Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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, 2023

☐	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

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 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 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 July 31, 2023 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, 2023 (Unaudited) and December 31, 2022	3

		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	4

		Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	5

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited)	6

		Notes to the Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24

	Item 4.	Controls and Procedures	24

PART II - OTHER INFORMATION

	Item 1.	Legal Proceedings	26

	Item 1A.	Risk Factors	26

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

	Item 3.	Defaults Upon Senior Securities	26

	Item 4.	Mine Safety Disclosures	26

	Item 5.	Other Information	26

	Item 6.	Exhibits	26

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,
	2023			December 31,
	(unaudited)			2022
ASSETS
Current Assets:
Cash and cash equivalents	$	707,345		$	520,166
Accounts receivable		2,009,756			948,328
Inventory		147,673			301,446
Other current assets		446,621			71,020
Total current assets		3,311,395			1,840,960

Property and equipment, net		449,883			642,559

Intangible assets, net		749,409			820,106
Operating lease asset		366,471			434,330
Other assets, net		198,690			209,649
Total assets	$	5,075,848		$	3,947,604

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	575,509		$	650,796
Notes payable		20,258,333			20,000,000
Notes payable - related parties		700,000			700,000
Convertible notes payable, related parties		—			42,394,168
Convertible notes payable, non-related parties		—			1,805,832
Operating lease liability		182,401			175,520
Other current liabilities (Note 8)		16,852,552			14,553,277
Total current liabilities		38,568,795			80,279,593

Long-term Liabilities:
Operating lease liability, less current portion		226,026			305,259
Other liability		16,319			23,481
Total long-term liabilities		242,345			328,740
Total liabilities		38,811,140			80,608,333

Stockholders' Deficit:
Common stock - par value $0.001; 800,000,000 and 500,000,000 shares authorized, respectively; 583,880,748 and 141,880,748 issued and outstanding, respectively		583,881			141,881
Additional paid in capital		171,005,111			127,130,055
Accumulated deficit		(205,324,284	)		(203,932,665	)
Total stockholders' deficit		(33,735,292	)		(76,660,729	)
Total liabilities and stockholders' deficit	$	5,075,848		$	3,947,604

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, 2023 AND 2022

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Revenues
Subscription-based lease	$	1,113,887		$	1,329,883		$	2,320,984		$	2,634,866
Sales-based equipment package		1,837,088			—			1,996,785			807,323
Sales-based software bundle		759,134			366,853			1,174,599			573,576
Total revenue		3,710,109			1,696,736			5,492,368			4,015,765

Operating expenses:
Cost of equipment		224,997			—			256,929			117,597
Network operations		763,487			609,507			1,468,530			1,346,983
General and administration		1,051,953			876,991			1,749,720			1,816,240
Sales and marketing		230,814			141,752			399,233			330,968
Research and development		515,374			450,292			1,034,006			947,544
Depreciation and amortization		103,797			151,490			280,628			312,953
Total operating expense		2,890,422			2,230,032			5,189,046			4,872,285

Operating income (loss)		819,687			(533,296	)		303,322			(856,520	)

Other income and (expense)
Interest expense		(865,627	)		(1,968,667	)		(1,696,961	)		(3,990,451	)
Interest income		1,133			54			2,020			54
Total other expense		(864,494	)		(1,968,613	)		(1,694,941	)		(3,990,397	)

Loss before taxes		(44,807	)		(2,501,909	)		(1,391,619	)		(4,846,917	)

Provision for income taxes		—			—			—			—

Net loss	$	(44,807	)	$	(2,501,909	)	$	(1,391,619	)	$	(4,846,917	)

Net loss per share	$	(0.00	)	$	(0.02	)	$	(0.00	)	$	(0.03	)

Weighted average number of common shares outstanding, basic, and diluted		463,880,748			139,380,748			304,336,304			139,380,748

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

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Unaudited)

					Additional
	Common Stock				Paid in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, January 1, 2022		139,380,748	$	139,381	$	85,052,367	$	(197,890,046	)	$	(112,698,298	)
Issuance of warrants to purchase common stock		—		—		240,000		—			240,000
Stock based compensation		—		—		55,847		—			55,847
Net loss		—		—		—		(2,345,008	)		(2,345,008	)

Balance, March 31, 2022		139,380,748	$	139,381	$	85,348,214	$	(200,235,054	)	$	(114,747,459	)
Stock based compensation		—		—		58,363		—			58,363
Net loss		—		—		—		(2,501,909	)		(2,501,909	)

Balance, June 30, 2022		139,380,748	$	139,381	$	85,406,577	$	(202,736,963	)	$	(117,191,005	)

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	)

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Unaudited)


	Six Months Ended
	June 30, 2023			June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITES
Net loss	$	(1,391,619	)	$	(4,846,917	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation		194,619			264,106
Amortization of intangible assets		70,697			27,622
Amortization of debt discount		—			495,837
Amortization of deferred installation costs		15,312			21,225
Amortization of deferred debt issuance and debt financing costs		—			—
Non-cash lease expense		67,859			58,092
Interest incurred and paid in kind		258,333			1,622,052
Stock based compensation related to options granted and warrants issued		117,056			354,210
Changes in operating assets and liabilities:
Accounts receivable		(1,061,428	)		180,249
Inventory		153,773			(111,326	)
Other current assets		(375,601	)		140,310
Patent license		(4,354	)		8,197
Accounts payable		(75,286	)		154,298
Accrued interest		1,345,917			1,490,131
Other current liabilities		881,006			62,706
Net cash flows provided by (used in) operating activities		196,284			(79,208	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment		(1,943	)		—
Patent, trademark, and other intangible asset costs		—			(56,110	)
Net cash flows used in investing activities		(1,943	)		(56,110	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable		—			(13,786	)
Repayment of vehicle loan		(7,162	)		(7,044	)
Net cash flows used in financing activities		(7,162	)		(20,830	)

Increase (decrease) in cash		187,179			(156,148	)
Cash and cash equivalents, beginning of period		520,166			659,228
Cash and cash equivalents and restricted cash, end of period	$	707,345		$	503,080

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITES
Replacement Notes conversion to equity at $0.10 per share	$	44,200,000			—

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

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED 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, 2022 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, 2022 as filed with the SEC on May 26, 2023.

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”).

Disaggregation of Revenue

The following presents net revenues disaggregated by our business models:

	Six Months Ended June 30,
	2023		2022
Sales-based contract revenue
Equipment package, net (point in time)	$	1,996,785	$	807,323
Software bundle (over time)		1,174,599		573,576
Total sales-based contract revenue		3,171,384		1,380,899

Subscription-based lease revenue		2,320,984		2,634,866
Net revenue	$	5,492,368	$	4,015,765

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.

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2023 and 2022, a total of $16,094 and $156,784, 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, 2023 and 2022, included in the Other current liabilities.


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	21,145		$	231,140
Additions		—			—
Transfer to revenue		(16,094	)		(156,784	)
Balance, end of period	$	5,051		$	74,356

During the six months ended June 30, 2023 and 2022, a total of $822,974 and $1,274,726, 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, 2023 and 2022, included in the Other current liabilities.


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	869,485		$	752,526
Additions		1,319,224			1,655,760
Transfer to revenue		(822,974	)		(1,274,726	)
Balance, end of period	$	1,365,735		$	1,133,560

As of June 30, 2023, 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 $1,370,786 and will be recognized into revenue over time as follows:

Years Ending December 31,	Amount
2023	$	830,967
2024		501,410
Thereafter		38,409
	$	1,370,786

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, 2023 and 2022, included in other assets in the accompanying unaudited consolidated balance sheet.


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	33,461		$	68,901
Additions		—			—
Transfer to expense		(15,312	)		(21,225	)
Balance, end of period	$	18,149		$	47,676

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.

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Leases

The Company has an operating lease primarily consisting of office space with a remaining lease term of 26 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 46,711,922 and 183,586,301 on June 30, 2023 and 2022, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. The 47,021,922 potential common shares consist of 41,327,477 stock options and 5,694,445 warrants.

ASU 2016-13

ASU 2016-13 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance:

Eliminates the probable initial recognition threshold in current GAAP and, instead, reflects an organization’s current estimate of all expected credit losses over the contractual term of its financial assets.

Broadens the information that an entity can consider when measuring credit losses to include forward-looking information.

Increases usefulness of the financial statements by requiring timely inclusion of forecasted information in forming expectations of credit losses.

Increases comparability of purchased financial assets with credit deterioration (PCD assets) with other purchased assets that do not have credit deterioration as well as originated assets because credit losses that are expected will be recorded through an allowance for credit losses for all assets.

Increases users’ understanding of underwriting standards and credit quality trends by requiring additional information about credit quality indicators by year of origination (vintage).

For available-for-sale debt securities, aligns the income statement recognition of credit losses with the reporting period in which changes occur by recording credit losses (and subsequent changes in credit losses) through an allowance rather than a write down.

The guidance affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. We as a smaller reporting company as defined by the SEC have adopted ASU 2016-13 effective for January 1, 2023. As of June 30, 2023, ASU 2016-13 does not have any material effect on the Company.

ASU 2020-06

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.

ASU 2022-03

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.

NOTE 2 – GOING CONCERN, LIQUIDITY AND MANAGEMENT’S 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, 2023, 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.

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2023, the Company had a working capital deficit of $35,257,400. 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”). The Conversion Shares bear a lockup legend that expires December 31, 2023.

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.

