resident.

 

 Caregiver Platform

 

The caregiver platform includes a “Leave of Absence” component, which allows the facility to document when the resident is outside of their room for a duration of time. This information is incorporated with known data from the workflows and sensors to improve awareness. The Caregiver Connect mobile application provides a convenient and intuitive interface to the CareView Connect platform. The caregiver can use the mobile app to capture important information and interface with critical workflows, such as acknowledging and documenting alert presses by the resident. CareView Connect also provides a product focused on capturing and measuring the mental state and pain experienced by the resident. “How are you feeling today?” provides a convenient way to capture information about the mental state of the resident using emojis. Similarly, “What is your pain today?” allows the staff to categorize and document pain. Connect Resident is a tablet application intended for the resident’s direct use. This product currently supports video conferencing with a remote caregiver, becoming a communications conduit for telehealth. Connect Resident also supports “How are you feeling today?”, which allows the resident to submit this information directly.

 

 Quality of Life Metrics

 

CareView developed its own algorithm for measuring quality of life based on “best of breed” research and leveraging the data collected by the platform. CareView Connect’s Quality of Life Metrics focuses on several categories, including Physical Activity, Bodily Pain, General Health, Vitality, Social Interaction, Mental Health, and Sleep Quality. Leveraging this data, the facility and their staff have improved visibility into the health and well-being of their residents. By applying machine learning and predictive analytics, subtle patterns and trends that may not otherwise be visible become actionable. The facility can use this information to present a more compassionate and capable level of care, differentiating the facility from their competition. The Quality-of-Life Metrics information can be made available to the family and loved ones, opening a new channel of remote awareness and care. Because the information is collected automatically, the family gains awareness on issues of which their loved ones may normally be unaware. The Connect Family mobile application allows family members to monitor their loved one and receive alerts and notifications based on their preferences.

 

 Pricing Structure and Revenue Streams

 

The CareView Connect suite of products and services offers multiple pricing models. We work with each facility on pricing to offer an affordable package based on the demographics of the residents of the facility. The pricing structure with each facility is negotiated separately. Typically, we offer the CareView Connect basic package at a price per monitored room with varying price structures based on number of sensors and number of residents in each facility.

 

Purchasing Agreement with Decisive Point Consulting Group, LLC

 

On February 2, 2021, we partnered with Decisive Point Consulting Group, a Department of Veterans Affairs Contractor Verification Enterprise (CVE) and a Verified Service-Disabled Veteran Owned Small Business (SDVOSB), to expand our reach within the VA hospitals and Community Living Centers space. Our partnership reflects our desire to collaborate with companies that share our vision of patient safety. We continue to use this partnership to contract with VA hospitals and their Community Living Centers (“CLC”).

 

Indefinite Delivery Indefinite Quality (IDIQ) Contract

 

On September 10, 2021, the Company entered an Indefinite Delivery Indefinite Quality (IDIQ) contract for Telecare Services with Shore Systems and Solutions, LLC (S3). The award provides S3 with a path to providing the CareView System to veterans and their families receiving care at the 1,293 Veterans Health Administration (“VHA”) facilities across the United States and Territories.

 

 

General Service Administration Multiple Award Schedule

 

Pursuant to the terms of the Company’s General Service Administration (“GSA”) Multiple Award Schedule contract (“MAS”), the MAS allows us to sell the CareView System at a negotiated rate to the approximate 169 United States Department of Veterans Affairs (“VA”) facilities with over 39,000 licensed beds and the approximate 42 DOD hospitals with over 2,600 licensed beds. The sales-based model was added to the MAS, which allows us to sell the proprietary hardware and license the software on an annualized basis. The MAS is one of the most widely accepted government contract vehicles available to agency procurement officers. GSA’s application process requires potential vendors to be recognized as highly credible and well established. CareView is the sole source provider. Our products and services represent an enormous opportunity to improve the health and safety of our Nation’s veterans.

 

Group Purchasing Agreement with HealthTrust Purchasing Group, LP

 

On December 14, 2016, the Company entered a Group Purchasing Agreement with HealthTrust Purchasing Group, L.P. (“HealthTrust”) (the “HealthTrust GPO Agreement”), the Nation’s only committed-model Group Purchasing Organization (“GPO”) headquartered in Nashville, Tennessee. HealthTrust serves approximately 1,600 acute care facilities and members in more than 26,000 other locations, including ambulatory surgery centers, physician practices, long-term care, and alternate care sites. The agreement was effective on January 1, 2017 and all CareView System components and modules are available for purchase by HealthTrust’s exclusive membership. HealthTrust members may order CareView’s products and services included in the agreement directly from CareView.

 

On October 1, 2018, the Company added CareView Connect to the HealthTrust GPO Agreement.

 

On November 1, 2020, the sales-based contract model was added to the HealthTrust GPO Agreement which allows us to sell the proprietary hardware and license the software on an annualized basis. On December 1, 2021, the HealthTrust GPO Agreement was renewed for another 3-year term. We continue to work with HealthTrust and their members to expand contracts.

 

Group Purchasing Agreement with Premier, Inc.

 

On June 8, 2022 the Company entered a Group Purchasing Agreement with Premier, Inc. (“Premier”), headquartered in Charlotte, N.C. Premier is a leading healthcare improvement company, uniting an alliance of more than 4,400 U.S. hospitals and health systems and approximately 225,000 other providers and organizations to transform healthcare. The agreement was effective on June 15, 2022 and all Gen 5 CareView System components and modules are available for purchase by Premier’s exclusive membership. Premier members may order CareView’s products and services included in the agreement directly from CareView. We are continuing to work with Premier on new contracts.

 

Group Purchasing Agreement with Vizient

 

On February 15, 2023 the Company entered a Group Purchasing Agreement with Vizient, headquartered in Irving, TX. Vizient, the nation’s largest health care performance improvement company, has a diverse membership and customer base, including academic medical centers, pediatric facilities, community hospitals, integrated health delivery networks, and non-acute health care providers, and represents more than $130 billion in annual purchasing volume. The multi-year agreement allows Vizient members the opportunity to benefit from pre-negotiated pricing for CareView products. The agreement was effective on February 15, 2023 and all Gen 5 CareView System components and modules are available for purchase by Vizients’s exclusive membership. Vizient members may order CareView’s products and services included in the agreement directly from CareView. We are continuing to work with Vizient on new contracts.

 

Group Purchasing Agreement with Panda Health

 

On January 1, 2024, the Company entered an agreement with Panda Health, a platform and marketplace connecting digital health and other information technology suppliers with Members and various services, relating to digital health solutions. Panda Health transforms how health systems connect with, explore, and adopt leading digital health technologies. Panda Health minimizes risk associated with digital health decisions, with processes and insights that are backed by thousands of data points, hundreds of solution evaluations, deep market intelligence, and an unmatched team of digital health advisors. The agreement was effective January 1, 2024 and is for a three-year term. 

 

Summary of Product and Service Usage

 

Our contracts typically include multiple combinations of our products, software solutions, and related services with multiple payment options. Customers can continue to lease our equipment under our subscription model or can purchase our equipment upfront under our sales-based contract model with an auto-renewal at the end of each contract period. The new sales-based contract offers our customers the flexibility of capitalizing on their investment, which in turn, replenishes our cash reserves. For the years ended December 31, 2023, and 2022, the Company executed sales-based contracts in approximate aggregated amounts of $8,223,000 and $4,309,000.

 

 

Results of Operations

 

Three months ended June 30, 2024, compared to three months ended June 30, 2023

 

   

Three months ended

         
   

June 30,

         
   

2024

   

2023

   

Change

 
   

(000 ’s)

 

Revenue

  $ 1,974     $ 3,710     $ (1,736 )

Operating expenses

    2,292       2,890       (598 )

Operating income

    (318 )     820       (1,138 )

Other, net

    (788 )     (864 )     (76 )

Net loss

  $ (1,106 )   $ (44 )   $ (1,062 )

 

Revenue

 

Revenue decreased approximately $1,736,000 for the three months ended June 30, 2024, as compared to the same period in 2023. The decrease was attributable to no new customer equipment sales in the second quarter.

 

Operating Expenses

 

Our principal operating costs include the following items as a percentage of total operating expense.

 

   

Three months ended

 
   

June 30,

 
   

2024

   

2023

 

Human resource costs, including benefits and non-cash compensation

    64 %     51 %

Professional and consulting costs

    7 %     9 %

Depreciation and amortization

    3 %     3 %

Other product deployment costs, excluding human resources and travel and entertainment costs

    9 %     10 %

Travel and entertainment expense

    1 %     3 %

Other expenses

    16 %     24 %

 

Operating expenses decreased by a net 21% because of the following items:

 

   

(000’s)

 

Human resource costs, including benefits and non-cash compensation

  $ (12 )

Depreciation and amortization

    (40 )

Other product deployment costs, excluding human resources and travel and entertainment expense

    (69 )

Professional and consulting costs

    (85 )

Travel and entertainment expense

    (66 )

Other expenses

    (326 )
    $ (598 )

 

Human resource related costs (including salaries and benefits and non-cash compensation) decreased approximately $12,000 due to no severance and PTO payouts, along with lower salary of replacement staff during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Product deployment costs decreased approximately $69,000 due to decrease in cost of sales of hardware and associated installation, training and go-live. Professional and consulting costs decreased approximately $85,000 due to less accounting, marketing and clinical consultants.  Travel and entertainment costs decreased approximately $66,000 due to less corporate transportation and airfare costs. For the comparable periods, other expenses decreased approximately $326,000, primarily as a result of public entity costs, advertising and marketing, business insurance and warehouse supplies.

 

 

Other, net

 

Other non-operating income and expense decreased by approximately $76,000, or 9%, for the three months ended June 30, 2024 in comparison to the same period in 2023, primarily because of no debt restructuring costs while earning higher interest with more cash in bank.

 

Net Loss

 

As a result of the factors above, our second quarter 2024 net loss of approximately $1,107,000, increased approximately $1,062,000, or 2,371%, as compared to approximately $45,000 net loss for the second quarter of 2023.

 

Six months ended June 30, 2024, compared to six months ended June 30, 2023

 

   

Six months ended

         
   

June 30,

         
   

2024

   

2023

   

Change

 
   

(000’s)

 

Revenue

  $ 4,177     $ 5,492     $ (1,315 )

Operating expenses

    4,729       5,189       (460 )

Operating income

    (552 )     303       (855 )

Other, net

    (1,577 )     (1,694 )     (117 )

Net loss

  $ (2,129 )   $ (1,391 )   $ (738 )

 

Revenue

 

Revenue decreased approximately $1,315,000 for the six months ended June 30, 2024, as compared to the same period in 2023. The decrease was attributable to only one new customer sale in the six-month period.

 

Other, net decreased approximately $118,000 for the six months ended June 30, 2024, as compared to the same period in 2023. The decrease was attributable to the no debt restructuring costs while earning higher interest with more cash in bank.

 

Operating Expenses

 

Our principal operating costs include the following items as a percentage of total operating expense.

 

   

Six months ended

 
   

June 30,

 
   

2024

   

2023

 

Human resource costs, including benefits and non-cash compensation

    63 %     55 %

Professional and consulting costs

    7 %     10 %

Depreciation and amortization

    2 %     5 %

Other product deployment costs, excluding human resources and travel and entertainment costs

    9 %     7 %

Travel and entertainment expense

    1 %     3 %

Other expenses

    18 %     20 %

 

Operating expenses decreased by a net 9% of approximately $460,000. The decrease was attributable to other expenses of approximately $242,000 less than comparable period from no debt-to-equity conversion costs, less warehouse supplies, renegotiated business insurance, less R&D and no Dell financing. The Professional and consulting costs of approximately $200,000 being lower than the comparable period is attributed to not using Centri Business Consulting, Danielle Lewis Marketing Services and converting a 1099 to an employee.

 

Net Loss

 

Year-To-date 2024 net loss of approximately $2,129,000 increased approximately $738,000 or 53%, as compared to approximately $1,392,000 net loss for the comparable six months of 2023.

 

 

Liquidity and Capital Resources

 

Accounting standards require management to evaluate whether the Company can continue as a going concern for a period of one year after the date of the filing of this Form 10-Q (“evaluation period”). In evaluating the Company’s ability to continue as a going concern, management considers the conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months after the Company issues its financial statements. For the period ended June 30, 2024, management considers the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations due before August 14, 2025.

