UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

(Mark One)

 

☒ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended September 30 , 20 1 8 .

 

☐ Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 (No fee required)
For the transition period from _______ to _______.

 

Commission file number : 000-27407

 

SPINE INJURY SOLUTIONS , INC.
(Name of Registrant in Its Charter)

 

Delaware 

98-0187705

(State or Other Jurisdiction of Incorporation or

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

Organization)

  

 

5225 Katy Freeway
Suite 600

Houston, Texas   77007
(Address of Principal Executive Offices)

 

(713) 521-4220
(Issuer's Telephone Number, Including Area Code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. 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  ☒

 

As of November 13, 2018, there were 20,240,882 shares of the registrant’s common stock outstanding (the only class of voting common stock).

 

 

 

FORM 10-Q

 

TABLE OF CONTENTS

 

Note About Forward-Looking Statements

   
       

PART I

FINANCIAL INFORMATION

   
       

Item 1.

Condensed Consolidated Financial Statements

   
       
 

Condensed Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017 

 

4

       
 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017 (Unaudited)

 

5

       
 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 (Unaudited)

 

6

       
 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

7

       

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

15

       

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

 

17

       

Item 4.

Controls and Procedures

 

17

       

PART II

OTHER INFORMATION

   
       

Item 1A.

Risk Factors

 

18

       

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

18

       

Item 6.

Exhibits

 

18

       
 

Signatures

 

20

   

 

 

 

NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. Forward-looking statements may appear throughout this report, including without limitation, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report and in our Annual Report on Form 10-K for the year ended December 31, 2017, and in particular, the risks discussed in our Form 10-K under the caption “Risk Factors” in Item 1A therein, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Important factors that in our view could cause material adverse effects on our financial condition and results of operations include, but are not limited to, risks associated with service demands and acceptance, our ability to expand, changes in healthcare practices, changes in technology, economic conditions, the impact of competition and pricing, government regulation and approvals and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. We undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

As used herein, the “Company,” “we,” “our,” and similar terms include Spine Injury Solutions, Inc. and its subsidiaries and predecessors, unless the context indicates otherwise.

 

 

 

 

 

 

 

 

 

PART I  FINANCIAL INFORMATION

 

ITEM 1.   FINANCIAL STATEMENTS

 

 

SPINE INJURY SOLUTIONS , INC.

UNAUDITED CONDENSED CON SOLIDAT ED BALANCE SHEETS

  

   

SEPTEMBER 30 ,

   

DECEMBER 31 ,

 
   

201 8  

   

201 7

 

ASSETS

 

(Unaudited)

         
                 

Current assets:

               

 Cash

  $ 47,588     $ 77,843  

Accounts receivable, net

    1,103,984       1,078,184  

Prepaid expenses

    20,546       9,250  

Inventories

    221,915       200,825  
                 

Total current assets

    1,394,033       1,366,102  
                 

Accounts receivable, net of allowance for doubtful accounts

of $51,209 and $106,443 at September 30, 2018 and

December 31, 2017, respectively

    2,524,753       2,405,837  

Property and equipment, net

    28,439       43,164  

Intangible assets and goodwill

    170,200       170,200  
                 

Total assets

  $ 4,117,425     $ 3,985,303  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               
                 

Current liabilities:

               

Line of credit

  $ 1,490,000     $ 1,325,000  

Notes payable

    90,000       225,000  

Accounts payable and accrued liabilities

    101,186       79,205  

Deferred Revenue

    22,935       -  

Due to related parties

    21,307       27,910  
                 

Total current liabilities

    1,725,428       1,657,115  
                 

Commitments and contingencies

               
                 

Stockholders' equity:

               

Common stock: $0.001 par value, 50,000,000 shares authorized,  20,240,882 shares issued and outstanding at September 30, 2018 and 20,215,882 at December 31, 2017

    20,241       20,216  

Additional paid-in capital

    19,869,511       19,864,536  

Accumulated deficit

    (17,497,755 )     (17,556,564 )
                 

         Total stockholders' equity

    2,391,997       2,328,188  
                 

       Total liabilities and stockholders’ equity

  $ 4,117,425     $ 3,985,303  

 

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

 

 

SPINE INJURY SOLUTIONS , INC.