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of our Warrants activity and related information follows:

	Number of Shares Under Warrant		Range of Warrant Price Per Share		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Balance at December 31, 2022		5,694,445		$0.01-$0.03	$	0.024		3.5
Granted		—		—		—		—
Expired		—		—		—		—
Canceled		—		—		—		—
Balance at June 30, 2023		5,694,445		$0.01-$0.03	$	0.024		3.1

Options to Purchase Common Stock of the Company

During the six months ended June 30, 2023, 545,000 options to purchase our Common Stock were granted having a fair value of $29,700 and exercise price of $0.06 per share. During the six months ended June 30, 2023, no options expired or were terminated.

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

	Number of Shares Under Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at December 31, 2022		40,817,477		$	0.12			5.8	$	526,425
Granted		545,000			0.06			9.7		3,000
Forfeited/Expired		(35,000	)		(0.06	)		—		—
Exercised		—			—			—		—
Balance at June 30, 2023		41,327,477		$	0.12			5.5	$	529,425
Vested and Exercisable at June 30, 2023		33,115,144		$	0.13			4.8	$	523,425

At June 30, 2023, total unrecognized estimated compensation expense related to non-vested Options granted prior to that date was approximately $89,355, which is expected to be recognized over a weighted-average period of 1.7 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, 2023		December 31, 2022
Prepaid insurance	$	425,138	$	36,639
Other prepaid expenses		21,483		34,381
TOTAL OTHER CURRENT ASSETS	$	446,621	$	71,020

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, 2023		December 31, 2022
Inventory assets (finished goods)	$	147,673	$	301,446
TOTAL INVENTORY	$	147,673	$	301,446

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, 2023			December 31, 2022
Network equipment	$	12,620,258		$	12,620,258
Office equipment		236,372			234,430
Vehicles		232,411			232,411
Test equipment		230,365			230,365
Furniture		92,846			92,846
Warehouse equipment		9,523			9,523
Leasehold improvements		5,121			5,121
		13,426,896			13,424,954
Less: accumulated depreciation		(12,977,013	)		(12,782,395	)
TOTAL PROPERTY AND EQUIPMENT, NET	$	449,883		$	642,559

Depreciation expense for the six months ended June 30, 2023 and 2022 was $194,618 and $264,106, respectively.

NOTE 7 – INTANGIBLE AND OTHER ASSETS, NET

Intangible assets consist of the following:


	June 30, 2023
	Cost		Accumulated Amortization		Net
Patents and trademarks	$	1,213,850	$	471,524	$	742,326
Other intangible assets		20,237		13,154		7,083
TOTAL INTANGIBLE ASSETS	$	1,234,087	$	484,678	$	749,409


	December 31, 2022
	Cost		Accumulated Amortization		Net
Patents and trademarks	$	1,213,850	$	395,715	$	818,135
Other intangible assets		85,896		83,925		1,971
TOTAL INTANGIBLE ASSETS	$	1,299,746	$	479,640	$	820,106

Other assets consist of the following:


	June 30, 2023
	Cost		Accumulated Amortization		Net
Deferred installation costs	$	1,352,041	$	1,333,893	$	18,148
Deferred sales commission		243,687		165,280		78,407
Prepaid license fee		249,999		193,988		56,011
Security deposit		46,124		—		46,124
TOTAL OTHER ASSETS	$	1,891,851	$	1,693,161	$	198,690


	December 31, 2022
	Cost		Accumulated Amortization		Net
Deferred installation costs	$	1,352,041	$	1,318,580	$	33,461
Deferred sales commissions		163,973		98,116		65,857
Prepaid license fee		249,999		185,792		64,207
Security deposit		46,124		—		46,124
TOTAL OTHER ASSETS	$	1,812,137	$	1,602,488	$	209,649

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

		June 30, 2023		December 31, 2022
Accrued interest	$	14,225,278	$	12,933,611
Accrued interest, related parties		391,278		337,027
Allowance for system removal		54,802		54,802
Accrued paid time off		131,612		154,776
Deferred officer compensation⁽¹⁾		139,041		139,041
Deferred revenue		1,370,786		890,631
Other accrued liabilities		539,755		43,389
TOTAL OTHER CURRENT LIABILITIES	$	16,852,552	$	14,553,277

⁽¹⁾

Salary for Steve Johnson, CEO, between February 15, 2018 and September 30, 2020.

NOTE 9 – INCOME TAXES

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We do not expect to pay any significant federal or state income tax for 2023 because of the losses recorded during the six months ended June 30, 2023 and net operating loss carry forwards from prior years. In assessing the realizability of deferred tax asset, including the net operating loss carryforwards (NOLs), the Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all the benefits of deferred tax assets will not be realized. As of June 30, 2023, we maintained a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income taxes has been recorded. There were no recorded unrecognized tax benefits at the end of the reporting period.

The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. corporate rates from 35% to 21%. Additionally, the Act limits the use of net operating loss carry backs, however any future net operating losses will instead be carried forward indefinitely. Net operating losses generated from January 1, 2018 are limited to offset 80% of current income, with the remainder of the net operating loss continuing to carry forward indefinitely. Net operating losses incurred before January 1, 2018 are not subject to the 80% limitations and will begin to expire in 2029. Based on an initial assessment of the Act, the Company believes that the most significant impact on the Company’s unaudited condensed consolidated financial statements will be limitations in tax deductions on interest expense. Under the Act, interest deductions disallowed from current income will carryforward indefinitely. The Act did not impact management’s valuation allowance position.

The effective tax rate for the six months ended June 30, 2023 was different from the federal statutory rate due primarily to change in the valuation allowance and nondeductible interest and amortization expense.

NOTE 10 – 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”). On May 15, 2019, pursuant to the terms of the Fifth Amendment to the PDL Credit Agreement (see below for additional details), the interest increased to 15.5% per annum, payable quarterly.

On January 31, 2021, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Third Amendment to Modification Agreement (the “Twenty-Third 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 January 31, 2021 (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, 2021 (the end of the extended Modification Period) and that such deferrals would be a Covered Event. The Company has evaluated the Twenty-Third Modification Agreement Amendment and as the effective borrowing rate under the restructured agreement is less than the effective borrowing rate on the old agreement, a concession is deemed to have been granted under ASC 470-60-55-10. As a concession has been granted, the agreement is to be accounted for as a troubled debt restructuring by debtors (TDR) under ASC 470-60.

On May 25, 2021, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Fourth Amendment to Modification Agreement (the “Twenty-Fourth 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 November 30, 2021 (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, 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 November 30, 2021 (the end of the extended Modification) and that such deferrals would be a Covered Event. The Company has evaluated the Twenty-Fourth Modification Agreement Amendment and as the effective borrowing rate under the restructured agreement is less than the effective borrowing rate on the old agreement, a concession is deemed to have been granted under ASC 470-60-55-10. As a concession has been granted, the agreement is to be accounted for as a troubled debt restructuring by debtors (TDR) under ASC 470-60.

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On November 29, 2021, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Fifth Amendment to Modification Agreement (the “Twenty-Fifth 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 June 30, 2022 (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 June 30, 2022 (the end of the extended Modification) and that such deferrals would be a covered event. The Company has evaluated the Twenty-Fifth Modification Agreement Amendment and as the effective borrowing rate under the restructured agreement is less than the effective borrowing rate on the old agreement, a concession is deemed to have been granted under ASC 470-60-55-10. As a concession has been granted, the agreement is to be accounted for as a troubled debt restructuring by debtors (TDR) under ASC 470-60.

On June 23, 2022, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Sixth Amendment to Modification Agreement (the “Twenty-Sixth 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 June 30, 2022 (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, October 7, 2020 and June 30, 2022 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 June 30, 2022, would each be deferred until December 31, 2022 (the end of the extended Modification) and that such deferrals would be a covered event. The Company has evaluated the Twenty-Sixth Modification Agreement Amendment and as the effective borrowing rate under the restructured agreement is less than the effective borrowing rate on the old agreement, a concession is deemed to have been granted under ASC 470-60-55-10. As a concession has been granted, the agreement is to be accounted for as a troubled debt restructuring by debtors (TDR) under ASC 470-60.

On December 30, 2022, the Company, the Borrower, the Subsidiary Guarantor, the Lender and the Tranche Three Lenders entered into a Twenty-Seventh Amendment to Modification Agreement (the “Twenty-Seventh 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 February 28, 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 February 28, 2023 (the end of the extended Modification Period) and that such deferrals would be a covered event. The Company has evaluated the Twenty-seventh Modification Agreement Amendment and as the effective borrowing rate under the restructured agreement is less than the effective borrowing rate on the old agreement, a concession is deemed to have been granted under ASC 470-60-55-10. As a concession has been granted, the agreement is to be accounted for as a troubled debt restructuring by debtors (TDR) under ASC 470-60.

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 three months ended March 31, 2023 and 2022, pursuant to the terms of the PDL Modification Agreement, as amended, $802,125 and $775,000, respectively, 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).

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Accounting Treatment

In connection with the PDL Credit Agreement, as amended, we issued the PDL Warrant to the Lender. As of June 30, 2023, the Amended PDL Warrant has not been exercised.

Pursuant to the PDL Seventh Credit Agreement Amendment, calculations will be made for the “interest paid-in-kind” and quarterly “prepayment(s)” effective for the month ended June 30, 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 Seventh 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 11 – AGREEMENT WITH HEALTHCOR

On April 20, 2021, 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, 2021 to April 20, 2022 by entering into Allonge No. 3 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 January 30, 2022 to April 20, 2022 by entering into Allonge No. 3 to the 2012 HealthCor Notes (the “Third 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 warrants to purchase an aggregate of 2,000,000 shares of our Common Stock at an exercise price per share equal to $0.23 per share (subject to adjustment as described therein) and with an expiration date of April 20, 2031, to the HealthCor Parties (collectively the “2021 HealthCor Warrants”). As a concession has been granted, the agreement is to be accounted for as a troubled debt restructuring by debtors (TDR) under ASC 470-60.