 

The Company is subject to risks like those of healthcare technology companies whereby revenues are generated based on both on a sales-based and subscription-based business model such as dependence on key individuals, uncertainty of product development, generation of revenues, positive cash flow, dependence on outside sources of capital, risks associated with research, development, and successful testing of its products, successful protection of intellectual property, ability to maintain and grow its customer base, and susceptibility to infringement on the proprietary rights of others. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill the Company’s growth and operating activities and generating a level of revenues adequate to support the Company’s cost structure.

 

The Company has experienced net losses and significant cash outflows from cash used in operating activities over the past years. As of and for the three months ended June 30, 2024, the Company had an accumulated deficit of $210,014,451, loss from operations of $319,053, net cash provided by operating activities of $749,331, and an ending cash balance of $1,738,994.

 

As of June 30, 2024, the Company had a working capital deficit of $39,291,576 consisting primarily of PDL notes payables including accrued interest. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date the condensed consolidated financial statements were issued. While management will look to continue funding operations by increased sales volumes and raising additional capital from sources such as sales of its debt or equity securities or loans to meet operating cash requirements, there is no assurance that management’s plans will be successful.

 

On March 8, 2022, we agreed with the HealthCor Parties to (i) amend the 2011 HealthCor Notes to extend the maturity date of the 2011 HealthCor Notes from April 20, 2022 to April 20, 2023 by entering into Allonge No. 4 to the 2011 HealthCor Notes (the “Third 2011 Note Allonges”) and (ii) amend the 2012 HealthCor Notes to extend the maturity date of the 2012 HealthCor Notes from April 20, 2022 to April 20, 2023 by entering into Allonge No. 4 to the 2012 HealthCor Notes (the “Fourth 2012 Note Allonges”) (such amendments to the 2011 HealthCor Notes and 2012 HealthCor Notes together, the “HealthCor Note Extensions”). In connection with the HealthCor Note Extensions, we issued the HealthCor parties warrants to purchase an aggregate of 3,000,000 shares of our Common Stock at an exercise price per share equal to $0.09 per share (subject to adjustment as described therein) and with an expiration date of March 08, 2032 (collectively the “2021 HealthCor Warrants”).

 

On December 30, 2022, the Company entered into a consent and agreement to cancel and exchange existing notes and issue replacement notes and cancel warrants (the “Cancellation Agreement”) with certain holders (the “Investors”) of senior secured convertible promissory notes (“Notes”) and warrants (“Warrants”) to purchase the Company’s common stock, that were issued pursuant to the Note and Warrant Purchase Agreement, dated as of April 21, 2011 (as amended, modified, or supplemented from time to time) (the “Purchase Agreement”). The Cancellation Agreement provided for the cancellation of all outstanding Notes and Warrants issued pursuant to the Purchase Agreement in exchange for the issuance of replacement senior secured convertible promissory notes (the “Replacement Notes”) with an aggregate principal amount of $44,200,000. The maturity date of the Replacement Notes was December 31, 2023. No interest accrues on the Replacement Notes. As of June 30, 2023, all replacement notes were converted into shares of the Company’s common stock at $0.10 per share.

 

On March 30, 2023, investors holding an aggregate of $26,200,000 of Replacement Notes exercised their right to convert the debt into shares of the Company’s common stock at $0.10 per share (the “First Tranche”). Upon conversion, the Company issued the investors in the First Tranche an aggregate of 262,000,000 shares. The First Tranche only converted 50% of the HealthCor Replacement Notes. Due to the insufficient number of the Company’s available authorized shares of common stock, a shareholder vote to authorize an increase in the Company’s authorized shares of common stock to 800,000,000 was approved on May 26, 2023.

 

Effective May 22, 2023, the Company’s increased its authorized shares of common stock from 500,000,000 shares to 800,000,000 shares.

 

 

On May 24, 2023, noteholders owning an aggregate of $18,000,000 Replacement Notes, provided the Company with a Conversion Notice, pursuant to the terms of the Replacement Notes, to convert the Replacement Notes into shares of the Company’s common stock at a conversion price of $0.10 per share, resulting in the issuance of an aggregate of 180,000,000 shares. 

 

Management continues to monitor the immediate and future cash flow needs of the Company in a variety of ways which include forecasted net cash flows from operations, capital expenditure control, new inventory orders, debt modifications, increases sales outreach, streamlining and controlling general and administrative costs, competitive industry pricing, sale of equities, debt conversions, new product or services offerings, and new business partnerships.

 

The Company’s net losses, cash outflows, and working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern through August 13, 2025. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the Company’s cost structure.

 

Critical Accounting Estimates

 

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Commission on March 29, 2024 and incorporated herein by reference, for detailed explanation of our critical accounting estimates, which have not changed significantly during the three and six months ended June 30, 2024.

 

 

Recently Issued and Newly Adopted Accounting Pronouncements

 

We do not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying condensed consolidated financial statements.

 

Recent Events

 

None.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

None.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), we carried out an evaluation, with the participation of our management, including Steve G. Johnson, our Chief Executive Officer (“CEO”) and principal executive officer, and Jason T. Thompson, our principal financial officer and chief accounting officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report.

 

Under the supervision and with the participation of our CEO and principal financial and chief accounting officer, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based on that evaluation, our CEO and principal financial and chief accounting officer concluded that our disclosure controls and procedures were not effective as of June 30, 2024 due to the continuing existence of a material weakness in internal control over financial reporting described below (which we view as an integral part of our disclosure controls and procedures). Based on the performance of additional procedures designed to ensure the reliability of our financial reporting, we believe that the condensed consolidated financial statements included in this Report fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with accounting principles generally accepted in the United States (“GAAP”).

 

Material Weakness and Remediation Plan

 

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that the Company did not maintain effective internal control over financial reporting as of the quarter ended June 30, 2024 due to the existence of the material weaknesses described below.

 

Management determined that the Company did not maintain effective internal control over financial reporting as of June 30, 2024, due to the existence of the following material weaknesses:

 

 

It was determined that the Company does not have effective controls over the identification and evaluation of the GAAP accounting for certain complex transactions in the areas of revenues, debt, and income taxes, due to a lack of technical expertise.

 

Based on additional procedures and post-closing review, Management concluded that the consolidated financial statements including this report present fairly, in all material respects, results of operations, and cash flows for the periods presented, in conformity with accounting principles accepted in the United States.

 

We began to take steps to address our material weaknesses, through our remediation plan. We implemented the following measures:

 

 

Identify and employ additional full-time highly qualified accounting personnel to join the corporate accounting function to enhance overall monitoring, maintain standard internal controls, and accounting oversight within the Company.

 

 

Implement enhanced documentation associated with management review controls and validation of the completeness and accuracy of financial reporting and key management financial reports.

 

 

Provide training of standard operating procedures and internal controls to key stakeholders within the supply chain, logistics, and inventory processes.

 

 

Enhance and automate existing internal control to ensure proper authorization, review, and recording of financial transactions.

 

 

On an as-needed basis, identify and engage certain third-party subject matter experts to assist with the preparation and reporting of complex business and accounting transactions.

 

Changes in Internal Control Over Financial Reporting

 

Other than as described above, there were no changes in our internal control over financial reporting identified in management’s evaluations pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on Controls

 

Our management can provide no assurance that our disclosure controls and procedures or our internal control over financial reporting can prevent all errors and all fraud under all circumstances. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or will be detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors.

 

Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

 

Item 5. Other Information.

 

None.

 

 

Item 6. Exhibits.

 

Exhibit No.

Date of Document

Name of Document

31.1

August 14, 2024

Certification of Chief Executive Officer of Periodic Report pursuant to Rule 13a-14a and Rule 14d-14(a)*

31.2

August 14, 2024

Certification of Chief Financial Officer of Periodic Report pursuant to Rule 13a-14a and Rule 15d-14(a)*

32

August 14, 2024

Certifications under Section 906*

101.SCH

n/a

Inline XBRL Taxonomy Extension Schema Document*

101.CAL

n/a

Inline XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF

n/a

Inline XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB

n/a

Inline XBRL Taxonomy Extension Label Linkbase Document*

101.PRE

n/a

Inline XBRL Taxonomy Extension Presentation Linkbase Document*

104   Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

 

*

Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

DATE: August 14, 2024

 

 

CAREVIEW COMMUNICATIONS, INC.

     
 

By:

/s/ Steven G. Johnson

   

Steven G. Johnson

   

Chief Executive Officer

   

Principal Executive Officer

     
 

By:

/s/ Jason T. Thompson

   

Jason T. Thompson

   

Principal Financial Officer

   

Chief Accounting Officer

 

25

CAREVIEW COMMUNICATIONS, INC. 10-Q

EXHIBIT 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Steven G. Johnson, certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of CareView Communications, Inc.

 

 

(2)

Based on my knowledge, this report does not contain any untrue statements 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(s) 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 evaluations; 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(s) and I have disclosed, based on our most recent evaluation of the 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.

 

August 14, 2024

/s/ Steven G. Johnson

 

Steven G. Johnson

 

Chief Executive Officer

 

Principal Executive Officer

 

 

CAREVIEW COMMUNICATIONS, INC. 10-Q

EXHIBIT 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Jason T. Thompson, certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of CareView Communications, Inc.

 

 

(2)

Based on my knowledge, this report does not contain any untrue statements 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(s) 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 evaluations; 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(s) and I have disclosed, based on our most recent evaluation of the 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.

 

August 14, 2024

/s/ Jason T. Thompson

 

Jason T. Thompson

 

Principal Financial Officer

 

Chief Accounting Officer

 

 

CAREVIEW COMMUNICATIONS, INC. 10-Q

EXHIBIT 32

 

CERTIFICATIONS UNDER SECTION 906

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of CareView Communications, Inc., a Nevada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

The Quarterly Report for the quarter ended June 30, 2024 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

August 14, 2024

/s/ Steven G. Johnson

 

Steven G. Johnson

 

Chief Executive Officer

 

Principal Executive Officer

 

August 14, 2024

/s/ Jason T. Thompson

 

Jason T. Thompson

 

Chief Accounting Officer

 

Principal Financial Officer

 