UNAUDITED CONDENSED CON SOLIDAT ED STATEMENTS OF OPERATIONS

 

   

FOR THE THREE MONTHS ENDED

SEPTEMBER 30,

   

FOR THE NINE MONTHS ENDED

SEPTEMBER 30,

 
   

201 8

   

201 7

   

201 8

   

201 7

 

Net revenue

  $ 561,706     $ 565,202     $ 1,800,842     $ 1,492,429  
                                 

Cost of providing services, including amounts

                               

Billed by a related party of

                               

Third party providers

    139,994       22,605       253,019       41,477  

Related party providers

    70,107       142,745       358,335       421,260  
                                 

Total cost of providing services

    210,101       165,350       611,354       462,737  
                                 

Gross profit

    351,605       399,852       1,189,488       1,029,692  
                                 

Research and development expenses

    -       -       -       12,203  

Operating, general and administrative expenses

    394,539       378,063       1,090,357       1,177,558  
                                 

Income (loss) from operations

    (42,934 )     21,789       99,131       (160,069

)

                                 

Other income and (expense):

                               

Other income

    5,608       666       7,448       4,237  

Interest expense

    (16,790

)

    (14,866

)

    (47,770

)

    (41,497

)

                                 

Total other income and (expense)

    (11,182

)

    (14,200

)

    (40,322

)

    (37,260

)

                                 

Net (loss) income

  $ (54,116 )   $ 7,589     $ 58,809     $ (197,329

)

                                 

Net (loss) income per common share:

                               

Basic and diluted

  $ 0.00     $ 0.00     $ 0.00     $ (0.01

)

                                 

Weighted average number of common shares outstanding:

                               

Basic and diluted

    20,222,775       20,161,317       20,236,211       20,151,230  

 

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

 

 

SPINE INJURY SOLUTIONS , INC.

UNAUDITED CONDENSED CON SOLIDAT ED STATEMENTS OF CASH FLOWS

 

   

FOR THE NINE MONTHS ENDED

SEPTEMBER 30,

 
   

201 8

   

201 7

 

Cash flows from operating activities:

               

Net income (loss)

  $ 58,809     $ (197,329 )

Adjustments to reconcile net income (loss) to net cash

 used in operating activities:

               

Provision for bad debt

    215,000       170,000  

Stock based compensation

    5,000       10,900  

Depreciation and amortization expense

    14,725       14,183  

Changes in operating assets and liabilities:

               

Accounts receivable, net

    (359,716

)

    (76,421 )

Inventories

    (21,090

)

    6,987  

Prepaid expenses and other assets

    (11,296

)

    (9,250 )

Deferred Revenue

    22,935       -  

Due to related party

    (6,603 )     10,396  

Accounts payable and accrued liabilities

    21,981       (16,457 )
                 

Net cash used in operating activities

    (60,255 )     (86,991 )
                 

Cash flows from investing activities:

               

 Purchase of equipment

    -       (3,614 )
                 

Net cash used in investing activities

    -       (3,614 )
                 

Cash flows from financing activities:

               

Payment of notes payable and long-term debt

    (135,000

)

    (50,000 )

Proceeds from line of credit, net

    165,000       25,000  
                 

Net cash provided by (used) in financing activities

    30,000       (25,000 )
                 

Net decrease in cash and cash equivalents

    (30,255

)

    (115,605 )
                 

Cash and cash equivalents at beginning of period

    77,843       256,263  

Cash and cash equivalents at end of period

  $ 47,588     $ 140,658  
                 

Supplementary cash flow information:

               

Interest paid

  $ 47,770     $ 41,497  

Taxes paid

  $ -     $ -  

 

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

 

 

NOTE 1. DESCRIPTION OF BUSINESS

 

Spine Injury Solutions Inc. was incorporated under the laws of Delaware on March 4, 1998.  We changed our name from Spine Pain Management Inc. to Spine Injury Solutions, Inc. on October 1, 2015.