Also on April 20, 2021, in connection with the HealthCor Note Extensions and the issuance of the 2021 HealthCor Warrants, we entered into a Consent and Agreement Pursuant to Note and Warrant Purchase Agreement (the “2021 NWPA Consent”) with the HealthCor Parties and certain additional Existing Investors (in their capacity as Majority Holders acting together with the HealthCor Parties), pursuant to which, among other things, (i) the Majority Holders consented to the HealthCor Note Extensions, (ii) the Majority Holders consented to the issuance of the 2021 HealthCor Warrants and (iii) the parties agreed that the holders of the 2021 HealthCor Warrants would have registration rights for the shares of Common Stock issuable upon exercise of the 2021 HealthCor Warrants under the Registration Rights Agreement dated as of April 20, 2011, as amended June 30, 2015, by and among the Company, the HealthCor Parties and the additional investors party thereto (the “Registration Rights Agreement”).

On March 08, 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 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, to the HealthCor Parties (collectively the “2021 HealthCor Warrants”). The warrants were valued at $240,000 and are amortized over the life of the debt. The conclusion was that this was a debt modification and this was accounted for as such.

Also on March 08, 2022, in connection with the HealthCor Note Extensions and the issuance of the 2021 HealthCor Warrants, we entered into a Consent and Agreement Pursuant to Note and Warrant Purchase Agreement (the “2022 NWPA Consent”) with the HealthCor Parties and certain additional Existing Investors (in their capacity as Majority Holders acting together with the HealthCor Parties), pursuant to which, among other things, (i) the Majority Holders consented to the HealthCor Note Extensions, (ii) the Majority Holders consented to the issuance of the 2021 HealthCor Warrants and (iii) the parties agreed that the holders of the 2021 HealthCor Warrants would have registration rights for the shares of Common Stock issuable upon exercise of the 2021 HealthCor Warrants under the Registration Rights Agreement dated as of April 20, 2011, as amended June 30, 2015, by and among the Company, the HealthCor Parties and the additional investors party thereto (the “Registration Rights Agreement”).

On July 1, 2022, we entered into amendments to the 2014 HealthCor Notes, 2015 Supplemental Notes, Eighth Amendment Supplemental Closing Notes, Tenth Amendment Supplemental Closing Notes, Twelfth Amendment Supplemental Closing Note and Thirteenth Amendment Supplemental Closing Note (collectively, the “2022 Allonges”) to suspend the accrual of interest on the 2014 HealthCor Notes as to 100% of the outstanding principal amount under such notes, 2015 Supplemental Notes as to 100% of the outstanding principal amount under such notes, Eighth Amendment Supplemental Closing Notes as to 100% of the outstanding principal amount under such notes, Tenth Amendment Supplemental Closing Notes as to 100% of the outstanding principal amount under such notes, Twelfth Amendment Supplemental Closing Note as to 100% of the outstanding principal amount under such note, and Thirteenth Amendment Supplemental Closing Note as to 100% of the outstanding principal amount under such note, for all periods beginning on and after January 1, 2022. This was determined to be a Troubled Debt Restructure and is accounted for accordingly.

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Also on December 30, 2022, the Existing Investors agreed to the cancellation by the Company and the forfeiting of their respective rights in and to the 2011 Warrants, 2014 Supplemental Warrants, Fifth Amendment Supplemental Warrants, Sixth Amendment Supplemental Warrants, Eighth Amendment Supplemental Warrants, 2021 Warrants and 2022 Warrants (collectively, the “Warrants”); and the Existing Investors have agreed to waive any and all interest that has accrued, but remains unpaid on the Existing Notes held by the Existing Investors; in exchange for releasing its second senior secured position they hold in connection with the 2011 Notes and 2012 Notes. The Existing Investors have agreed to waive any and all interest that has accrued, but remains unpaid on the Existing Notes held by the Existing Investors with the 2014 Notes along with the 2015 Notes, 2018 Notes, 2019 Note and 2020 Note. In exchange for releasing its second senior secured position they hold in connection with the 2011 Notes and 2012 Notes, the HealthCor Parties will receive an additional $5,000,000 in value in the Replacement Notes. In this troubled debt restructuring, all the conversion rates were changed to $0.10. The gain from this troubled debt restructuring was $1,489,357.

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 $1,406,760 in interest for the six months ended June 30, 2023 and 2022, respectively, related to these transactions. For the six months ended June 30, 2023 and 2022, we recorded $0 and $860,728, respectively, of PIK related to the notes included in the HealthCor Purchase Agreement. 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.

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.

Warrants were issued with Allonge 4 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 Allonge 4 Amendment Warrants was $240,000.

CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – JOINT VENTURE AGREEMENT

On December 31, 2019, the Company and Rockwell entered into a Second Amendment to the Rockwell Note (the “Second Rockwell Note Amendment”) pursuant to which Rockwell agreed to extend the term of the Rockwell Note by one year, to December 31, 2020, and agreed to extend the time to make the quarterly payment that would otherwise be due on December 31, 2019 to January 31, 2020. We have evaluated the Second Amendment to the Rockwell Note under ASC 470 and determined that the amendment should be treated as a debt modification.

On January 31, 2020, the Company and Rockwell entered into a Third Amendment to the Rockwell Note (the “Third Rockwell Note Amendment”), pursuant to which Rockwell agreed to extend the time to make the quarterly payment that would otherwise be due on January 31, 2020 (per the Second Rockwell Note Amendment) to February 10, 2020. We have evaluated the Third Amendment to the Rockwell Note under ASC 470 and determined that the amendment should be treated as a debt modification.

Effective as of March 31, 2020, the Company and Rockwell entered into a Fourth Amendment to the Rockwell Note (the “Fourth Rockwell Note Amendment”), pursuant to which Rockwell agreed to extend the time to make the quarterly payment that would otherwise be due on March 31, 2020 to April 16, 2020. We have evaluated the Fourth Amendment to the Rockwell Note under ASC 470 and determined that the amendment should be treated as a debt modification.

On December 31, 2020, the Company and Rockwell entered a Fifth Amendment to the Rockwell Note (the “Fifth Rockwell Note Amendment”), pursuant to which Rockwell agreed (i) to extend the term of the Promissory Note by one (1) year and continue the quarterly principal payments through September 30, 2021 with the final balloon payment due on December 31, 2021 and (ii) that the quarterly principal payment that would otherwise be due on December 31, 2020 will not be required to be made until the final balloon payment due date. We have evaluated the Fourth Amendment to the Rockwell Note under ASC 470 and determined that the amendment should be treated as a debt modification.

On November 30, 2021, the Company and Rockwell entered into a Sixth Amendment to the Rockwell Note (the “Sixth Rockwell Note Amendment”), pursuant to which Rockwell agreed to extend the term of the Rockwell Note by three months, to March 31, 2022, and agreed that the quarterly principal payment that would otherwise be due on December 31, 2021 will not be required to be made until March 31, 2022.

As of March 31, 2022, the Rockwell Note was paid off.

NOTE 13 – 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 remaining lease term of 38 months (Lease through August 31, 2025).

On September 8, 2009, we entered into a Commercial Lease Agreement (the “Lease”) for 10,578 square feet of office and warehouse space expiring on June 30, 2015. 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 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, 2023 and 2022 was $147,894 and $154,202, 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, 2023, for the following five fiscal years and thereafter as follows:

Quarter endingJune 30, 2023	Operating Leases
Remaining 2023	$	108,901
2024		221,070
2025		150,679
Total minimum lease payments		480,650
Less effects of discounting		(72,223	)
Present value of future minimum lease payments	$	408,427

NOTE 14 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through August 14, 2023, the date of filing of this Form 10-Q.

Item 2. Management’s 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, 2023. 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

For over a decade, CareView has been dedicated to supporting hospital care teams with its innovative virtual care solutions. The Company has established successful partnerships with over 200 hospitals nationwide, implementing effective inpatient virtual care strategies that greatly enhance patient safety and overcome critical staffing challenges. The CareView platform, fueled by industry-leading predictive technology and supported by its purpose-built hardware, specifically addresses the unique requirements of virtual nursing and virtual sitting use cases. The CareView team works closely with their hospital partners to understand their evolving needs and deliver tailored virtual care strategies that align with their objectives. By providing healthcare professionals with the tools they need to deliver exceptional care, CareView contributes to improved patient outcomes and a more sustainable healthcare ecosystem.

Software: The CareView Platform

The CareView platform comprises two essential components: the Patient Safety System® and the Patient Care System. These systems work in harmony to deliver unparalleled patient safety and exceptional virtual nursing care. The Patient Safety System is purposefully designed to optimize virtual sitting outcomes. Leveraging our patented predictive technology, including Virtual Bed Rails® and Virtual Chair Rails®, it ensures continuous monitoring of 25-35 patients from a centralized location. By utilizing these innovative tools, we enhance patient safety while reducing sitter costs across the nation. The Patient Care System revolutionizes virtual nursing by harnessing our clinically-designed technology. By reallocating professional nursing and administrative tasks to virtual Registered Nurses (vRNs), it alleviates the bedside workload and enables virtual engagement with patients and their families. This transformational approach allows for personalized care and improved patient experiences.