 
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Document And Entity Information - shares
6 Months Ended
Jun. 30, 2024
Aug. 14, 2024
Document Information [Line Items]    
Entity Central Index Key 0001377149  
Entity Registrant Name CareView Communications Inc  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Document Transition Report false  
Entity File Number 000-54090  
Entity Incorporation, State or Country Code NV  
Entity Tax Identification Number 95-4659068  
Entity Address, Address Line One 405 State Highway 121, Suite B-240  
Entity Address, City or Town Lewisville  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 75067  
City Area Code 972  
Local Phone Number 943-6050  
Title of 12(b) Security Common Stock, $0.001 par value per share  
Trading Symbol CRVW  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   583,880,748
v3.24.2.u1
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Current Assets:    
Cash and restricted cash $ 1,738,994 $ 1,145,871
Accounts receivable 1,342,847 1,167,934
Inventory 309,371 294,435
Other current assets 437,341 335,091
Total current assets 3,828,553 2,943,331
Property and equipment, net 238,794 317,626
Other Assets:    
Intangible assets, net 407,983 406,301
Operating lease asset 213,317 292,990
Other assets, net 350,038 302,010
Total other assets 971,338 1,001,301
Total assets 5,038,685 4,262,258
Current Liabilities:    
Accounts payable 436,125 598,095
Deferred revenue 3,150,192 1,752,061
Operating lease liability 193,634 188,184
Accrued interest payable 18,083,389 16,479,139
Other current liabilities 556,789 489,497
Total current liabilities 43,120,129 40,206,976
Long-term Liabilities:    
Operating lease liability 46,311 139,099
Other liabilities 52,771 178,907
Total long-term liabilities 99,082 318,006
Total liabilities 43,219,211 40,524,982
Stockholders' Deficit:    
Preferred stock - par value $0.001; 20,000,000 shares authorized; no shares issued and outstanding 0 0
Common stock - par value $0.001; 800,000,000 shares authorized; 583,880,748 issued and outstanding 583,881 583,881
Additional paid in capital 171,250,044 171,038,349
Accumulated deficit (210,014,451) (207,884,954)
Total stockholders' deficit (38,180,526) (36,262,724)
Total liabilities and stockholders' deficit 5,038,685 4,262,258
Nonrelated Party [Member]    
Current Liabilities:    
Notes payable 20,000,000 20,000,000
Related Party [Member]    
Current Liabilities:    
Notes payable $ 700,000 $ 700,000
v3.24.2.u1
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares
Jun. 30, 2024
Dec. 31, 2023
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized (in shares) 20,000,000 20,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock par value (in dollars per share) $ 0.001 $ 0.001
Common stock shares authorized (in shares) 800,000,000 800,000,000
Common stock shares issued (in shares) 583,880,748 583,880,748
Common stock shares outstanding (in shares) 583,880,748 583,880,748
v3.24.2.u1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ / shares in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Revenues        
Total revenue $ 1,973,639 $ 3,710,109 $ 4,176,878 $ 5,492,368
Operating expenses:        
Cost of equipment 42,460 224,997 91,644 256,929
Network operations 640,685 763,487 1,483,986 1,468,530
General and administration 789,509 1,051,953 1,407,293 1,749,720
Sales and marketing 236,533 230,814 564,217 399,233
Research and development 515,234 515,374 1,042,709 1,034,006
Depreciation and amortization 68,271 103,797 139,468 280,628
Total operating expense 2,292,692 2,890,422 4,729,317 5,189,046
Operating income (loss) (319,053) 819,687 (552,439) 303,322
Other income and (expense)        
Interest expense (802,125) (865,627) (1,604,250) (1,696,961)
Interest income 13,907 1,133 27,192 2,020
Total other expense (788,218) (864,494) (1,577,058) (1,694,941)
Loss before taxes (1,107,271) (44,807) (2,129,497) (1,391,619)
Provision for income taxes 0 0 0 0
Net loss $ (1,107,271) $ (44,807) $ (2,129,497) $ (1,391,619)
Net loss per share (in dollars per share) $ (0) $ (0) $ (0) $ (0)
Weighted average number of common shares outstanding, basic, and diluted (in shares) 583,880,748 463,880,748 583,880,748 304,336,304
Subscription Based Lease [Member]        
Revenues        
Total revenue $ 1,008,345 $ 1,113,887 $ 2,019,145 $ 2,320,984
Sales Based Equipment Package [Member]        
Revenues        
Total revenue 246,620 1,837,088 816,815 1,996,785
Sales Based Software Bundle [Member]        
Revenues        
Total revenue $ 718,674 $ 759,134 $ 1,340,918 $ 1,174,599
v3.24.2.u1
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance (in shares) at Dec. 31, 2022 141,880,748      
Balance at Dec. 31, 2022 $ 141,881 $ 127,130,055 $ (203,932,665) $ (76,660,729)
Stock based compensation $ 0 62,260 0 62,260
Debt to equity conversion at $0.10 (in shares) 262,000,000      
Debt to equity conversion at $0.10 $ 262,000 25,938,000 0 26,200,000
Net loss $ 0 0 (1,346,812) (1,346,812)
Balance (in shares) at Mar. 31, 2023 403,880,748      
Balance at Mar. 31, 2023 $ 403,881 153,130,315 (205,279,477) (51,745,281)
Balance (in shares) at Dec. 31, 2022 141,880,748      
Balance at Dec. 31, 2022 $ 141,881 127,130,055 (203,932,665) (76,660,729)
Net loss       (1,391,619)
Balance (in shares) at Jun. 30, 2023 583,880,748      
Balance at Jun. 30, 2023 $ 583,881 171,005,111 (205,324,284) (33,735,292)
Balance (in shares) at Mar. 31, 2023 403,880,748      
Balance at Mar. 31, 2023 $ 403,881 153,130,315 (205,279,477) (51,745,281)
Stock based compensation $ 0 54,796 0 54,796
Debt to equity conversion at $0.10 (in shares) 180,000,000      
Debt to equity conversion at $0.10 $ 180,000 17,820,000 0 18,000,000
Net loss $ 0 0 (44,807) (44,807)
Balance (in shares) at Jun. 30, 2023 583,880,748      
Balance at Jun. 30, 2023 $ 583,881 171,005,111 (205,324,284) (33,735,292)
Balance (in shares) at Dec. 31, 2023 583,880,748      
Balance at Dec. 31, 2023 $ 583,881 171,038,349 (207,884,954) (36,262,724)
Stock based compensation 0 53,271 0 53,271
Net loss $ 0 0 (1,022,226) (1,022,226)
Balance (in shares) at Mar. 31, 2024 583,880,748      
Balance at Mar. 31, 2024 $ 583,881 171,091,620 (208,907,180) (37,231,679)
Balance (in shares) at Dec. 31, 2023 583,880,748      
Balance at Dec. 31, 2023 $ 583,881 171,038,349 (207,884,954) (36,262,724)
Net loss       (2,129,497)
Balance (in shares) at Jun. 30, 2024 583,880,748      
Balance at Jun. 30, 2024 $ 583,881 171,250,044 (210,014,451) (38,180,526)
Balance (in shares) at Mar. 31, 2024 583,880,748      
Balance at Mar. 31, 2024 $ 583,881 171,091,620 (208,907,180) (37,231,679)
Stock based compensation 0 158,424 0 158,424
Net loss $ 0 0 (1,107,271) (1,107,271)
Balance (in shares) at Jun. 30, 2024 583,880,748      
Balance at Jun. 30, 2024 $ 583,881 $ 171,250,044 $ (210,014,451) $ (38,180,526)
v3.24.2.u1
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) (Parentheticals) - $ / shares
May 24, 2023
Mar. 30, 2023
Debt Converted to Equity [Member]    
Debt to equity conversion price per share (in dollars per share) $ 0.1 $ 0.1
v3.24.2.u1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITES    
Net loss $ (2,129,497) $ (1,391,619)
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Depreciation 108,710 194,619
Amortization of intangible assets 20,577 70,697
Amortization of deferred installation costs 10,182 15,312
Non-cash lease expense 79,674 67,859
Stock based compensation 211,695 117,056
Changes in operating assets and liabilities:    
Accounts receivable (174,913) (1,061,428)
Inventory (14,936) 153,773
Other current assets (102,250) (375,601)
Accounts payable (161,970) (75,286)
Accrued interest 1,604,250 1,604,250
Other current liabilities 67,292 481,398
Deferred revenue 1,286,061 480,156
Deferred sales commissions 31,794 (12,550)
Operating lease liability (87,338) (72,352)
Net cash flows provided by operating activities 749,331 196,284
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of property and equipment (29,878) (1,943)
Patent, trademark, and other intangible asset costs (120,459) 0
Net cash flows used in investing activities (150,337) (1,943)
CASH FLOWS FROM FINANCING ACTIVITIES    
Repayment of vehicle loan (5,871) (7,162)
Net cash flows used in financing activities (5,871) (7,162)
Increase in cash 593,123 187,179
Cash, beginning of period 1,145,871 520,166
Cash and restricted cash, end of period 1,738,994 707,345
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITES    
Non-cash debt-to-equity conversion $ 0 $ 44,200,000
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

Interim Financial Statements

 

The accompanying unaudited interim condensed consolidated financial statements of CareView Communications, Inc. (“CareView”, the “Company”, “we”, “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 29, 2024.

 

Revenue Recognition

 

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”). For our subscription service contracts, we have employed the practical expedient discussed in ASC 606-10-55-18 related to invoicing as we have the right to consideration from our customers in the amount that corresponds directly with the value to the customer of our performance completed to date and therefore, we recognize revenue upon invoicing as further discussed below.

 

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. For those customers for which we are required to collect sales taxes, we record such sales taxes on a net basis which has no effect on the amount of revenue or expenses recognized as the sales taxes are a flow through to the taxing authority.

 

We enter into contracts with customers that may provide multiple combinations of our products, software solutions, and other related services, which are generally capable of being distinct and accounted for as separate performance obligations. Performance obligations that are not distinct at contract inception are combined.

 

Customer contract fulfillment typically involves multiple procurement promises, which may include various equipment, software subscription, project-related installation and training services, and support. We allocate the transaction price to each performance obligation based on estimated relative standalone selling price. Revenue is then recognized for each performance obligation upon transferring control of the hardware, software, and services to the customer and in an amount that reflects the consideration we expect to receive and the estimated benefit the customer receives over the term of the contract.

 

Generally, we recognize revenue under each of our performance obligations as follows:

 

 

Subscription services – We recognize subscription revenues monthly over the contracted license period.

 

Equipment packages – We recognize equipment revenues when control of the devices has been transferred to the client (“point in time”).

 

Software bundle and related services related to sales-based contracts – We recognize our software subscription, installation, training, and other services on a straight-line basis over the estimated contracted license period (“over time”).

 

The Company earns sales-based contract revenue from services rendered under specific agreements, which hinge on a third-party reseller who possesses the exclusive authority to engage directly with veteran-owned hospitals. Evaluating the Company’s role in these contracts necessitates assessing whether it functions as the principal or agent, a determination that involves analyzing the extent of control the Company wields over the contracts.

 

Following its assessment, the Company reports revenue from services provided under such contracts on a gross basis. This decision is justified by the Company’s primary responsibility to fulfill the contractual obligations, including delivery and installation of equipment and software, training, and its control over other services within the contract period. Furthermore, the Company directly sets the contract price with its customers based on the services outlined in the statement of work. As the Company is responsible for fulling this promise and maintains control, the Company is acting as the principal.

 

Disaggregation of Revenue 

 

The following presents net revenues disaggregated by our business models:

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Sales-based contract revenue

        

Equipment package, net (point in time)

 $816,815  $1,996,785 

Software bundle (over time)

  1,340,918   1,174,599 

Total sales-based contract revenue

  2,157,733   3,171,384 
         

Subscription-based lease revenue

  2,019,145   2,320,984 

Net revenue

 $4,176,878  $5,492,368 

 

Contract Liabilities

 

Our subscription-based contracts payment arrangements are required to be paid monthly which are recognized into revenue when received. Some customers choose to pay their subscription fee in advance. Customer payments received in advance of satisfaction of the related performance obligations are deferred as contract liabilities. These amounts are recorded as “deferred revenue” in our condensed consolidated balance sheets and recognized into revenues over time.

 

Our sales-based contract payment arrangements with our customers typically include an initial equipment payment due upon signing of the contract and subsequent payments when certain performance obligations are completed. Customer payments received in advance of satisfaction of related performance obligations are deferred as contract liabilities. These amounts are recorded as “deferred revenue” in our condensed consolidated balance sheets and recognized into revenues as either a point in time or over time.

 

During the six months ended June 30, 2024 and 2023, a total of $0 and $16,094, respectively, of subscription-based deferred contract liability was recognized as revenue. The table below details the subscription-based contract liability activity during the six months ended June 30, 2024 and 2023, included in the Other current liabilities.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $  $21,145 

Additions

      

Transfer to revenue

     (16,094)

Balance, end of period

 $  $5,051 

 

During the six months ended June 30, 2024 and 2023, a total of $1,322,919 and $822,974, respectively, of sales-based deferred contract liability was recognized as revenue. The table below details the sales-based contract liability activity during the six months ended June 30, 2024 and 2023, included in the Other current liabilities.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $1,922,925  $869,485 

Additions

  2,600,786   1,319,224 

Transfer to revenue

  (1,322,919)  (822,974)

Balance, end of period

 $3,200,792  $1,365,735 

 

As of June 30, 2024, the aggregate amount of deferred revenue from subscription-based contracts and sales-based contracts allocated to performance obligations that are unsatisfied or partially satisfied is approximately $3,200,792 and will be recognized into revenue over time as follows:

 

Years Ending December 31,

 

Amount

 

2024

 $1,877,116 

2025

  1,323,676 

Thereafter

   
  $3,200,792 

 

We defer and capitalize all costs associated with the installation of the CareView System into a healthcare facility until the CareView System is fully operational and accepted by the healthcare facility. Installation costs are specifically identifiable based on the amounts we are charged from third party installers or directly identifiable labor hours incurred for each installation. Upon acceptance, the associated costs are expensed on a straight-line basis over the life of the contract with the healthcare facility. These costs are included in network operations on the accompanying consolidated statements of operations.