The CareView platform seamlessly integrates with CareView's in-room cameras, 3rd party technology integrations, and clinical workflows, empowering hospitals to implement their virtual care strategies effortlessly. The CareView platform includes a real-time analytics dashboard and a range of reporting tools, providing valuable insights and data to optimize patient care delivery. CareView also understands the importance of system management and maintenance. The CareView team is dedicated to providing exceptional support, monitoring, and maintenance services for the platform and hardware, ensuring optimal performance and peace of mind for our valued partners.

CareView prioritizes the privacy and security of our customers' confidential data and information systems. The Company has implemented comprehensive measures to provide robust protection, as evidenced by their privacy and information security assessment certifications. Since 2017, CareView has been HITRUST certified, an internationally recognized standard that ensures the implementation of adequate and proportionate security controls. This certification validates their commitment to safeguarding customers' information and intellectual property assets. With HITRUST certification, customers can trust that CareView adheres to stringent information security policies. To handle sensitive information securely, CareView leverages a FIPS 140-2 validated cryptographic module certificate #3998. This certificate demonstrates compliance with the Federal Information Processing Standard (FIPS) 140-2 Level 1, providing a high level of confidence in their encryption practices. Importantly, this validation is achieved without the need for additional hardware, ensuring a streamlined and efficient security infrastructure. CareView is fully compliant with the Health Insurance Portability and Accountability Act (HIPAA). Their commitment to HIPAA standards ensures that sensitive information is safeguarded at all times. With CareView's additional HIPAA-compliant features, customers have the power to control their privacy settings. A patient, nurse, or physician, can enable privacy options whenever needed.

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.

Hardware: In-room Cameras

CareView takes pride in their meticulously designed and engineered hardware that seamlessly integrates with the CareView platform, elevating the virtual care experience for their esteemed hospital partners and their patients. To cater to various patient care scenarios, CareView offers a range of in-room cameras, each carefully crafted to handle different care situations while ensuring optimal monitoring capabilities. All of the CareView cameras are equipped with low-light/night vision cameras, pan tilt zoom and high-fidelity 2-way audio for effective communication. For virtual sitting use cases, the CareView cameras use 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 cameras are available in multiple configurations for permanent or temporary situations; the Mobile, Portable, and Fixed Controller. For virtual care situations that demand that the camera come to the patient, the 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 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 Fixed Controller can be installed seamlessly in the ceiling tiles leaving no exposed wiring making it ligature resistant.

CareView 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 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 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 System to the extent, and only to the extent, necessary to access, explore and otherwise use the CareView 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 System. The CareView 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 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 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 in a timely manner 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.

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, 2022, and 2021, the Company executed sales-based contracts in approximate aggregated amounts of $4,309,000 and $5,600,000.

Results of Operations

Three months ended June 30, 2023, compared to three months ended June 30, 2022

	Three months ended June 30,
	2023			2022			Change
	(000 ’s)
Revenue	$	3,710		$	1,697		$	2,013
Operating expenses		2,890			2,230			660
Operating income		820			(533	)		1,353
Other, net		(864	)		(1,969	)		(1,105	)
Net loss	$	(44	)	$	(2,502	)	$	(2,458	)

Revenue

Revenue increased approximately $2,013,000 for the three months ended June 30, 2023, as compared to the same period in 2022. The increase was attributable to recognizing hardware order fulfillment of two major new customers.

Operating Expenses

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

	Three Months Ended June 30,
	2023			2022
Human resource costs, including benefits and non-cash compensation		51	%		57	%
Professional and consulting costs		9	%		12	%
Depreciation and amortization		3	%		7	%
Other product deployment costs, excluding human resources and travel and entertainment costs		10	%		1	%
Travel and entertainment expense		3	%		0	%
Other expenses		24	%		23	%

Operating expenses increased by a net 29.6% because of the following items:

		(000’s)
Human resource costs, including benefits and non-cash compensation	$	193
Depreciation and amortization		(47	)
Other product deployment costs, excluding human resources and travel and entertainment expense		269
Professional and consulting costs		(20	)
Travel and entertainment expense		155
Other expenses		110
	$	660

Human resource related costs (including salaries and benefits and non-cash compensation) increased approximately $193,000 due to higher payroll costs of professional staff, commissions and PTO paid out during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. Product deployment costs increased approximately $269,000 due to increase in cost of sales of hardware and associated installation, training and go-live. Travel and entertainment costs increased approximately $155,000 due to 2022 second quarter year to date correction of $150,340 credit card charges incorrectly booked to corporate transportation costs. For the comparable periods, other expenses increased approximately $110,000, primarily as a result of public entity costs, advertising and marketing, and warehouse supplies.

Other, net

Other non-operating income and expense decreased by approximately $1,105,000, or 56%, for the three months ended June 30, 2023 in comparison to the same period in 2022, primarily because of the cancellation of all Non-PDL, related and non-related parties’ interest expense and warrants in consideration for the debt to equity conversion.

Net Loss

As a result of the factors above, our second quarter 2023 net loss of approximately $45,000 decreased approximately $2,457,000, or 98%, as compared to approximately $2,502,000 net loss for the second quarter of 2022.

Six months ended June 30, 2023, compared to six months ended June 30, 2022

	Six months ended June 30,
	2023			2022			Change
	(000’s)
Revenue	$	5,492		$	4,016		$	1,476
Operating expenses		5,189			4, 872			317
Operating income		303			(856	)		1,159
Other, net		(1,694	)		(3,990	)		(2,296	)
Net loss	$	(1,391	)	$	(4,846	)	$	(3,455	)

Revenue

Revenue increased approximately $1,476,000 for the six months ended June 30, 2023, as compared to the same period in 2022. The increase was attributable to recognizing hardware order fulfillment of two major new customers.

Other, net decreased approximately $2,295,000 for the six months ended June 30, 2023, as compared to the same period in 2022. The decrease was attributable to the cancellation of all non-PDL, related and non-related parties’ interest expense and warrants in consideration for the debt to equity conversion.

Operating Expenses

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

	Six Months Ended June 30,
	2023			2022
Human resource costs, including benefits and non-cash compensation		55	%		55	%
Professional and consulting costs		10	%		11	%
Depreciation and amortization		5	%		6	%
Other product deployment costs, excluding human resources and travel and entertainment costs		7	%		5	%
Travel and entertainment expense		3	%		3	%
Other expenses		20	%		20	%

Operating expenses increased by a net 6.5% of approximately $317,000. The increase was attributable to other product deployment costs of hardware sales and associated installation, training and go-live as well as Human resource cost of sales commissions being higher than the comparable period.

Net Loss

Year-To-date 2023 net loss of approximately $1,392,000 decreased approximately $3,455,000 or 71%, as compared to approximately $4,847,000 net loss for the comparable six months of 2022.

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, 2023, 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, 2024.

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, 2023, the Company had an accumulated deficit of $205,324,284, income from operations of $819,687, net cash provided by operating activities of $1,585,116, and an ending cash balance of $707,345.

As of June 30, 2023, the Company had a working capital deficit of $35,257,400 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 note 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, 2024. 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/A for the year ended December 31, 2022 filed with the Commission on May 26, 2023 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, 2023.

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, 2023. 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, 2023 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, 2023 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, 2023, 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.

●

Due to a lack of accounting resources, it was determined that the Company had inadequate segregation of duties in place related to its financial reporting and other management oversight. Specifically, the accounting personnel had responsibility for initiating transactions in the financial statement areas of revenues, equity, payroll, debt, and financial reporting, recording transactions, and preparing financial reports.

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.

●

The Company hired a certified public accountant (“CPA”) as its Controller and a Senior Accountant while contracting with the former Senior Accountant.

●

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, 2023 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.

The shares were offered and sold to accredited investors in a transaction not involving a public offering, pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. The investors represented their intentions to acquire the securities for investment only and not with a view to sale in connection with any distribution thereof, and appropriate legends were placed upon the shares issued in the transaction. The offer and sale of the securities were made without any general solicitation or advertising.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.	Date of Document	Name of Document
31.1	August 14, 2023	Certification of Chief Executive Officer of Periodic Report pursuant to Rule 13a-14a and Rule 14d-14(a)*
31.2	August 14, 2023	Certification of Chief Financial Officer of Periodic Report pursuant to Rule 13a-14a and Rule 15d-14(a)*
32	August 14, 2023	Certifications under Section 906*
101.SCH	n/a	XBRL Taxonomy Extension Schema Document*
101.CAL	n/a	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	n/a	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	n/a	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	n/a	XBRL Taxonomy Extension Presentation Linkbase Document*

*	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, 2023

	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

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:

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;

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;

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

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):

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

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, 2023	/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)

(3)

(4)

(5)

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, 2023	/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, 2023 (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, 2023	/s/ Steven G. Johnson
	Steven G. Johnson
	Chief Executive Officer
	Principal Executive Officer

August 14, 2023	/s/ Jason T. Thompson
	Jason T. Thompson
	Chief Accounting Officer
	Principal Financial Officer

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Jul. 31, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	000-54090
Entity Registrant Name	CAREVIEW COMMUNICATIONS, INC.
Entity Central Index Key	0001377149
Entity Tax Identification Number	95-4659068
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	405 State Highway 121
Entity Address, Address Line Two	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
Security Exchange Name	NONE
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

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current Assets:
Cash and cash equivalents	$ 707,345	$ 520,166
Accounts receivable	2,009,756	948,328
Inventory	147,673	301,446
Other current assets	446,621	71,020
Total current assets	3,311,395	1,840,960
Property and equipment, net	449,883	642,559
Intangible assets, net	749,409	820,106
Operating lease asset	366,471	434,330
Other assets, net	198,690	209,649
Total assets	5,075,848	3,947,604
Current Liabilities:
Accounts payable	575,509	650,796
Notes payable	20,258,333	20,000,000
Notes payable - related parties	700,000	700,000
Convertible notes payable, related parties		42,394,168
Convertible notes payable, non-related parties		1,805,832
Operating lease liability	182,401	175,520
Other current liabilities (Note 8)	16,852,552	14,553,277
Total current liabilities	38,568,795	80,279,593
Long-term Liabilities:
Operating lease liability, less current portion	226,026	305,259
Other liability	16,319	23,481
Total long-term liabilities	242,345	328,740
Total liabilities	38,811,140	80,608,333
Stockholders' Deficit:
Common stock - par value $0.001; 800,000,000 and 500,000,000 shares authorized, respectively; 583,880,748 and 141,880,748 issued and outstanding, respectively	583,881	141,881
Additional paid in capital	171,005,111	127,130,055
Accumulated deficit	(205,324,284)	(203,932,665)
Total stockholders' deficit	(33,735,292)	(76,660,729)
Total liabilities and stockholders' deficit	$ 5,075,848	$ 3,947,604

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	800,000,000	500,000,000
Common stock, issued	583,880,748	141,880,748
Common stock, outstanding	583,880,748	141,880,748

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues
Total revenue	$ 3,710,109	$ 1,696,736	$ 5,492,368	$ 4,015,765
Operating expenses:
Cost of equipment	224,997		256,929	117,597
Network operations	763,487	609,507	1,468,530	1,346,983
General and administration	1,051,953	876,991	1,749,720	1,816,240
Sales and marketing	230,814	141,752	399,233	330,968
Research and development	515,374	450,292	1,034,006	947,544
Depreciation and amortization	103,797	151,490	280,628	312,953
Total operating expense	2,890,422	2,230,032	5,189,046	4,872,285
Operating income (loss)	819,687	(533,296)	303,322	(856,520)
Other income and (expense)
Interest expense	(865,627)	(1,968,667)	(1,696,961)	(3,990,451)
Interest income	1,133	54	2,020	54
Total other expense	(864,494)	(1,968,613)	(1,694,941)	(3,990,397)
Loss before taxes	(44,807)	(2,501,909)	(1,391,619)	(4,846,917)
Provision for income taxes
Net loss	$ (44,807)	$ (2,501,909)	$ (1,391,619)	$ (4,846,917)
Net loss per share, basic	$ (0.00)	$ (0.02)	$ (0.00)	$ (0.03)
Net loss per share, diluted	$ (0.00)	$ (0.02)	$ (0.00)	$ (0.03)
Weighted average number of common shares outstanding, basic	463,880,748	139,380,748	304,336,304	139,380,748
Weighted average number of common shares outstanding, diuted	463,880,748	139,380,748	304,336,304	139,380,748
Subscription-based lease revenue [Member]
Revenues
Total revenue	$ 1,113,887	$ 1,329,883	$ 2,320,984	$ 2,634,866
Sales-based equipment package revenue [Member]
Revenues
Total revenue	1,837,088		1,996,785	807,323
Sales-based software bundle revenue [Member]
Revenues
Total revenue	$ 759,134	$ 366,853	$ 1,174,599	$ 573,576

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2021	$ 139,381	$ 85,052,367	$ (197,890,046)	$ (112,698,298)
Beginning balance (in shares) at Dec. 31, 2021	139,380,748
Issuance of warrants to purchase common stock		240,000		240,000
Stock based compensation		55,847		55,847
Net loss			(2,345,008)	(2,345,008)
Ending balance, value at Mar. 31, 2022	$ 139,381	85,348,214	(200,235,054)	(114,747,459)
Ending balance (in shares) at Mar. 31, 2022	139,380,748
Beginning balance, value at Dec. 31, 2021	$ 139,381	85,052,367	(197,890,046)	(112,698,298)
Beginning balance (in shares) at Dec. 31, 2021	139,380,748
Net loss				(4,846,917)
Ending balance, value at Jun. 30, 2022	$ 139,381	85,406,577	(202,736,963)	(117,191,005)
Ending balance (in shares) at Jun. 30, 2022	139,380,748
Beginning balance, value at Mar. 31, 2022	$ 139,381	85,348,214	(200,235,054)	(114,747,459)
Beginning balance (in shares) at Mar. 31, 2022	139,380,748
Stock based compensation		58,363		58,363
Net loss			(2,501,909)	(2,501,909)
Ending balance, value at Jun. 30, 2022	$ 139,381	85,406,577	(202,736,963)	(117,191,005)
Ending balance (in shares) at Jun. 30, 2022	139,380,748
Beginning balance, value at Dec. 31, 2022	$ 141,881	127,130,055	(203,932,665)	(76,660,729)
Beginning balance (in shares) at Dec. 31, 2022	141,880,748
Stock based compensation		62,260		62,260
Debt to equity conversion at $0.10	$ 262,000	25,938,000		26,200,000
Debt to equity conversion at $0.10 (in shares)	262,000,000
Net loss			(1,346,812)	(1,346,812)
Ending balance, value at Mar. 31, 2023	$ 403,881	153,130,315	(205,279,477)	(51,745,281)
Ending balance (in shares) at Mar. 31, 2023	403,880,748
Beginning balance, value at Dec. 31, 2022	$ 141,881	127,130,055	(203,932,665)	(76,660,729)
Beginning balance (in shares) at Dec. 31, 2022	141,880,748
Net loss				(1,391,619)
Ending balance, value at Jun. 30, 2023	$ 583,881	171,005,111	(205,324,284)	(33,735,292)
Ending balance (in shares) at Jun. 30, 2023	583,880,748
Beginning balance, value at Mar. 31, 2023	$ 403,881	153,130,315	(205,279,477)	(51,745,281)
Beginning balance (in shares) at Mar. 31, 2023	403,880,748
Stock based compensation		54,796		54,796
Debt to equity conversion at $0.10	$ 180,000	17,820,000		18,000,000
Debt to equity conversion at $0.10 (in shares)	180,000,000
Net loss			(44,807)	(44,807)
Ending balance, value at Jun. 30, 2023	$ 583,881	$ 171,005,111	$ (205,324,284)	$ (33,735,292)
Ending balance (in shares) at Jun. 30, 2023	583,880,748

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2023	Mar. 31, 2023
Statement of Stockholders' Equity [Abstract]
Debt to equity conversion (in dollars per share)	$ 0.10	$ 0.10

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITES
Net loss	$ (1,391,619)	$ (4,846,917)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation	194,619	264,106
Amortization of intangible assets	70,697	27,622
Amortization of debt discount		495,837
Amortization of deferred installation costs	15,312	21,225
Amortization of deferred debt issuance and debt financing costs
Non-cash lease expense	67,859	58,092
Interest incurred and paid in kind	258,333	1,622,052
Stock based compensation related to options granted and warrants issued	117,056	354,210
Changes in operating assets and liabilities:
Accounts receivable	(1,061,428)	180,249
Inventory	153,773	(111,326)
Other current assets	(375,601)	140,310
Patent license	(4,354)	8,197
Accounts payable	(75,286)	154,298
Accrued interest	1,345,917	1,490,131
Other current liabilities	881,006	62,706
Net cash flows provided by (used in) operating activities	196,284	(79,208)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment	(1,943)
Patent, trademark, and other intangible asset costs		(56,110)
Net cash flows used in investing activities	(1,943)	(56,110)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable		(13,786)
Repayment of vehicle loan	(7,162)	(7,044)
Net cash flows used in financing activities	(7,162)	(20,830)
Increase (decrease) in cash	187,179	(156,148)
Cash and cash equivalents, beginning of period	520,166	659,228
Cash and cash equivalents and restricted cash, end of period	707,345	503,080
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITES
Replacement Notes conversion to equity at $0.10 per share	$ 44,200,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2023	Mar. 31, 2023
Statement of Cash Flows [Abstract]
Replacement notes conversion to equity (in dollars per share)	$ 0.10	$ 0.10

BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

NOTE 1 – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Interim Financial Statements

Revenue Recognition

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”).

●

Disaggregation of Revenue

The following presents net revenues disaggregated by our business models:

	Six Months Ended June 30,
	2023		2022
Sales-based contract revenue
Equipment package, net (point in time)	$	1,996,785	$	807,323
Software bundle (over time)		1,174,599		573,576
Total sales-based contract revenue		3,171,384		1,380,899

Subscription-based lease revenue		2,320,984		2,634,866
Net revenue	$	5,492,368	$	4,015,765

Contract Liabilities


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	21,145		$	231,140
Additions		—			—
Transfer to revenue		(16,094	)		(156,784	)
Balance, end of period	$	5,051		$	74,356


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	869,485		$	752,526
Additions		1,319,224			1,655,760
Transfer to revenue		(822,974	)		(1,274,726	)
Balance, end of period	$	1,365,735		$	1,133,560

Years Ending December 31,	Amount
2023	$	830,967
2024		501,410
Thereafter		38,409
	$	1,370,786


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	33,461		$	68,901
Additions		—			—
Transfer to expense		(15,312	)		(21,225	)
Balance, end of period	$	18,149		$	47,676

Significant Judgements When Applying Topic 606

Leases

Earnings (Loss) Per Share

ASU 2016-13

Broadens the information that an entity can consider when measuring credit losses to include forward-looking information.

Increases usefulness of the financial statements by requiring timely inclusion of forecasted information in forming expectations of credit losses.

Increases users’ understanding of underwriting standards and credit quality trends by requiring additional information about credit quality indicators by year of origination (vintage).