 

The table below details the activity in these deferred installation costs during the periods ended June 30, 2024 and 2023, included in other assets in the accompanying unaudited consolidated balance sheet.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $48,309  $33,461 

Additions

  98,200    

Transfer to expense

  (10,181)  (15,312)

Balance, end of period

 $136,328  $18,149 

 

Significant Judgements When Applying Topic 606

 

Contracts with our customers are typically structured similarly and include various combinations of our products, software solutions, and related services. Determining whether the various contract promises are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

 

Contract transaction price is allocated to distinct performance obligations using estimated standalone selling price. We determine standalone selling price maximizing observable inputs such as standalone sales, competitor standalone sales, or substantive renewal prices charged to customers when they exist. In instances where standalone selling price is not observable, we utilize an estimate of standalone selling price. Such estimates are derived from various methods that include cost plus margin, and historical pricing practices. Judgment may be required to determine standalone selling prices for each performance obligation and whether it depicts the amount we expect to receive in exchange for the related good or service.

 

Contract modifications occur when we and our customers agree to modify existing customer contracts to change the scope or price (or both) of the contract or when a customer terminates some, or all, of the existing services provided by us. When a contract modification occurs, it requires us to exercise judgment to determine if the modification should be accounted for as a separate contract, the termination of the original contract and creation of a new contract, a cumulative catch-up adjustment to the original contract, or a combination.

 

Contracts with our customers include a limited warranty on our products covering materials, workmanship, or design for the duration of the contract. We do not offer paid additional extended or lifetime warranty packages. We determined the limited warranty in our contract is not a distinct performance obligation. We do not believe our estimates of warranty costs to be significant to our determination of revenue recognition, and therefore, did not reserve for warranty costs.

 

Leases

 

The Company has an operating lease primarily consisting of office space with a remaining lease term of 14 months. At the lease commencement date, an operating lease liability and related operating lease asset are recognized. The operating lease liabilities are calculated using the present value of lease payments. The discount rate used is either the rate implicit in the lease, when known, or our estimated incremental borrowing rate. Operating lease assets are valued based on the initial operating lease liabilities plus any prepaid rent and direct costs from executing the leases.

 

Earnings (Loss) Per Share

 

We calculate earnings per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of common shares outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants to purchase our Common Stock (the “Warrants”) and convertible debt. Potential common shares totaling 73,621,280 and 46,711,922 on June 30, 2024 and 2023, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. The 73,621,280 potential common shares consist of 67,926,835 stock options and 5,694,445 warrants.

 

Accounting Standards Update (ASU)

 

ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. We as a smaller reporting company as defined by the SEC will adopt ASU 2020-06 effective for fiscal year 2024. As of 2024, the Company does not have any preferred stock or convertible debt.

 

ASU 2022-03 clarifies that a “contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security” and is not included in the equity security’s unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by the ASU). In addition, the ASU prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. Under the existing guidance in ASC 820-10-35-6B, “although a reporting entity must be able to access the market, the reporting entity does not need to be able to sell the particular asset or transfer the particular liability on the measurement date to be able to measure fair value on the basis of the price in that market.” ASU 2022-03 clarifies that an entity should apply this existing guidance when measuring the fair value of equity securities that are subject to contractual sale restrictions (i.e., a contractual sale restriction on the reporting entity that prevents the sale of an equity security in the market does not prevent the entity from measuring the fair value of the equity security on the basis of the price in that principal market). ASU 2022-03 for the Company will be effective for fiscal year 2024. For 2024, no contractual sale restriction exists with the Company.

 

ASU 2023-09 requires public business entities to disclose percentages and amounts in their reporting currency for certain categories in a tabular format with qualitative disclosures on an annual basis. ASU 2023-09 requires the use of the following categories to assist investors with assessing risks and opportunities related to effective tax rates over time and for multiple entities:

 

State and local income tax, net of federal (national) income tax effect

Foreign tax effect

Effect of changes in tax laws or rates enacted in the current period

Effect of cross-border tax laws

Tax credits

Changes in valuation allowances

Nontaxable or nondeductible items

Changes in unrecognized tax benefits

 

The new reporting guidance is effective for the Company for annual periods beginning after December 15, 2024.

 

v3.24.2.u1
Note 2 - Going Concern, Liquidity and Management's Plan
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Substantial Doubt about Going Concern [Text Block]

NOTE 2 GOING CONCERN, LIQUIDITY AND MANAGEMENTS PLAN

 

Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year after the date of the filing of this Form 10-Q (“evaluation period”). In evaluating the Company’s ability to continue as a going concern, management considers the conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months after the Company issues its financial statements. For the six months ended June 30, 2024, management considers the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations due within 12 months of the date these financial statements are issued.

 

The Company is subject to risks like those of healthcare technology companies whereby revenues are generated based on both sales-based and subscription-based models, which assume dependence on key individuals, uncertainty of product development, generation of revenues, positive cash flow, dependence on outside sources of capital, risks associated with research, development, and successful testing of its products, successful protection of intellectual property, ability to maintain and grow its customer base, and susceptibility to infringement on the proprietary rights of others. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill the Company’s growth and operating activities and generating a level of revenues adequate to support the Company’s cost structure.

 

As of June 30, 2024, the Company had a working capital deficit of $39,291,576. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date the consolidated financial statements were issued. While management will look to continue funding operations by increased sales volumes and raising additional capital from sources such as sales of its debt or equity securities or loans to meet operating cash requirements, there is no assurance that management’s plans will be successful.

 

On March 30, 2023, noteholders owning Replacement Notes in an aggregate of $26,200,000, entered into a Replacement Note Conversion Agreement, wherein the Replacement Notes were converted into shares of the Company’s common stock at a conversion price of $0.10 per share, resulting in the issuance of an aggregate of 262,000,000 shares (the “Conversion Shares”). 

 

Upon this conversion, and as of March 31, 2023, the Company’s officers and board of directors held the majority of the Company’s outstanding voting stock. With controlling interest of the majority of outstanding shares, the Company’s majority shareholders voted to amend its articles of incorporation to increase the authorized shares available for issuance from 500,000,000 to 800,000,000, with an effective date of May 22, 2023.

 

On May 24, 2023, noteholder owning Replacement Notes in the aggregate of $18,000,000, presented Conversion Notices, per the terms of the Replacement Notes, to the Company to convert the Replacement Notes into 180,000,000 shares of the Company’s common stock at a conversion price of $0.10 per share. The shares bear a lock-up legend that expires December 31, 2023.

 

Management continues to monitor the immediate and future cash flows needs of the company in a variety of ways which include forecasted net cash flows from operations, capital expenditure control, new inventory orders, debt modifications, increases in sales outreach, streamlining and controlling general and administrative costs, competitive industry pricing, sale of equities, debt conversions, new product or services offerings, and new business partnerships.

 

The Company’s net losses, cash outflows, and working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the Company’s cost structure.

 

v3.24.2.u1
Note 3 - Stockholders' Equity
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Equity [Text Block]

NOTE 3 STOCKHOLDERS EQUITY

 

Warrants to Purchase Common Stock of the Company

 

We use the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of Warrants. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant.

 

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants and is calculated by using the average daily historical stock prices through the day preceding the grant date. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of our stock prices (and that of peer entities whose stock prices were publicly available) over a period equal to the expected life of the awards.

 

A summary of our Warrants activity and related information follows:

 

                           

Weighted

 
                   

Weighted

   

Average

 
   

Number of

   

Range of

   

Average

   

Remaining

 
   

Shares Under

   

Warrant Price

   

Exercise

   

Contractual

 
   

Warrant

   

Per Share

   

Price

   

Life

 

Balance at December 31, 2023

    5,694,445    

0.011 -0.0303

    $ 0.024       2.6  

Granted

                       

Expired

                       

Canceled

                       

Balance at June 30, 2024

    5,694,445    

0.011 -0.0303

    $ 0.024       2.1  

 

Options to Purchase Common Stock of the Company

 

During the six months ended June 30, 2024, 30,277,858 options to purchase our Common Stock were granted having a fair value of $1,816,521 and exercise price of $0.06 per share.

 

A summary of our stock option activity and related information follows:

 

                   

Weighted

         
           

Weighted

   

Average

         
   

Number of

   

Average

   

Remaining

   

Aggregate

 
   

Shares Under

   

Exercise

   

Contractual

   

Intrinsic

 
   

Options

   

Price

   

Life

   

Value

 

Balance at December 31, 2023

    38,483,977     $ 0.09       5.2     $ 314,925  

Granted

    30,277,858       0.06       9.4        

Forfeited/Expired

    (835,000 )     0.58              

Exercised

                       

Balance at June 30, 2024

    67,926,835     $ 0.07       7.0     $ 104,475  

Vested and Exercisable at June 30, 2024

    36,718,977     $ 0.08       4.7     $ 104,475  

 

Share-based compensation expense for Options charged to our operating results for the six months ended June 30, 2024 and 2023 were $211,695 and $117,056, respectively. The estimate of forfeitures is to be recorded at the time of grant and revised in subsequent periods if actual forfeitures differ from the estimates. We have not included an adjustment to our stock-based compensation expense based on the nominal amount of the historical forfeiture rate. We do, however, revise our stock-based compensation expense based on actual forfeitures during each reporting period.

 

At June 30, 2024, total unrecognized estimated compensation expense related to non-vested Options granted prior to that date was approximately $1,663,565, which is expected to be recognized over a weighted-average period of 2.6 years. No tax benefit was realized due to a continued pattern of operating losses.

 

v3.24.2.u1
Note 4 - Other Current Assets
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Other Current Assets [Text Block]

NOTE 4 OTHER CURRENT ASSETS

 

Other current assets consist of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Prepaid insurance

  $ 304,005     $ 180,267  

Other prepaid expenses

    41,355       62,843  

Sales tax overpayment

    91,981       91,981  

TOTAL OTHER CURRENT ASSETS

  $ 437,341     $ 335,091  

 

v3.24.2.u1
Note 5 - Inventory
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Inventory Disclosure [Text Block]

NOTE 5 INVENTORY

 

Inventory is valued at the lower of cost, determined on a first-in, first-out (FIFO), or net realizable value. Inventory items are analyzed to determine cost and net realizable value and appropriate valuation adjustments are then established.

 

Inventory consists of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Equipment components

  $ 309,371     $ 294,435  

TOTAL INVENTORY

  $ 309,371     $ 294,435  

 

v3.24.2.u1
Note 6 - Property and Equipment
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Property, Plant and Equipment Disclosure [Text Block]

NOTE 6 PROPERTY AND EQUIPMENT

 

Property and equipment consist of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Network equipment

  $ 9,218,247     $ 9,204,511  

Office equipment

    258,096       241,955  

Vehicles

    133,617       133,616  

Test equipment

    230,365       230,365  

Furniture

    92,097       92,097  

Warehouse equipment

    18,788       18,788  

Leasehold improvements

    5,121       5,121  
      9,956,331       9,926,453  

Less: accumulated depreciation

    (9,717,537 )     (9,608,827 )

TOTAL PROPERTY AND EQUIPMENT, NET

  $ 238,794     $ 317,626  

 

Depreciation expense for the six months ended June 30, 2024 and 2023 was $108,710 and $194,619, respectively.

 

v3.24.2.u1
Note 7 - Intangible and Other Assets, Net
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Intangible and Other Assets [Text Block]

NOTE 7 INTANGIBLE AND OTHER ASSETS, NET

 

Intangible assets consist of the following:

 

   

June 30, 2024

 
   

Cost

   

Accumulated Amortization

   

Net

 

Patents and trademarks

  $ 888,690     $ 496,151     $ 392,539  

Other intangible assets

    33,299       17,855       15,444  

TOTAL INTANGIBLE ASSETS

  $ 921,989     $ 514,006     $ 407,983  

 

   

December 31, 2023

 
   

Cost

   

Accumulated Amortization

   

Net

 

Patents and trademarks

  $ 879,492     $ 478,250     $ 401,242  

Other intangible assets

    20,237       15,178       5,059  

TOTAL INTANGIBLE ASSETS

  $ 899,729     $ 493,428     $ 406,301  

 

Other assets consist of the following:

 

   

June 30, 2024

 
   

Cost

   

Accumulated Amortization

   

Net

 

Deferred installation costs

  $ 1,495,920     $ 1,359,592     $ 136,328  

Deferred sales commissions

    553,464       425,496       127,968  

Prepaid license fee

    249,999       210,381       39,618  

Security deposit

    46,124             46,124  

TOTAL OTHER ASSETS

  $ 2,345,507     $ 1,995,469     $ 350,038  

 

   

December 31, 2023

 
   

Cost

   

Accumulated Amortization

   

Net

 

Deferred installation costs

  $ 1,397,720     $ 1,349,410     $ 48,310  

Deferred sales commissions

    439,221       279,459       159,762  

Prepaid license fee

    249,999       202,185       47,814  

Security deposit

    46,124             46,124  

TOTAL OTHER ASSETS

  $ 2,133,064     $ 1,831,054     $ 302,010  

 

v3.24.2.u1
Note 8 - Other Current Liabilities
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

NOTE 8 OTHER CURRENT LIABILITIES

 

Other current liabilities consist of the following:

 

   

June 30,

   

December 31,

 
   

2024

   

2023

 

Allowance for system removal

    54,802       54,802  

Accrued paid time off

    129,221       164,566  

Deferred officer compensation (1)

    49,528       49,528  

Other accrued liabilities

    323,238       220,601  

TOTAL OTHER CURRENT LIABILITIES

  $ 556,789     $ 489,497  

 


(1)

Remaining salary payable for Steve Johnson, CEO, between February 15, 2018 and September 30, 2020.