ASU 2020-06

ASU 2022-03

GOING CONCERN, LIQUIDITY AND MANAGEMENT’S PLAN

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN, LIQUIDITY AND MANAGEMENT’S PLAN

NOTE 2 – GOING CONCERN, LIQUIDITY AND MANAGEMENT’S PLAN

STOCKHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 3 – STOCKHOLDERS’ EQUITY

Warrants to Purchase Common Stock of the Company

A summary of our Warrants activity and related information follows:

	Number of Shares Under Warrant		Range of Warrant Price Per Share		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Balance at December 31, 2022		5,694,445		$0.01-$0.03	$	0.024		3.5
Granted		—		—		—		—
Expired		—		—		—		—
Canceled		—		—		—		—
Balance at June 30, 2023		5,694,445		$0.01-$0.03	$	0.024		3.1

Options to Purchase Common Stock of the Company

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

	Number of Shares Under Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at December 31, 2022		40,817,477		$	0.12			5.8	$	526,425
Granted		545,000			0.06			9.7		3,000
Forfeited/Expired		(35,000	)		(0.06	)		—		—
Exercised		—			—			—		—
Balance at June 30, 2023		41,327,477		$	0.12			5.5	$	529,425
Vested and Exercisable at June 30, 2023		33,115,144		$	0.13			4.8	$	523,425

OTHER CURRENT ASSETS

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER CURRENT ASSETS

NOTE 4 – OTHER CURRENT ASSETS

Other current assets consist of the following:

	June 30, 2023		December 31, 2022
Prepaid insurance	$	425,138	$	36,639
Other prepaid expenses		21,483		34,381
TOTAL OTHER CURRENT ASSETS	$	446,621	$	71,020

INVENTORY

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

INVENTORY

NOTE 5 – INVENTORY

Inventory consists of the following:

	June 30, 2023		December 31, 2022
Inventory assets (finished goods)	$	147,673	$	301,446
TOTAL INVENTORY	$	147,673	$	301,446

PROPERTY AND EQUIPMENT

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	June 30, 2023			December 31, 2022
Network equipment	$	12,620,258		$	12,620,258
Office equipment		236,372			234,430
Vehicles		232,411			232,411
Test equipment		230,365			230,365
Furniture		92,846			92,846
Warehouse equipment		9,523			9,523
Leasehold improvements		5,121			5,121
		13,426,896			13,424,954
Less: accumulated depreciation		(12,977,013	)		(12,782,395	)
TOTAL PROPERTY AND EQUIPMENT, NET	$	449,883		$	642,559

Depreciation expense for the six months ended June 30, 2023 and 2022 was $194,618 and $264,106, respectively.

INTANGIBLE AND OTHER ASSETS, NET

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE AND OTHER ASSETS, NET

NOTE 7 – INTANGIBLE AND OTHER ASSETS, NET

Intangible assets consist of the following:


	June 30, 2023
	Cost		Accumulated Amortization		Net
Patents and trademarks	$	1,213,850	$	471,524	$	742,326
Other intangible assets		20,237		13,154		7,083
TOTAL INTANGIBLE ASSETS	$	1,234,087	$	484,678	$	749,409


	December 31, 2022
	Cost		Accumulated Amortization		Net
Patents and trademarks	$	1,213,850	$	395,715	$	818,135
Other intangible assets		85,896		83,925		1,971
TOTAL INTANGIBLE ASSETS	$	1,299,746	$	479,640	$	820,106

Other assets consist of the following:


	June 30, 2023
	Cost		Accumulated Amortization		Net
Deferred installation costs	$	1,352,041	$	1,333,893	$	18,148
Deferred sales commission		243,687		165,280		78,407
Prepaid license fee		249,999		193,988		56,011
Security deposit		46,124		—		46,124
TOTAL OTHER ASSETS	$	1,891,851	$	1,693,161	$	198,690


	December 31, 2022
	Cost		Accumulated Amortization		Net
Deferred installation costs	$	1,352,041	$	1,318,580	$	33,461
Deferred sales commissions		163,973		98,116		65,857
Prepaid license fee		249,999		185,792		64,207
Security deposit		46,124		—		46,124
TOTAL OTHER ASSETS	$	1,812,137	$	1,602,488	$	209,649

OTHER CURRENT LIABILITIES

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

OTHER CURRENT LIABILITIES

NOTE 8 – OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

		June 30, 2023		December 31, 2022
Accrued interest	$	14,225,278	$	12,933,611
Accrued interest, related parties		391,278		337,027
Allowance for system removal		54,802		54,802
Accrued paid time off		131,612		154,776
Deferred officer compensation⁽¹⁾		139,041		139,041
Deferred revenue		1,370,786		890,631
Other accrued liabilities		539,755		43,389
TOTAL OTHER CURRENT LIABILITIES	$	16,852,552	$	14,553,277

⁽¹⁾

Salary for Steve Johnson, CEO, between February 15, 2018 and September 30, 2020.

INCOME TAXES

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9 – INCOME TAXES

AGREEMENT WITH PDL BIOPHARMA, INC.

6 Months Ended

Jun. 30, 2023

Agreement With Pdl Biopharma Inc.

AGREEMENT WITH PDL BIOPHARMA, INC.

NOTE 10 – AGREEMENT WITH PDL BIOPHARMA, INC.

Accounting Treatment

In connection with the PDL Credit Agreement, as amended, we issued the PDL Warrant to the Lender. As of June 30, 2023, the Amended PDL Warrant has not been exercised.

AGREEMENT WITH HEALTHCOR

6 Months Ended

Jun. 30, 2023

Agreement With Healthcor

AGREEMENT WITH HEALTHCOR

NOTE 11 – AGREEMENT WITH HEALTHCOR

Accounting Treatment

JOINT VENTURE AGREEMENT

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

JOINT VENTURE AGREEMENT

NOTE 12 – JOINT VENTURE AGREEMENT

As of March 31, 2022, the Rockwell Note was paid off.

LEASE

6 Months Ended

Jun. 30, 2023

Lease

LEASE

NOTE 13 – LEASE

Undiscounted Cash Flows

Quarter endingJune 30, 2023	Operating Leases
Remaining 2023	$	108,901
2024		221,070
2025		150,679
Total minimum lease payments		480,650
Less effects of discounting		(72,223	)
Present value of future minimum lease payments	$	408,427

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through August 14, 2023, the date of filing of this Form 10-Q.

BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Policies)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Financial Statements

Revenue Recognition

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”).

●

Disaggregation of Revenue

The following presents net revenues disaggregated by our business models:

	Six Months Ended June 30,
	2023		2022
Sales-based contract revenue
Equipment package, net (point in time)	$	1,996,785	$	807,323
Software bundle (over time)		1,174,599		573,576
Total sales-based contract revenue		3,171,384		1,380,899

Subscription-based lease revenue		2,320,984		2,634,866
Net revenue	$	5,492,368	$	4,015,765

Contract Liabilities


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	21,145		$	231,140
Additions		—			—
Transfer to revenue		(16,094	)		(156,784	)
Balance, end of period	$	5,051		$	74,356


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	869,485		$	752,526
Additions		1,319,224			1,655,760
Transfer to revenue		(822,974	)		(1,274,726	)
Balance, end of period	$	1,365,735		$	1,133,560

Years Ending December 31,	Amount
2023	$	830,967
2024		501,410
Thereafter		38,409
	$	1,370,786


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	33,461		$	68,901
Additions		—			—
Transfer to expense		(15,312	)		(21,225	)
Balance, end of period	$	18,149		$	47,676

Significant Judgements When Applying Topic 606

Leases

Earnings (Loss) Per Share

Recently Issued and Newly Adopted Accounting Pronouncements

ASU 2016-13

Broadens the information that an entity can consider when measuring credit losses to include forward-looking information.

Increases usefulness of the financial statements by requiring timely inclusion of forecasted information in forming expectations of credit losses.

Increases users’ understanding of underwriting standards and credit quality trends by requiring additional information about credit quality indicators by year of origination (vintage).

ASU 2020-06

ASU 2022-03

BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following presents net revenues disaggregated by our business models:

	Six Months Ended June 30,
	2023		2022
Sales-based contract revenue
Equipment package, net (point in time)	$	1,996,785	$	807,323
Software bundle (over time)		1,174,599		573,576
Total sales-based contract revenue		3,171,384		1,380,899

Subscription-based lease revenue		2,320,984		2,634,866
Net revenue	$	5,492,368	$	4,015,765

The table below details the subscription-based contract liability activity during the six months ended June 30, 2023 and 2022, included in the Other current liabilities.


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	21,145		$	231,140
Additions		—			—
Transfer to revenue		(16,094	)		(156,784	)
Balance, end of period	$	5,051		$	74,356


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	869,485		$	752,526
Additions		1,319,224			1,655,760
Transfer to revenue		(822,974	)		(1,274,726	)
Balance, end of period	$	1,365,735		$	1,133,560

Years Ending December 31,	Amount
2023	$	830,967
2024		501,410
Thereafter		38,409
	$	1,370,786


	Six Months Ended June 30,
	2023			2022
Balance, beginning of period	$	33,461		$	68,901
Additions		—			—
Transfer to expense		(15,312	)		(21,225	)
Balance, end of period	$	18,149		$	47,676

STOCKHOLDERS’ EQUITY (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

A summary of our Warrants activity and related information follows:

	Number of Shares Under Warrant		Range of Warrant Price Per Share		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Balance at December 31, 2022		5,694,445		$0.01-$0.03	$	0.024		3.5
Granted		—		—		—		—
Expired		—		—		—		—
Canceled		—		—		—		—
Balance at June 30, 2023		5,694,445		$0.01-$0.03	$	0.024		3.1

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

	Number of Shares Under Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance at December 31, 2022		40,817,477		$	0.12			5.8	$	526,425
Granted		545,000			0.06			9.7		3,000
Forfeited/Expired		(35,000	)		(0.06	)		—		—
Exercised		—			—			—		—
Balance at June 30, 2023		41,327,477		$	0.12			5.5	$	529,425
Vested and Exercisable at June 30, 2023		33,115,144		$	0.13			4.8	$	523,425

OTHER CURRENT ASSETS (Tables)

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other current assets consist of the following:

	June 30, 2023		December 31, 2022
Prepaid insurance	$	425,138	$	36,639
Other prepaid expenses		21,483		34,381
TOTAL OTHER CURRENT ASSETS	$	446,621	$	71,020

INVENTORY (Tables)

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Inventory consists of the following:

	June 30, 2023		December 31, 2022
Inventory assets (finished goods)	$	147,673	$	301,446
TOTAL INVENTORY	$	147,673	$	301,446

PROPERTY AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Property and equipment consist of the following:

	June 30, 2023			December 31, 2022
Network equipment	$	12,620,258		$	12,620,258
Office equipment		236,372			234,430
Vehicles		232,411			232,411
Test equipment		230,365			230,365
Furniture		92,846			92,846
Warehouse equipment		9,523			9,523
Leasehold improvements		5,121			5,121
		13,426,896			13,424,954
Less: accumulated depreciation		(12,977,013	)		(12,782,395	)
TOTAL PROPERTY AND EQUIPMENT, NET	$	449,883		$	642,559

INTANGIBLE AND OTHER ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets consist of the following:


	June 30, 2023
	Cost		Accumulated Amortization		Net
Patents and trademarks	$	1,213,850	$	471,524	$	742,326
Other intangible assets		20,237		13,154		7,083
TOTAL INTANGIBLE ASSETS	$	1,234,087	$	484,678	$	749,409


	December 31, 2022
	Cost		Accumulated Amortization		Net
Patents and trademarks	$	1,213,850	$	395,715	$	818,135
Other intangible assets		85,896		83,925		1,971
TOTAL INTANGIBLE ASSETS	$	1,299,746	$	479,640	$	820,106

Other assets consist of the following:


	June 30, 2023
	Cost		Accumulated Amortization		Net
Deferred installation costs	$	1,352,041	$	1,333,893	$	18,148
Deferred sales commission		243,687		165,280		78,407
Prepaid license fee		249,999		193,988		56,011
Security deposit		46,124		—		46,124
TOTAL OTHER ASSETS	$	1,891,851	$	1,693,161	$	198,690


	December 31, 2022
	Cost		Accumulated Amortization		Net
Deferred installation costs	$	1,352,041	$	1,318,580	$	33,461
Deferred sales commissions		163,973		98,116		65,857
Prepaid license fee		249,999		185,792		64,207
Security deposit		46,124		—		46,124
TOTAL OTHER ASSETS	$	1,812,137	$	1,602,488	$	209,649

OTHER CURRENT LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

Other current liabilities consist of the following:

		June 30, 2023		December 31, 2022
Accrued interest	$	14,225,278	$	12,933,611
Accrued interest, related parties		391,278		337,027
Allowance for system removal		54,802		54,802
Accrued paid time off		131,612		154,776
Deferred officer compensation⁽¹⁾		139,041		139,041
Deferred revenue		1,370,786		890,631
Other accrued liabilities		539,755		43,389
TOTAL OTHER CURRENT LIABILITIES	$	16,852,552	$	14,553,277

⁽¹⁾

Salary for Steve Johnson, CEO, between February 15, 2018 and September 30, 2020.

LEASE (Tables)

6 Months Ended

Jun. 30, 2023

Lease

Quarter endingJune 30, 2023	Operating Leases
Remaining 2023	$	108,901
2024		221,070
2025		150,679
Total minimum lease payments		480,650
Less effects of discounting		(72,223	)
Present value of future minimum lease payments	$	408,427

The following presents net revenues disaggregated by our business models: (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Net revenue	$ 3,710,109	$ 1,696,736	$ 5,492,368	$ 4,015,765
Sales-based equipment package revenue [Member]
Disaggregation of Revenue [Line Items]
Net revenue	1,837,088		1,996,785	807,323
Sales-based software bundle revenue [Member]
Disaggregation of Revenue [Line Items]
Net revenue	759,134	366,853	1,174,599	573,576
Sales-based contract revenue [Member]
Disaggregation of Revenue [Line Items]
Net revenue			3,171,384	1,380,899
Subscription-based lease revenue [Member]
Disaggregation of Revenue [Line Items]
Net revenue	$ 1,113,887	$ 1,329,883	$ 2,320,984	$ 2,634,866

BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Performance obligations	$ 1,370,786
Remaining lease term	38 months
Anti-dilutive common share equivalents excluded from EPS calculation	47,021,922	183,586,301
Share-Based Payment Arrangement, Option [Member]
Anti-dilutive common share equivalents excluded from EPS calculation	41,327,477
Warrant [Member]
Anti-dilutive common share equivalents excluded from EPS calculation	5,694,445
Common Stock [Member]
Anti-dilutive common share equivalents excluded from EPS calculation	46,711,922
Office Space [Member]
Remaining lease term	26 months
Subscription-Based Contract Liability [Member]
Contract liability recognized as revenue	$ 16,094	$ 156,784
Sales-Based Contract Liability [Member]
Contract liability recognized as revenue	$ 822,974	$ 1,274,726

The table below details the subscription-based contract liability activity during the six months ended June 30, 2023 and 2022, included in the Other current liabilities. (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Subscription-Based Contract Liability [Member]
Disaggregation of Revenue [Line Items]
Balance, beginning of period	$ 21,145	$ 231,140
Additions
Transfer to revenue	(16,094)	(156,784)
Balance, end of period	5,051	74,356
Sales-Based Contract Liability [Member]
Disaggregation of Revenue [Line Items]
Balance, beginning of period	869,485	752,526
Additions	1,319,224	1,655,760
Transfer to revenue	(822,974)	(1,274,726)
Balance, end of period	$ 1,365,735	$ 1,133,560

As of June 30, 2023, the aggregate amount of deferred revenue from subscription-based contracts and sales-based contracts allocated to performance obligations that are unsatisfied or partially satisfied (Details)	Jun. 30, 2023 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 1,370,786
2023 [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	830,967
2024 [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	501,410
Thereafter [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 38,409

The table below details the activity in these deferred installation costs during the periods ended June 30, 2023 and 2022, included in other assets in the accompanying unaudited consolidated balance sheet. (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Balance, beginning of period	$ 33,461	$ 68,901
Additions
Transfer to expense	(15,312)	(21,225)
Balance, end of period	$ 18,149	$ 47,676

GOING CONCERN, LIQUIDITY AND MANAGEMENT’S PLAN (Details Narrative) - USD ($)			3 Months Ended
	May 24, 2023	Mar. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	May 22, 2023	Dec. 31, 2022	Dec. 30, 2022
Working capital			$ 35,257,400
Noteholders owning replacement notes			$ 18,000,000	$ 26,200,000
Debt to equity conversion (in dollars per share)			$ 0.10	$ 0.10
Common stock, authorized			800,000,000		800,000,000	500,000,000
Replacement Notes [Member]
Noteholders owning replacement notes	$ 18,000,000	$ 26,200,000
Debt to equity conversion (in dollars per share)	$ 0.10	$ 0.10					$ 0.10
Noteholders owning replacement notes (in shares)	180,000,000	262,000,000

A summary of our Warrants activity and related information follows: (Details) - Warrant [Member]	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Class of Warrant or Right [Line Items]
Warrants outstanding, beginning \| shares	5,694,445
Weighted average exercise price, beginning	$ 0.024
Warrant term, beginning	3 years 6 months
Warrants outstanding, ending \| shares	5,694,445
Weighted average exercise price, ending	$ 0.024
Warrant term, ending	3 years 1 month 6 days
Minimum [Member]
Class of Warrant or Right [Line Items]
Warrant price, beginning	$ 0.01
Warrant price, ending	0.01
Maximum [Member]
Class of Warrant or Right [Line Items]
Warrant price, beginning	0.03
Warrant price, ending	$ 0.03

STOCKHOLDERS’ EQUITY (Details Narrative)	6 Months Ended
STOCKHOLDERS’ EQUITY (Details Narrative)	Jun. 30, 2023 USD ($) $ / shares shares
Equity [Abstract]
Options granted \| shares	545,000
Options granted, fair value	$ 29,700
Option exercise price \| $ / shares	$ 0.06
Unrecognized estimated compensation expense	$ 89,355
Period for recognition of unrecognized compensation expense	1 year 8 months 12 days

A summary of our stock option activity and related information follows: (Details)	6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares
Equity [Abstract]
Stock Options Outstanding, Beginning \| shares	40,817,477
Stock Options Outstanding, Weighted Average Exercise Price, Beginning \| $ / shares	$ 0.12
Stock Options Outstanding, Weighted Average Remaining Contractual Life, Beginning	5 years 9 months 18 days
Stock Options Outstanding, Aggregate Intrinsic Value, Beginning \| $	$ 526,425
Stock Options Outstanding, Granted \| shares	545,000
Stock Options Outstanding, Weighted Average Exercise Price, Granted \| $ / shares	$ 0.06
Stock Options Outstanding, Weighted Average Remaining Contractual Life, Granted	9 years 8 months 12 days
Stock Options Outstanding, Aggregate Intrinsic Value, Granted \| $	$ 3,000
Stock Options Outstanding, Forfeited/Expired \| shares	(35,000)
Stock Options Outstanding, Weighted Average Exercise Price, Forfeited/Expired \| $ / shares	$ (0.06)
Stock Options Outstanding, Ending \| shares	41,327,477
Stock Options Outstanding, Weighted Average Exercise Price, Ending \| $ / shares	$ 0.12
Stock Options Outstanding, Weighted Average Remaining Contractual Life, Ending	5 years 6 months
Stock Options Outstanding, Aggregate Intrinsic Value, Ending \| $	$ 529,425
Stock Options Vested and Exercisable \| shares	33,115,144
Stock Options Vested and Exercisable, Weighted Average Exercise Price \| $ / shares	$ 0.13
Stock Options Vested and Exercisable, Weighted Average Remaining Contractual Life	4 years 9 months 18 days
Stock Options Vested and Exercisable, Aggregate Intrinsic Value \| $	$ 523,425