 

v3.24.2.u1
Note 9 - Agreement With PDL Biopharma, Inc.
6 Months Ended
Jun. 30, 2024
PDL Credit Agreement [Member]  
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 9 AGREEMENT WITH PDL BIOPHARMA, INC.

 

On June 26, 2015, we entered into a Credit Agreement (as subsequently amended) with PDL BioPharma, Inc. (“PDL”), as administrative agent and lender (“the Lender”) (the “PDL Credit Agreement”). Under the PDL Credit Agreement the Lender made available to us up to $40 million in two tranches of $20 million each. Tranche One was funded on October 8, 2015 (the “Tranche One Loan”). Pursuant to the terms of the PDL Credit Agreement and having not met the Tranche Two Milestones by July 26, 2017, the Tranche Two funding was terminated in full.

 

On February 28, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Eighth Amendment to Modification Agreement (the “Twenty-Eighth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and March 31, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until March 30, 2023 (the end of the extended Modification Period).

 

On March 31, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Ninth Amendment to Modification Agreement (the “Twenty-Ninth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and April 30, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until April 30, 2023 (the end of the extended Modification Period). Under debt modification/troubled debt guidance, we determined that the first of the eight amendments had no cash flow impact, and therefore, had no impact on accounting. Amendments nine through ten qualified for modification accounting, while the final nineteen amendments qualified for troubled debt restructuring accounting. As appropriate, we expensed the legal costs paid to third parties. For the six months ended June 30, 2024 and 2023, pursuant to the terms of the PDL Modification Agreement, as amended, $1,604,250 was recorded as interest expense on the accompanying unaudited condensed consolidated financial statements.

 

On April 29, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Thirtieth Amendment to Modification Agreement (the “Thirtieth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and May 31, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until May 31, 2023 (the end of the extended Modification Period).

 

On May 31, 2023 (the “Effective Date”), the Company, the Borrower, the Lender, Steven G. Johnson, President and Chief Executive Officer of the Company, and Dr. James R. Higgins, a director of the Company, entered into a Seventh Amendment to Credit Agreement (the “Seventh Credit Agreement Amendment”), pursuant to which the parties agreed to amend the Credit Agreement to, among other things, (i) provide that, after the Effective Date, all accrued but unpaid interest (including interest accrued but unpaid prior to the Effective Date and excluding interest payable on the Maturity Date, in connection with any prepayment, or in the event of an Event of Default, which interest will be payable in cash) accruing on Tranche One Loans and Tranche Three Loans will be paid-in-kind on each Interest Payment Date by being added to the aggregate principal balance of the respective loans in arrears on each Interest Payment Date; (ii) require certain mandatory prepayments of the loans by the Company, including (A) quarterly prepayments in the amount, if any, that the Company’s Excess Cash Flow exceeds $600,000, (B) monthly transfers to the Inventory Reserve Account in the amount, if any, the Company’s cash exceeds $1,200,000, (C) prepayment in the amount, if any, the Company’s Inventory Reserve Account exceeds $600,000, and (D) prepayment in the amount, if any, of 100% of the gross proceeds of any indebtedness incurred by the Company (other than permitted indebtedness); and (iii) extend the Maturity Date to  December 31, 2024.

 

On September 30, 2023 (the “Effective Date”), the Company, the Borrower, the Lender, Steven G. Johnson, President and Chief Executive Officer of the Company, and Dr. James R. Higgins, a director of the Company, entered into an Eighth Amendment to Credit Agreement (the “Eighth Credit Agreement Amendment”), pursuant to which the parties agreed to amend the Credit Agreement to modify certain texts originating within the Seventh Credit Agreement. Stricken texts include “all accrued but unpaid interest (including interest accrued but unpaid prior to the Effective Date and excluding interest payable on the Maturity Date, in connection with any prepayment, or in the event of an Event of Default, which interest will be payable in cash) accruing on Tranche One Loans and Tranche Three Loans will be paid-in-kind on each Interest Payment Date by being added to the aggregate principal balance of the respective loans in arrears on each Interest Payment Date.” Additional texts include Release of Claims, which “in consideration of the Lender’s and Agent’s agreements contained in this Amendment, each of Holdings, the Borrower and the Subsidiary Guarantor hereby releases and discharges the Lender and the Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all other claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which Holdings, the Borrower or the Subsidiary Guarantor ever had or now has against the Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of the Agent, any Lender or any other Released Person relating to the Credit Agreement or any other Loan Document on or prior to the date hereof.”

 

Accounting Treatment

 

In connection with the PDL Credit Agreement, as amended, we issued the PDL Warrant to the Lender. As of June 30, 2024, the Amended PDL Warrant has not been exercised.

 

Due to the PDL Eighth Credit Agreement Amendment, the calculations for the “interest paid-in-kind” and quarterly “prepayment(s)” were removed effective with the year ending on December 31, 2023. The Company concluded that the Company is encountering financial hardship and that a concession was not granted. As the Lender has not granted a concession, the guidance contained in ASC 470-50 Modification and Extinguishment was applied. Given the present value of the cash flows under the Eighth Credit Agreement Amendment differed by less than 10% from the present value of the remaining cash flows under the terms of the prior debt agreement, the debt was determined to be not substantially different which resulted in modification accounting. The Company did not have any debt issuance costs, only legal expenses.

 

v3.24.2.u1
Note 10 - Agreement With Healthcor
6 Months Ended
Jun. 30, 2024
HealthCor Notes [Member]  
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 10 AGREEMENT WITH HEALTHCOR

 

On April 21, 2011, we entered into a Note and Warrant Purchase Agreement (as subsequently amended) with HealthCor Partners Fund, LP (“HealthCor Partners”) and HealthCor Hybrid Offshore Master Fund, LP (“HealthCor Hybrid” and, together with HealthCor Partners, “HealthCor”) (the “HealthCor Purchase Agreement”). Pursuant to the terms of the HealthCor Purchase Agreement, we sold and issued Senior Secured Convertible Notes to HealthCor in the principal amount of $9,316,000 and $10,684,000, respectively (collectively the “2011 HealthCor Notes”). The 2011 HealthCor Notes have a maturity date of  April 20, 2021. We also issued Warrants to HealthCor for the purchase of an aggregate of up to 5,488,456 and 6,294,403 shares, respectively, of our Common Stock at an exercise price of $1.40 per share (collectively the “2011 HealthCor Warrants”). So long as no event of default has occurred, the outstanding principal balances of the 2011 HealthCor Notes accrue interest from April 21, 2011 through April 20, 2016 (the “First Five-Year Note Period”) at the rate of 12.5% per annum, compounding quarterly and shall be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar quarter. Interest accruing from April 21, 2016 through April 20, 2021 (the “Second Five Year Note Period”) at a rate of 10% per annum, compounding quarterly, may be paid quarterly in arrears in cash or, at our option, such interest may be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar quarter. For the period from April 21, 2016 through September 30, 2018 interest has been added to the outstanding principal balance. Pursuant to the terms of the Ninth Amendment, the accrual of interest has been suspended after September 30, 2018. From the date any event of default occurs, the interest rate, then applicable, shall be increased by five percent (5%) per annum. HealthCor has the right, upon an event of default, to declare due and payable any unpaid principal amount of the 2011 HealthCor Notes then outstanding, plus previously accrued but unpaid interest and charges, together with the interest then scheduled to accrue (calculated at the default rate described in the immediately preceding sentence) through the end of the First Five Year Note Period or the Second Five Year Note Period, as applicable. Subject to the terms of the Ninth Amendment as discussed below, HealthCor’s ability to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2011 HealthCor Notes into fully paid and nonassessable shares of our Common Stock has been eliminated. The warrants issued with this Note were cancelled with the Ninth-Amendment dated July 10, 2018.

 

On March 30, 2023, HealthCor noteholders owning an aggregate of $36,000,000 Replacement Notes, entered into a Replacement Note Conversion Agreement, wherein half, fifty percent, of the HealthCor Replacement Notes were converted into shares of the Company’s common stock at a conversion price of $0.10 per share, resulting in the issuance of an aggregate of 180,000,000 shares. The other related and non-related parties Replacement Notes of $8,200,000 were likewise converted into shares of the Company’s common stock at a conversion price of $0.10 per share, resulting in the issuance of a combined total aggregate of 262,000,000 shares (the “Conversion Shares”). The shares bear a lockup legend that expires December 31, 2023.

 

On May 24, 2023, HealthCor noteholders owning an aggregate of $18,000,000 Replacement Notes, presented Conversion Notices, pursuant to the terms of the Replacement Note, for the conversion of the Replacement Notes into 180,000,000 shares of the Company’s common stock at a conversion price of $0.10 per share. The shares bear a lockup legend that expires December 31, 2023.

 

Accounting Treatment 

 

When issuing debt or equity securities convertible into common stock at a discount to the fair value of the common stock at the date the debt or equity financing is committed, a company is required to record a beneficial conversion feature (“BCF”) charge. We had three separate issuances of equity securities convertible into common stock that qualify under this accounting treatment, (i) the 2011 HealthCor Notes, (ii) the 2012 HealthCor Notes and (iii) the 2014 HealthCor Notes. Because the conversion option and the 2011 HealthCor Warrants on the 2011 HealthCor Notes were originally classified as a liability when issued due to the down round provision and the removal of the provision requiring liability treatment, and subsequently reclassified to equity on December 31, 2011 when the 2011 HealthCor Notes were amended, only the accrued interest capitalized as payment in kind (’‘PIK’’) since reclassification qualifies under this accounting treatment. We recorded an aggregate of $0 and $0 in interest for the years ended December 31, 2023 and 2022, respectively, related to these transactions. For the years ended December 31, 2023, and 2022, we recorded $0 and $0, respectively, of PIK related to the notes included in the HealthCor Purchase Agreement. The face amount of the 2012 HealthCor Notes, 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes and all accrued PIK interest also qualify for BCF treatment as discussed above. Under the accounting standards, we determined that the restructuring of the HealthCor notes, pursuant to the terms of the Ninth Amendment, resulted in a troubled debt restructuring. As the future cash flows were greater than the carrying amount of the debt at the date of the amendment, we accounted for the change prospectively using the new effective interest rate.

 

Warrants were issued with the Fourth, Fifth, Eighth, Ninth, and Allonge 3 Amendment Notes and the proceeds were allocated to the instruments based on relative fair value as the warrants did not contain any features requiring liability treatment and therefore were classified as equity. At each amendment date, the warrants were recorded as debt discount, as a reduction of the net carrying amount of the debt. The debt discounts are amortized into interest expense each period under the effective interest method. The value allocated to the Ninth Amendment Warrants was $378,000. The value allocated to the Allonge 3 Amendment Warrants was $420,000.

PDL Credit Agreement [Member]  
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 9 AGREEMENT WITH PDL BIOPHARMA, INC.

 

On June 26, 2015, we entered into a Credit Agreement (as subsequently amended) with PDL BioPharma, Inc. (“PDL”), as administrative agent and lender (“the Lender”) (the “PDL Credit Agreement”). Under the PDL Credit Agreement the Lender made available to us up to $40 million in two tranches of $20 million each. Tranche One was funded on October 8, 2015 (the “Tranche One Loan”). Pursuant to the terms of the PDL Credit Agreement and having not met the Tranche Two Milestones by July 26, 2017, the Tranche Two funding was terminated in full.