Other current assets consist of the following: (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid insurance	$ 425,138	$ 36,639
Other prepaid expenses	21,483	34,381
TOTAL OTHER CURRENT ASSETS	$ 446,621	$ 71,020

Inventory consists of the following: (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Inventory assets (finished goods)	$ 147,673	$ 301,446
TOTAL INVENTORY	$ 147,673	$ 301,446

Property and equipment consist of the following: (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 13,426,896	$ 13,424,954
Less: accumulated depreciation	(12,977,013)	(12,782,395)
Total property and equipment , net	449,883	642,559
Network Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	12,620,258	12,620,258
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	236,372	234,430
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	232,411	232,411
Test Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	230,365	230,365
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	92,846	92,846
Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	9,523	9,523
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 5,121	$ 5,121

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	6 Months Ended
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 194,618	$ 264,106

Intangible assets consist of the following: (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Cost	$ 1,234,087	$ 1,299,746
Accumulated amortization	484,678	479,640
Intangible assets, net	749,409	820,106
Patents and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	1,213,850	1,213,850
Accumulated amortization	471,524	395,715
Intangible assets, net	742,326	818,135
Other Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	20,237	85,896
Accumulated amortization	13,154	83,925
Intangible assets, net	$ 7,083	$ 1,971

Other assets consist of the following: (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Other assets noncurrent gross	$ 1,891,851	$ 1,812,137
Accumulated amortization	1,693,161	1,602,488
Other assets, net	198,690	209,649
Deferred Installation Costs [Member]
Other assets noncurrent gross	1,352,041	1,352,041
Accumulated amortization	1,333,893	1,318,580
Other assets, net	18,148	33,461
Deferred Sales Commissions [Member]
Other assets noncurrent gross	243,687	163,973
Accumulated amortization	165,280	98,116
Other assets, net	78,407	65,857
Prepaid License Fee [Member]
Other assets noncurrent gross	249,999	249,999
Accumulated amortization	193,988	185,792
Other assets, net	56,011	64,207
Security Deposit [Member]
Other assets noncurrent gross	46,124	46,124
Accumulated amortization
Other assets, net	$ 46,124	$ 46,124

Other current liabilities consist of the following: (Details) - USD ($)

Jun. 30, 2023

Dec. 31, 2022

Payables and Accruals [Abstract]

Accrued interest

$ 14,225,278

$ 12,933,611

Accrued interest, related parties

391,278

337,027

Allowance for system removal

54,802

Accrued paid time off

131,612

154,776

Deferred officer compensation

^[1]

139,041

Deferred revenue

1,370,786

890,631

Other accrued liabilities

539,755

43,389

TOTAL OTHER CURRENT LIABILITIES

$ 16,852,552

$ 14,553,277

[1]	Salary for Steve Johnson, CEO, between February 15, 2018 and September 30, 2020.

INCOME TAXES (Details Narrative) - Internal Revenue Service (IRS) [Member]	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Jan. 02, 2018
Percentage of corporate tax rate	21.00%	35.00%
Percentage of operating loss carryforwards limitation			80.00%

AGREEMENT WITH PDL BIOPHARMA, INC. (Details Narrative) - USD ($)		3 Months Ended				6 Months Ended
	May 31, 2023	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	May 15, 2019
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Interest expense		$ 865,627		$ 1,968,667		$ 1,696,961	$ 3,990,451
Seventh Amendment to Credit Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Excess Cash Flow threshold for mandatory quarterly loan prepayment	$ 600,000
Cash threshold for mandatory monthly transfers to Inventory Reserve Account	1,200,000
Inventory Reserve Account threshold for mandatory loan prepayment	$ 600,000
Prepayment percentage of gross debt proceeds	100.00%
Debt maturity date	Dec. 31, 2024
PDL Modification Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Interest expense			$ 802,125		$ 775,000
PDL BioPharma, Inc. [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt instrument interest rate								15.50%

AGREEMENT WITH HEALTHCOR (Details Narrative) - USD ($)								3 Months Ended			6 Months Ended
AGREEMENT WITH HEALTHCOR (Details Narrative) - USD ($)	May 24, 2023	Mar. 30, 2023	Dec. 30, 2022	Mar. 08, 2022	Mar. 06, 2022	Apr. 20, 2021	Apr. 18, 2021	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Jul. 01, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt to equity conversion (in dollars per share)								$ 0.10	$ 0.10		$ 0.10
Noteholders owning replacement notes								$ 18,000,000	$ 26,200,000
Interest expense								865,627		$ 1,968,667	$ 1,696,961	$ 3,990,451
Interest incurred and paid in kind											258,333	1,622,052
HealthCor Ninth Amendment Warrants [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt discount								378,000			378,000
HealthCor Allonge No.3 Warrants [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt discount								420,000			420,000
HealthCor Allonge No.4 Warrants [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt discount								$ 240,000			240,000
2011 Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Interest expense											0	1,406,760
2014 HealthCor Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of principal suspended interest accrual													100.00%
2015 Supplemental Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of principal suspended interest accrual													100.00%
Eighth Amendment Supplemental Closing Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of principal suspended interest accrual													100.00%
Tenth Amendment Supplemental Closing Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of principal suspended interest accrual													100.00%
Twelfth Amendment Supplemental Closing Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of principal suspended interest accrual													100.00%
Thirteenth Amendment Supplemental Closing Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of principal suspended interest accrual													100.00%
Replacement Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt instrument additional value			$ 5,000,000
Debt to equity conversion (in dollars per share)	$ 0.10	$ 0.10	$ 0.10
Gain on troubled debt restructuring			$ 1,489,357
Noteholders owning replacement notes	$ 18,000,000	$ 26,200,000
Noteholders owning replacement notes (in shares)	180,000,000	262,000,000
Replacement Notes [Member] \| Tranche One [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt to equity conversion (in dollars per share)		$ 0.10
Noteholders owning replacement notes		$ 36,000,000
Conversion percentage		50.00%
Noteholders owning replacement notes (in shares)		180,000,000
Replacement Notes [Member] \| Tranche Two [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt to equity conversion (in dollars per share)		$ 0.10
Noteholders owning replacement notes		$ 8,200,000
Noteholders owning replacement notes (in shares)		262,000,000
HealthCor Note Extensions [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Issuance of warrants				3,000,000		2,000,000
Exercise price of warrants				$ 0.09		$ 0.23
Warrants expiration date				Mar. 08, 2032		Apr. 20, 2031
Value of warrants				$ 240,000
HealthCor Note Extensions [Member] \| 2011 Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt maturity date				Apr. 20, 2023	Apr. 20, 2022	Apr. 20, 2022	Apr. 20, 2021
HealthCor Note Extensions [Member] \| 2012 Notes [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt maturity date				Apr. 20, 2023	Apr. 20, 2022	Apr. 20, 2022	Jan. 30, 2022
HealthCor Purchase Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Interest incurred and paid in kind											$ 0	$ 860,728

JOINT VENTURE AGREEMENT (Details Narrative) - Rockwell [Member - Rockwell Note [Member]	Nov. 30, 2021	Dec. 31, 2020	Mar. 31, 2020	Jan. 31, 2020	Dec. 31, 2019
Second Rockwell Note Amendment [Member]
Debt maturity date					Dec. 31, 2020
Debt previous payment due date					Dec. 31, 2019
Debt revised payment due date					Jan. 31, 2020
Third Rockwell Note Amendment [Member]
Debt previous payment due date				Jan. 31, 2020
Debt revised payment due date				Feb. 10, 2020
Fourth Rockwell Note Amendment [Member]
Debt previous payment due date			Mar. 31, 2020
Debt revised payment due date			Apr. 16, 2020
Fifth Rockwell Note Amendment [Member]
Debt maturity date		Dec. 31, 2021
Term extension period		1 year
Debt date of final required quarterly payment		Sep. 30, 2021
Prior due date of quarterly payment		Dec. 31, 2020
Sixth Rockwell Note Amendment [Member]
Debt maturity date	Mar. 31, 2022
Debt previous payment due date	Dec. 31, 2021
Debt revised payment due date	Mar. 31, 2022

Future lease payments included in the measurement of operating lease liability on the condensed consolidated balance sheet as of June 30, 2023, for the following five fiscal years and thereafter as follows: (Details)	Jun. 30, 2023 USD ($)
Lease
Remaining 2023	$ 108,901
2024	221,070
2025	150,679
Total minimum lease payments	480,650
Less effects of discounting	(72,223)
Present value of future minimum lease payments	$ 408,427

LEASE (Details Narrative)			6 Months Ended
LEASE (Details Narrative)	Mar. 04, 2020	Sep. 08, 2009 ft²	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)
Lease
Remaining lease term			38 months
Expiration of lease	Aug. 31, 2025	Jun. 30, 2015	Aug. 31, 2025
Area of lease \| ft²		10,578
Rent expense \| $			$ 147,894	$ 154,202