 

On February 28, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Eighth Amendment to Modification Agreement (the “Twenty-Eighth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and March 31, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until March 30, 2023 (the end of the extended Modification Period).

 

On March 31, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Ninth Amendment to Modification Agreement (the “Twenty-Ninth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and April 30, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until April 30, 2023 (the end of the extended Modification Period). Under debt modification/troubled debt guidance, we determined that the first of the eight amendments had no cash flow impact, and therefore, had no impact on accounting. Amendments nine through ten qualified for modification accounting, while the final nineteen amendments qualified for troubled debt restructuring accounting. As appropriate, we expensed the legal costs paid to third parties. For the six months ended June 30, 2024 and 2023, pursuant to the terms of the PDL Modification Agreement, as amended, $1,604,250 was recorded as interest expense on the accompanying unaudited condensed consolidated financial statements.

 

On April 29, 2023, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Thirtieth Amendment to Modification Agreement (the “Thirtieth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and May 31, 2023 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s (i) interest payments that would otherwise be due under the Credit Agreement on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and October 7, 2020 and (ii) payments for principal and for any other Obligations then outstanding under the Tranche One Loan and the Tranche Three Loans that would otherwise be due under the Credit Agreement on October 7, 2020, would each be deferred until May 31, 2023 (the end of the extended Modification Period).

 

On May 31, 2023 (the “Effective Date”), the Company, the Borrower, the Lender, Steven G. Johnson, President and Chief Executive Officer of the Company, and Dr. James R. Higgins, a director of the Company, entered into a Seventh Amendment to Credit Agreement (the “Seventh Credit Agreement Amendment”), pursuant to which the parties agreed to amend the Credit Agreement to, among other things, (i) provide that, after the Effective Date, all accrued but unpaid interest (including interest accrued but unpaid prior to the Effective Date and excluding interest payable on the Maturity Date, in connection with any prepayment, or in the event of an Event of Default, which interest will be payable in cash) accruing on Tranche One Loans and Tranche Three Loans will be paid-in-kind on each Interest Payment Date by being added to the aggregate principal balance of the respective loans in arrears on each Interest Payment Date; (ii) require certain mandatory prepayments of the loans by the Company, including (A) quarterly prepayments in the amount, if any, that the Company’s Excess Cash Flow exceeds $600,000, (B) monthly transfers to the Inventory Reserve Account in the amount, if any, the Company’s cash exceeds $1,200,000, (C) prepayment in the amount, if any, the Company’s Inventory Reserve Account exceeds $600,000, and (D) prepayment in the amount, if any, of 100% of the gross proceeds of any indebtedness incurred by the Company (other than permitted indebtedness); and (iii) extend the Maturity Date to  December 31, 2024.

 

On September 30, 2023 (the “Effective Date”), the Company, the Borrower, the Lender, Steven G. Johnson, President and Chief Executive Officer of the Company, and Dr. James R. Higgins, a director of the Company, entered into an Eighth Amendment to Credit Agreement (the “Eighth Credit Agreement Amendment”), pursuant to which the parties agreed to amend the Credit Agreement to modify certain texts originating within the Seventh Credit Agreement. Stricken texts include “all accrued but unpaid interest (including interest accrued but unpaid prior to the Effective Date and excluding interest payable on the Maturity Date, in connection with any prepayment, or in the event of an Event of Default, which interest will be payable in cash) accruing on Tranche One Loans and Tranche Three Loans will be paid-in-kind on each Interest Payment Date by being added to the aggregate principal balance of the respective loans in arrears on each Interest Payment Date.” Additional texts include Release of Claims, which “in consideration of the Lender’s and Agent’s agreements contained in this Amendment, each of Holdings, the Borrower and the Subsidiary Guarantor hereby releases and discharges the Lender and the Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all other claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which Holdings, the Borrower or the Subsidiary Guarantor ever had or now has against the Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of the Agent, any Lender or any other Released Person relating to the Credit Agreement or any other Loan Document on or prior to the date hereof.”

 

Accounting Treatment

 

In connection with the PDL Credit Agreement, as amended, we issued the PDL Warrant to the Lender. As of June 30, 2024, the Amended PDL Warrant has not been exercised.

 

Due to the PDL Eighth Credit Agreement Amendment, the calculations for the “interest paid-in-kind” and quarterly “prepayment(s)” were removed effective with the year ending on December 31, 2023. The Company concluded that the Company is encountering financial hardship and that a concession was not granted. As the Lender has not granted a concession, the guidance contained in ASC 470-50 Modification and Extinguishment was applied. Given the present value of the cash flows under the Eighth Credit Agreement Amendment differed by less than 10% from the present value of the remaining cash flows under the terms of the prior debt agreement, the debt was determined to be not substantially different which resulted in modification accounting. The Company did not have any debt issuance costs, only legal expenses.

 

v3.24.2.u1
Note 11 - Lease
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

NOTE 11 LEASE

 

Under ASC Topic 842, Leases (“ASC 842”), operating lease expense is generally recognized evenly over the term of the lease. The Company has an operating lease primarily consisting of office space with a remaining lease term of 14 months (Lease through  August 31, 2025). 

 

On March 4, 2020, we entered into the Fourth Amendment to Commercial Lease Agreement (the “Lease Extension”), wherein we extended the Lease through  August 31, 2025. The Lease Extension contains a renewal provision under which the Lease has been extended for an additional five-year period under the same terms and conditions of the original Lease Agreement. Management has identified this extension as a reassessment event, as we have elected to exercise the Lease Extension option even though the Company had previously determined that it was not reasonably certain to do so.

 

The Company has further concluded that the Lease Extension has no effects on the classification of the Lease. Rent expense for the six months ended June 30, 2024 and 2023 was $151,900 and $147,894, respectively.

 

Undiscounted Cash Flows

 

Future lease payments included in the measurement of operating lease liability on the condensed consolidated balance sheet as of June 30, 2024, for the following five fiscal years and thereafter as follows:

 

Quarter ending

 

Operating

 

June 30, 2024

 

Leases

 

Remaining 2024

    112,168  

2025

    150,679  

Total minimum lease payments

  $ 262,847  

Less effects of discounting

    (22,902 )

Present value of future minimum lease payments

  $ 239,945  

 

v3.24.2.u1
Note 12 - Subsequent Events
6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Subsequent Events [Text Block]

NOTE 12 SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through August 14, 2024, the date of filing of this Form 10-Q.

 

 

v3.24.2.u1
Insider Trading Arrangements
6 Months Ended
Jun. 30, 2024
Insider Trading Arr Line Items  
Material Terms of Trading Arrangement [Text Block]

Item 5. Other Information.

 

None.

Rule 10b5-1 Arrangement Terminated [Flag] false
Rule 10b5-1 Arrangement Adopted [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
v3.24.2.u1
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Interim Financial Statements

 

The accompanying unaudited interim condensed consolidated financial statements of CareView Communications, Inc. (“CareView”, the “Company”, “we”, “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 29, 2024.

 
Revenue [Policy Text Block]

Revenue Recognition

 

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”). For our subscription service contracts, we have employed the practical expedient discussed in ASC 606-10-55-18 related to invoicing as we have the right to consideration from our customers in the amount that corresponds directly with the value to the customer of our performance completed to date and therefore, we recognize revenue upon invoicing as further discussed below.

 

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. For those customers for which we are required to collect sales taxes, we record such sales taxes on a net basis which has no effect on the amount of revenue or expenses recognized as the sales taxes are a flow through to the taxing authority.

 

We enter into contracts with customers that may provide multiple combinations of our products, software solutions, and other related services, which are generally capable of being distinct and accounted for as separate performance obligations. Performance obligations that are not distinct at contract inception are combined.

 

Customer contract fulfillment typically involves multiple procurement promises, which may include various equipment, software subscription, project-related installation and training services, and support. We allocate the transaction price to each performance obligation based on estimated relative standalone selling price. Revenue is then recognized for each performance obligation upon transferring control of the hardware, software, and services to the customer and in an amount that reflects the consideration we expect to receive and the estimated benefit the customer receives over the term of the contract.

 

Generally, we recognize revenue under each of our performance obligations as follows:

 

 

Subscription services – We recognize subscription revenues monthly over the contracted license period.

 

Equipment packages – We recognize equipment revenues when control of the devices has been transferred to the client (“point in time”).

 

Software bundle and related services related to sales-based contracts – We recognize our software subscription, installation, training, and other services on a straight-line basis over the estimated contracted license period (“over time”).

 

The Company earns sales-based contract revenue from services rendered under specific agreements, which hinge on a third-party reseller who possesses the exclusive authority to engage directly with veteran-owned hospitals. Evaluating the Company’s role in these contracts necessitates assessing whether it functions as the principal or agent, a determination that involves analyzing the extent of control the Company wields over the contracts.

 

Following its assessment, the Company reports revenue from services provided under such contracts on a gross basis. This decision is justified by the Company’s primary responsibility to fulfill the contractual obligations, including delivery and installation of equipment and software, training, and its control over other services within the contract period. Furthermore, the Company directly sets the contract price with its customers based on the services outlined in the statement of work. As the Company is responsible for fulling this promise and maintains control, the Company is acting as the principal.

 

Disaggregation of Revenue 

 

The following presents net revenues disaggregated by our business models:

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Sales-based contract revenue

        

Equipment package, net (point in time)

 $816,815  $1,996,785 

Software bundle (over time)

  1,340,918   1,174,599 

Total sales-based contract revenue

  2,157,733   3,171,384 
         

Subscription-based lease revenue

  2,019,145   2,320,984 

Net revenue

 $4,176,878  $5,492,368 

 

Contract Liabilities

 

Our subscription-based contracts payment arrangements are required to be paid monthly which are recognized into revenue when received. Some customers choose to pay their subscription fee in advance. Customer payments received in advance of satisfaction of the related performance obligations are deferred as contract liabilities. These amounts are recorded as “deferred revenue” in our condensed consolidated balance sheets and recognized into revenues over time.

 

Our sales-based contract payment arrangements with our customers typically include an initial equipment payment due upon signing of the contract and subsequent payments when certain performance obligations are completed. Customer payments received in advance of satisfaction of related performance obligations are deferred as contract liabilities. These amounts are recorded as “deferred revenue” in our condensed consolidated balance sheets and recognized into revenues as either a point in time or over time.

 

During the six months ended June 30, 2024 and 2023, a total of $0 and $16,094, respectively, of subscription-based deferred contract liability was recognized as revenue. The table below details the subscription-based contract liability activity during the six months ended June 30, 2024 and 2023, included in the Other current liabilities.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $  $21,145 

Additions

      

Transfer to revenue

     (16,094)

Balance, end of period

 $  $5,051 

 

During the six months ended June 30, 2024 and 2023, a total of $1,322,919 and $822,974, respectively, of sales-based deferred contract liability was recognized as revenue. The table below details the sales-based contract liability activity during the six months ended June 30, 2024 and 2023, included in the Other current liabilities.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $1,922,925  $869,485 

Additions

  2,600,786   1,319,224 

Transfer to revenue

  (1,322,919)  (822,974)

Balance, end of period

 $3,200,792  $1,365,735 

 

As of June 30, 2024, the aggregate amount of deferred revenue from subscription-based contracts and sales-based contracts allocated to performance obligations that are unsatisfied or partially satisfied is approximately $3,200,792 and will be recognized into revenue over time as follows:

 

Years Ending December 31,

 

Amount

 

2024

 $1,877,116 

2025

  1,323,676 

Thereafter

   
  $3,200,792 

 

We defer and capitalize all costs associated with the installation of the CareView System into a healthcare facility until the CareView System is fully operational and accepted by the healthcare facility. Installation costs are specifically identifiable based on the amounts we are charged from third party installers or directly identifiable labor hours incurred for each installation. Upon acceptance, the associated costs are expensed on a straight-line basis over the life of the contract with the healthcare facility. These costs are included in network operations on the accompanying consolidated statements of operations.

 

The table below details the activity in these deferred installation costs during the periods ended June 30, 2024 and 2023, included in other assets in the accompanying unaudited consolidated balance sheet.

 

  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $48,309  $33,461 

Additions

  98,200    

Transfer to expense

  (10,181)  (15,312)

Balance, end of period

 $136,328  $18,149 

 

Significant Judgements When Applying Topic 606

 

Contracts with our customers are typically structured similarly and include various combinations of our products, software solutions, and related services. Determining whether the various contract promises are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

 

Contract transaction price is allocated to distinct performance obligations using estimated standalone selling price. We determine standalone selling price maximizing observable inputs such as standalone sales, competitor standalone sales, or substantive renewal prices charged to customers when they exist. In instances where standalone selling price is not observable, we utilize an estimate of standalone selling price. Such estimates are derived from various methods that include cost plus margin, and historical pricing practices. Judgment may be required to determine standalone selling prices for each performance obligation and whether it depicts the amount we expect to receive in exchange for the related good or service.

 

Contract modifications occur when we and our customers agree to modify existing customer contracts to change the scope or price (or both) of the contract or when a customer terminates some, or all, of the existing services provided by us. When a contract modification occurs, it requires us to exercise judgment to determine if the modification should be accounted for as a separate contract, the termination of the original contract and creation of a new contract, a cumulative catch-up adjustment to the original contract, or a combination.

 

Contracts with our customers include a limited warranty on our products covering materials, workmanship, or design for the duration of the contract. We do not offer paid additional extended or lifetime warranty packages. We determined the limited warranty in our contract is not a distinct performance obligation. We do not believe our estimates of warranty costs to be significant to our determination of revenue recognition, and therefore, did not reserve for warranty costs.

 

Lessee, Leases [Policy Text Block]

Leases

 

The Company has an operating lease primarily consisting of office space with a remaining lease term of 14 months. At the lease commencement date, an operating lease liability and related operating lease asset are recognized. The operating lease liabilities are calculated using the present value of lease payments. The discount rate used is either the rate implicit in the lease, when known, or our estimated incremental borrowing rate. Operating lease assets are valued based on the initial operating lease liabilities plus any prepaid rent and direct costs from executing the leases.

 

Earnings Per Share, Policy [Policy Text Block]

Earnings (Loss) Per Share

 

We calculate earnings per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of common shares outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants to purchase our Common Stock (the “Warrants”) and convertible debt. Potential common shares totaling 73,621,280 and 46,711,922 on June 30, 2024 and 2023, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. The 73,621,280 potential common shares consist of 67,926,835 stock options and 5,694,445 warrants.

 

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Standards Update (ASU)

 

ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. We as a smaller reporting company as defined by the SEC will adopt ASU 2020-06 effective for fiscal year 2024. As of 2024, the Company does not have any preferred stock or convertible debt.

 

ASU 2022-03 clarifies that a “contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security” and is not included in the equity security’s unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by the ASU). In addition, the ASU prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. Under the existing guidance in ASC 820-10-35-6B, “although a reporting entity must be able to access the market, the reporting entity does not need to be able to sell the particular asset or transfer the particular liability on the measurement date to be able to measure fair value on the basis of the price in that market.” ASU 2022-03 clarifies that an entity should apply this existing guidance when measuring the fair value of equity securities that are subject to contractual sale restrictions (i.e., a contractual sale restriction on the reporting entity that prevents the sale of an equity security in the market does not prevent the entity from measuring the fair value of the equity security on the basis of the price in that principal market). ASU 2022-03 for the Company will be effective for fiscal year 2024. For 2024, no contractual sale restriction exists with the Company.

 

ASU 2023-09 requires public business entities to disclose percentages and amounts in their reporting currency for certain categories in a tabular format with qualitative disclosures on an annual basis. ASU 2023-09 requires the use of the following categories to assist investors with assessing risks and opportunities related to effective tax rates over time and for multiple entities:

 

State and local income tax, net of federal (national) income tax effect

Foreign tax effect

Effect of changes in tax laws or rates enacted in the current period

Effect of cross-border tax laws

Tax credits

Changes in valuation allowances

Nontaxable or nondeductible items

Changes in unrecognized tax benefits

 

The new reporting guidance is effective for the Company for annual periods beginning after December 15, 2024.

 

v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Disaggregation of Revenue [Table Text Block]
  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Sales-based contract revenue

        

Equipment package, net (point in time)

 $816,815  $1,996,785 

Software bundle (over time)

  1,340,918   1,174,599 

Total sales-based contract revenue

  2,157,733   3,171,384 
         

Subscription-based lease revenue

  2,019,145   2,320,984 

Net revenue

 $4,176,878  $5,492,368 
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]
  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $  $21,145 

Additions

      

Transfer to revenue

     (16,094)

Balance, end of period

 $  $5,051 
  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $1,922,925  $869,485 

Additions

  2,600,786   1,319,224 

Transfer to revenue

  (1,322,919)  (822,974)

Balance, end of period

 $3,200,792  $1,365,735 
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

Years Ending December 31,

 

Amount

 

2024

 $1,877,116 

2025

  1,323,676 

Thereafter

   
  $3,200,792 
Capitalized Contract Cost [Table Text Block]
  

Six Months Ended

 
  

June 30,

 
  

2024

  

2023

 

Balance, beginning of period

 $48,309  $33,461 

Additions

  98,200    

Transfer to expense

  (10,181)  (15,312)

Balance, end of period

 $136,328  $18,149 
v3.24.2.u1
Note 3 - Stockholders' Equity (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]
                           

Weighted

 
                   

Weighted

   

Average

 
   

Number of

   

Range of

   

Average

   

Remaining

 
   

Shares Under

   

Warrant Price

   

Exercise

   

Contractual

 
   

Warrant

   

Per Share

   

Price

   

Life

 

Balance at December 31, 2023

    5,694,445    

0.011 -0.0303

    $ 0.024       2.6  

Granted

                       

Expired

                       

Canceled

                       

Balance at June 30, 2024

    5,694,445    

0.011 -0.0303

    $ 0.024       2.1  
Share-Based Payment Arrangement, Option, Activity [Table Text Block]
                   

Weighted

         
           

Weighted

   

Average

         
   

Number of

   

Average

   

Remaining

   

Aggregate

 
   

Shares Under

   

Exercise

   

Contractual

   

Intrinsic

 
   

Options

   

Price

   

Life

   

Value

 

Balance at December 31, 2023

    38,483,977     $ 0.09       5.2     $ 314,925  

Granted

    30,277,858       0.06       9.4        

Forfeited/Expired

    (835,000 )     0.58              

Exercised

                       

Balance at June 30, 2024

    67,926,835     $ 0.07       7.0     $ 104,475  

Vested and Exercisable at June 30, 2024

    36,718,977     $ 0.08       4.7     $ 104,475  
v3.24.2.u1
Note 4 - Other Current Assets (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Other Current Assets [Table Text Block]
   

June 30,

   

December 31,

 
   

2024

   

2023

 

Prepaid insurance

  $ 304,005     $ 180,267  

Other prepaid expenses

    41,355       62,843  

Sales tax overpayment

    91,981       91,981  

TOTAL OTHER CURRENT ASSETS

  $ 437,341     $ 335,091  
v3.24.2.u1
Note 5 - Inventory (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
   

June 30,

   

December 31,

 
   

2024

   

2023

 

Equipment components

  $ 309,371     $ 294,435  

TOTAL INVENTORY

  $ 309,371     $ 294,435  
v3.24.2.u1
Note 6 - Property and Equipment (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Property, Plant and Equipment [Table Text Block]
   

June 30,

   

December 31,

 
   

2024

   

2023

 

Network equipment

  $ 9,218,247     $ 9,204,511  

Office equipment

    258,096       241,955  

Vehicles

    133,617       133,616  

Test equipment

    230,365       230,365  

Furniture

    92,097       92,097  

Warehouse equipment

    18,788       18,788  

Leasehold improvements

    5,121       5,121  
      9,956,331       9,926,453  

Less: accumulated depreciation

    (9,717,537 )     (9,608,827 )

TOTAL PROPERTY AND EQUIPMENT, NET

  $ 238,794     $ 317,626  
v3.24.2.u1
Note 7 - Intangible and Other Assets, Net (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Finite-Lived Intangible Assets [Table Text Block]
   

June 30, 2024

 
   

Cost

   

Accumulated Amortization

   

Net

 

Patents and trademarks

  $ 888,690     $ 496,151     $ 392,539  

Other intangible assets

    33,299       17,855       15,444  

TOTAL INTANGIBLE ASSETS

  $ 921,989     $ 514,006     $ 407,983  
   

December 31, 2023

 
   

Cost

   

Accumulated Amortization

   

Net

 

Patents and trademarks

  $ 879,492     $ 478,250     $ 401,242  

Other intangible assets

    20,237       15,178       5,059  

TOTAL INTANGIBLE ASSETS

  $ 899,729     $ 493,428     $ 406,301  
Schedule of Other Assets, Noncurrent [Table Text Block]
   

June 30, 2024

 
   

Cost

   

Accumulated Amortization

   

Net

 

Deferred installation costs

  $ 1,495,920     $ 1,359,592     $ 136,328  

Deferred sales commissions

    553,464       425,496       127,968  

Prepaid license fee

    249,999       210,381       39,618  

Security deposit

    46,124             46,124  

TOTAL OTHER ASSETS

  $ 2,345,507     $ 1,995,469     $ 350,038  
   

December 31, 2023

 
   

Cost

   

Accumulated Amortization

   

Net

 

Deferred installation costs

  $ 1,397,720     $ 1,349,410     $ 48,310  

Deferred sales commissions

    439,221       279,459       159,762  

Prepaid license fee

    249,999       202,185       47,814  

Security deposit

    46,124             46,124  

TOTAL OTHER ASSETS

  $ 2,133,064     $ 1,831,054     $ 302,010  
v3.24.2.u1
Note 8 - Other Current Liabilities (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Other Current Liabilities [Table Text Block]
   

June 30,

   

December 31,

 
   

2024

   

2023

 

Allowance for system removal

    54,802       54,802  

Accrued paid time off

    129,221       164,566  

Deferred officer compensation (1)

    49,528       49,528  

Other accrued liabilities

    323,238       220,601  

TOTAL OTHER CURRENT LIABILITIES

  $ 556,789     $ 489,497  
v3.24.2.u1
Note 11 - Lease (Tables)
6 Months Ended
Jun. 30, 2024
Notes Tables  
Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

Quarter ending

 

Operating

 

June 30, 2024

 

Leases

 

Remaining 2024

    112,168  

2025

    150,679  

Total minimum lease payments

  $ 262,847  

Less effects of discounting

    (22,902 )

Present value of future minimum lease payments

  $ 239,945  
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements (Details Textual) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Revenue, Remaining Performance Obligation, Amount $ 3,200,792  
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 73,621,280 46,711,922
Share-Based Payment Arrangement, Option [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 67,926,835  
Warrant [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 5,694,445  
Office Space Lease [Member]    
Lessee, Operating Lease, Remaining Lease Term (Month) 14 months  
Subscription Based Contract [Member]    
Contract with Customer, Liability, Revenue Recognized $ (0) $ 16,094
Sales Based Contracts [Member]    
Contract with Customer, Liability, Revenue Recognized $ 1,322,919 $ 822,974
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements - Disaggregation of Revenue (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Net revenue $ 1,973,639 $ 3,710,109 $ 4,176,878 $ 5,492,368
Sales Based Equipment Package [Member]        
Net revenue 246,620 1,837,088 816,815 1,996,785
Sales Based Software Bundle [Member]        
Net revenue $ 718,674 $ 759,134 1,340,918 1,174,599
Sales Based Contracts [Member]        
Net revenue     2,157,733 3,171,384
Sales Based Contracts [Member] | Sales Based Equipment Package [Member]        
Net revenue     816,815 1,996,785
Sales Based Contracts [Member] | Sales Based Software Bundle [Member]        
Net revenue     1,340,918 1,174,599
Subscription Based Contract [Member]        
Net revenue     $ 2,019,145 $ 2,320,984
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements - Schedule of Contract Liabilities (Details) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Subscription Based Contract [Member]    
Balance, beginning of period $ 0 $ 21,145
Additions 0 0
Transfer to revenue 0 (16,094)
Balance, end of period 0 5,051
Sales Based Contracts [Member]    
Balance, beginning of period 1,922,925 869,485
Additions 2,600,786 1,319,224
Transfer to revenue (1,322,919) (822,974)
Balance, end of period $ 3,200,792 $ 1,365,735
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements - Schedule of Performance Obligations (Details)
Jun. 30, 2024
USD ($)
Performance obligation $ 3,200,792
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements - Schedule of Performance Obligations 2 (Details)
Jun. 30, 2024
USD ($)
Performance obligation $ 3,200,792
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01  
Performance obligation 1,877,116
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01  
Performance obligation 1,323,676
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01  
Performance obligation $ 0
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements - Schedule of Performance Obligations (Details) (Parentheticals)
Jun. 30, 2024
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01  
Satisfaction period (Year) 6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01  
Satisfaction period (Year) 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01  
Satisfaction period (Year) 1 year
v3.24.2.u1
Note 1 - Basis of Presentation and Recently Issued Accounting Pronouncements - Schedule of Capitalized Costs (Details) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Balance, beginning of period $ 48,309 $ 33,461
Additions 98,200 0
Transfer to expense (10,181) (15,312)
Balance, end of period $ 136,328 $ 18,149
v3.24.2.u1
Note 2 - Going Concern, Liquidity and Management's Plan (Details Textual) - USD ($)
6 Months Ended
May 24, 2023
Mar. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
May 22, 2023
May 21, 2023
Working Capital (Deficit)     $ 39,291,576        
Debt Conversion, Converted Instrument, Amount     $ 0 $ 44,200,000      
Common Stock, Shares Authorized (in shares)     800,000,000   800,000,000 800,000,000 500,000,000
Replacement Notes [Member] | Replacement Note Conversion Agreement [Member]              
Debt Conversion, Converted Instrument, Amount   $ 26,200,000          
Debt Instrument, Convertible, Conversion Price (in dollars per share)   $ 0.1          
Debt Conversion, Converted Instrument, Shares Issued (in shares)   262,000,000          
Replacement Notes [Member] | Conversion of Replacement Notes Into Common Stock [Member]              
Debt Conversion, Converted Instrument, Amount $ 18,000,000            
Debt Instrument, Convertible, Conversion Price (in dollars per share) $ 0.1            
Debt Conversion, Converted Instrument, Shares Issued (in shares) 180,000,000            
v3.24.2.u1
Note 3 - Stockholders' Equity (Details Textual) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares) 30,277,858  
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value (in dollars per share) $ 1,816,521  
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in dollars per share) $ 0.06  
Share-Based Payment Arrangement, Expense $ 211,695 $ 117,056
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount $ 1,663,565  
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year) 2 years 7 months 6 days  
Share-Based Payment Arrangement, Option [Member]    
Share-Based Payment Arrangement, Expense, Tax Benefit $ 0  
v3.24.2.u1
Note 3 - Stockholders' Equity - Warrant Activity (Details) - $ / shares
6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Warrants (in shares) 5,694,445  
Warrants, remaining contractual life (Year) 2 years 1 month 6 days 2 years 7 months 6 days
Warrants (in shares) 5,694,445 5,694,445
Minimum [Member]    
Warrants, exercise price (in dollars per share) $ 0.01  
Warrants, exercise price (in dollars per share) 0.01 $ 0.01
Maximum [Member]    
Warrants, exercise price (in dollars per share) 0.03  
Warrants, exercise price (in dollars per share) 0.03 0.03
Weighted Average [Member]    
Warrants, exercise price (in dollars per share) 0.024  
Warrants, exercise price (in dollars per share) $ 0.024 $ 0.024
v3.24.2.u1
Note 3 - Stockholders' Equity - Option Activity (Details) - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Balance (in shares) 38,483,977  
Balance, exercise price (in dollars per share) $ 0.09  
Balance, remaining contractual life (Year) 7 years 5 years 2 months 12 days
Balance, aggregate intrinsic value $ 314,925  
Granted (in shares) 30,277,858  
Granted, exercise price (in dollars per share) $ 0.06  
Granted, remaining contractual life (Year) 9 years 4 months 24 days  
Forfeited/Expired (in shares) (835,000)  
Forfeited/Expired, exercise price (in dollars per share) $ 0.58  
Exercised (in shares) 0  
Exercised, exercise price (in dollars per share) $ 0  
Balance (in shares) 67,926,835 38,483,977
Balance, exercise price (in dollars per share) $ 0.07 $ 0.09
Balance, aggregate intrinsic value $ 104,475 $ 314,925
Vested and Exercisable (in shares) 36,718,977  
Vested and Exercisable, exercise price (in dollars per share) $ 0.08  
Vested and Exercisable, remaining contractual life (Year) 4 years 8 months 12 days  
Vested and Exercisable, aggregate intrinsic value $ 104,475  
v3.24.2.u1
Note 4 - Other Current Assets - Schedule of Other Current Assets (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Prepaid insurance $ 304,005 $ 180,267
Other prepaid expenses 41,355 62,843
Sales tax overpayment 91,981 91,981
TOTAL OTHER CURRENT ASSETS $ 437,341 $ 335,091
v3.24.2.u1
Note 5 - Inventory - Schedule of Inventory (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
TOTAL INVENTORY $ 309,371 $ 294,435
Equipment Components [Member]    
TOTAL INVENTORY $ 309,371 $ 294,435
v3.24.2.u1
Note 6 - Property and Equipment (Details Textual) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Depreciation $ 108,710 $ 194,619
v3.24.2.u1
Note 6 - Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Property and equipment, gross $ 9,956,331 $ 9,926,453
Less: accumulated depreciation (9,717,537) (9,608,827)
TOTAL PROPERTY AND EQUIPMENT, NET 238,794 317,626
Network Equipment [Member]    
Property and equipment, gross 9,218,247 9,204,511
Office Equipment [Member]    
Property and equipment, gross 258,096 241,955
Vehicles [Member]    
Property and equipment, gross 133,617 133,616
Test Equipment [Member]    
Property and equipment, gross 230,365 230,365
Furniture and Fixtures [Member]    
Property and equipment, gross 92,097 92,097
Warehouse Equipment [Member]    
Property and equipment, gross 18,788 18,788
Leasehold Improvements [Member]    
Property and equipment, gross $ 5,121 $ 5,121
v3.24.2.u1
Note 7 - Intangible and Other Assets, Net - Schedule of Intangibles Assets (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Intangible assets, cost $ 921,989 $ 899,729
Intangible assets, amortization 514,006 493,428
Intangible assets, net 407,983 406,301
Patents and Trademarks [Member]    
Intangible assets, cost 888,690 879,492
Intangible assets, amortization 496,151 478,250
Intangible assets, net 392,539 401,242
Other Intangible Assets [Member]    
Intangible assets, cost 33,299 20,237
Intangible assets, amortization 17,855 15,178
Intangible assets, net $ 15,444 $ 5,059
v3.24.2.u1
Note 7 - Intangible and Other Assets, Net - Schedule of Other Assets (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Other assets, gross $ 2,345,507 $ 2,133,064
Other assets, amortization 1,995,469 1,831,054
Other assets, net 350,038 302,010
Deferred Installation Costs [Member]    
Other assets, gross 1,495,920 1,397,720
Other assets, amortization 1,359,592 1,349,410
Other assets, net 136,328 48,310
Deferred Sales Commissions [Member]    
Other assets, gross 553,464 439,221
Other assets, amortization 425,496 279,459
Other assets, net 127,968 159,762
Prepaid License Fee [Member]    
Other assets, gross 249,999 249,999
Other assets, amortization 210,381 202,185
Other assets, net 39,618 47,814
Security Deposits [Member]    
Other assets, gross 46,124 46,124
Other assets, amortization 0 0
Other assets, net $ 46,124 $ 46,124
v3.24.2.u1
Note 8 - Other Current Liabilities - Schedule of Other Current Liabilities (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Allowance for system removal $ 54,802 $ 54,802
Accrued paid time off 129,221 164,566
Deferred officer compensation (1) [1] 49,528 49,528
Other accrued liabilities 323,238 220,601
TOTAL OTHER CURRENT LIABILITIES $ 556,789 $ 489,497
[1] Remaining salary payable for Steve Johnson, CEO, between February 15, 2018 and September 30, 2020.
v3.24.2.u1
Note 9 - Agreement With PDL Biopharma, Inc. (Details Textual) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Mar. 31, 2023
PDL Modification Agreement [Member]      
Interest Expense, Operating and Nonoperating $ 1,604,250 $ 1,604,250  
PDL Credit Agreement [Member]      
Debt Instrument, Covenant, Excess Cash Flow Threshold     $ 600,000
Debt Instrument, Covenant, Excess Cash Threshold     1,200,000
Debt Instrument, Covenant, Inventory Reserve Account Threshold     $ 600,000
Debt Instrument, Covenant, Repayment Percentage Threshold     100.00%
PDL Credit Agreement [Member]      
Line of Credit Facility, Maximum Borrowing Capacity 40,000,000    
PDL Credit Agreement [Member] | Tranche One [Member]      
Line of Credit Facility, Maximum Borrowing Capacity 20,000,000    
PDL Credit Agreement [Member] | Tranche Two [Member]      
Line of Credit Facility, Maximum Borrowing Capacity $ 20,000,000    
v3.24.2.u1
Note 10 - Agreement With Healthcor (Details Textual) - USD ($)
6 Months Ended 12 Months Ended
May 24, 2023
Mar. 30, 2023
Apr. 21, 2011
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Dec. 31, 2022
Debt Conversion, Converted Instrument, Amount       $ 0 $ 44,200,000    
Ninth Amendment Warrants [Member]              
Warrants and Rights Outstanding       378,000      
Allonge 3 Amendment Warrants [Member]              
Warrants and Rights Outstanding       $ 420,000      
HealthCor Notes [Member]              
Paid-in-Kind Interest           $ 0 $ 0
HealthCor Notes [Member] | Replacement Note Conversion Agreement [Member]              
Debt Conversion, Converted Instrument, Shares Issued (in shares)   262,000,000          
HealthCor Notes [Member] | Replacement Note Conversion Agreement [Member] | HealthCor Noteholders [Member]              
Debt Conversion, Converted Instrument, Amount   $ 36,000,000          
Debt Instrument, Convertible, Conversion Price (in dollars per share)   $ 0.1          
Debt Conversion, Converted Instrument, Shares Issued (in shares)   180,000,000          
HealthCor Notes [Member] | Replacement Note Conversion Agreement [Member] | Other Related and Nonrelated Parties [Member]              
Debt Conversion, Converted Instrument, Amount   $ 8,200,000          
Debt Instrument, Convertible, Conversion Price (in dollars per share)   $ 0.1          
Replacement Notes [Member] | Replacement Note Conversion Agreement [Member]              
Debt Conversion, Converted Instrument, Amount   $ 26,200,000          
Debt Instrument, Convertible, Conversion Price (in dollars per share)   $ 0.1          
Debt Conversion, Converted Instrument, Shares Issued (in shares)   262,000,000          
Replacement Notes [Member] | Conversion of Replacement Notes Into Common Stock [Member]              
Debt Conversion, Converted Instrument, Amount $ 18,000,000            
Debt Instrument, Convertible, Conversion Price (in dollars per share) $ 0.1            
Debt Conversion, Converted Instrument, Shares Issued (in shares) 180,000,000            
PDL Credit Agreement [Member]              
Paid-in-Kind Interest           $ 0 $ 0
Healthcor [Member] | Convertible Debt [Member]              
Debt Instrument, Face Amount     $ 9,316,000        
Issuance of Warrants (in shares)     5,488,456        
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)     $ 1.4        
Debt Instrument, Interest Rate, Increase (Decrease)     5.00%        
Debt Instrument, Maturity Date     Apr. 20, 2021        
Healthcor [Member] | Convertible Debt [Member] | First Five-Year Note Period [Member]              
Debt Instrument, Interest Rate During Period     12.50%        
Healthcor [Member] | Convertible Debt [Member] | Second Five-Year Note Period [Member]              
Debt Instrument, Interest Rate During Period     10.00%        
Healthcor [Member] | Convertible Debt1 [Member]              
Debt Instrument, Face Amount     $ 10,684,000        
Issuance of Warrants (in shares)     6,294,403        
v3.24.2.u1
Note 11 - Lease (Details Textual) - USD ($)
6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Mar. 04, 2020
Operating Lease, Expense $ 151,900 $ 147,894  
Office Space Lease [Member]      
Lessee, Operating Lease, Remaining Lease Term (Month) 14 months    
Lessee, Operating Lease, Renewal Term (Year)     5 years
v3.24.2.u1
Note 11 - Lease - Schedule of Lease Maturities (Details)
Jun. 30, 2024
USD ($)
Remaining 2024 $ 112,168
2025 150,679
Total minimum lease payments 262,847
Less effects of discounting (22,902)
Present value of future minimum lease payments $ 239,945

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