 

We are a technology, marketing, management, billing, and collection company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents.  We deliver turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents.  Our goal is to become a leader in providing management services to spine and orthopedic surgeons and other healthcare providers to facilitate proper treatment of their injured clients.  By pre-funding the providers’ accounts receivable, which includes diagnostic testing and non-invasive surgical care, patients are not unnecessarily delayed or prevented from obtaining needed treatment.  By facilitating early treatment through affiliated doctors, we believe that health conditions can be prevented from escalating and injured victims can be quickly placed on the road to recovery.  Through our affiliate system, we facilitate spine surgeons, orthopedic surgeons and other healthcare providers to provide reasonable, necessary, and appropriate treatments to patients with musculo-skeletal spine injuries. We assist the centers that provide the spine diagnostic injections and treatment and pay the doctors a fee for the medical procedures they performed. After a patient is billed for the procedures performed by the affiliated doctor, we take control of the patients’ unpaid bill and oversee collection. In most instances, the patient is a plaintiff in an accident case, where the patient is represented by an attorney. Typically, the defendant (and/or the insurance company of the defendant) in the accident case pays the patient’s bill upon settlement or final judgment of the accident case. The payment to us is made through the attorney of the patient. In most cases, we must agree to the settlement price and the patient must sign off on the settlement. Once we are paid, the patient’s attorney can receive payment for his or her legal fee.

 

We currently are affiliated with four spine injury diagnostic centers in the United States, which are located in Houston, Texas; Odessa, Texas; Tyler, Texas and Las Cruces, New Mexico. We are seeking additional funding for expansion by way of reasonable debt financing to accelerate future development.  In connection with this strategy, we plan to open additional diagnostic centers in new market areas that are attractive under our business model, assuming adequate funds are available.

 

We own a patented device and process by which a video recording system is attached to a fluoroscopic x-ray machine, the “four camera technology,” which we have refined through research and development, resulting in a fully commercialized Quad Video Halo System 3.0.  Using this technology, diagnostic and treatment procedures are recorded from four separate video feeds that capture views from both inside and outside the body, and a video is made which is given to the patient’s representative to verify the treatment received. We believe the Quad Video Halo (“QVH”) can attract additional physicians and patients and provide us with additional revenue streams using our new programs designed to assist in treatment documentation.   Additionally, we anticipate independent medical representatives will sell QVH units to new hospitals and clinics.

 

In September 2014, we created a wholly owned subsidiary, Quad Video Halo, Inc.  The purpose of this entity is to hold certain company assets in connection with the QVH units.  

 

NOTE 2. GOING CONCERN CONSIDERATIONS

 

Since our inception in 1998, until commencement of our spine injury diagnostic operations in August, 2009, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit from operations of $15,004,698 as of December 31, 2009.  Since that time, our accumulated deficit has increased $2,493,057 to $17,497,755 as of September 30, 2018. We plan to increase our operating expenses as we increase our service development, marketing efforts and brand building activities. We also plan to increase our general and administrative functions to support our growing operations. We will need to generate significant revenues to achieve our business plan. Our continued existence is dependent upon our ability to successfully execute our business plan, as well as our ability to increase revenue from services and obtain additional capital from borrowing and selling securities, as needed, to fund our operations. There is no assurance that additional capital can be obtained or that it can be obtained on terms that are favorable to us and our existing stockholders.  Any expectation of future profitability is dependent upon our ability to expand and develop our healthcare services business, of which there can be no assurances.

 

 

NOTE 3. CRITICAL ACCOUNTING POLICIES

 

The following are summarized accounting policies considered to be critical by our management:

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Nevertheless, we believe that the disclosures are adequate to make the information presented not misleading. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2017 Annual Report as filed on Form 10-K. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly our financial position with respect to the interim condensed consolidated financial statements and the results of its operations for the interim period ended September 30, 2018, have been included. The results of operations for interim periods are not necessarily indicative of the results for a full year.

 

Basis of Consolidation

 

The accompanying unaudited condensed consolidated financial statements include the accounts of Spine Injury Solutions, Inc. and its wholly owned subsidiary, Quad Video Halo, Inc. All material intercompany balances of transactions have been eliminated upon consolidation.

 

Accounting Method

 

Our financial statements are prepared using the accrual basis of accounting in accordance with U.S. GAAP.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our condensed consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of our financial position and results of operations.

 

Revenue Recognition

 

Our net revenues include service and product revenues. Service revenues arise from the delivery of medical diagnostic services provided to the patient by medical professionals at the spine injury diagnostic centers, only after the patient completes and signs required medical and financial paperwork. Service revenues are recorded as net patient service revenues based on variable consideration elements further described in Note 4. Product sales arise from the sale and transfer of control of the Company’s QVH units to a consumer. QVH services sales arise when a customer requests use of a QVH unit along with video processes and storage. The services are provided on a monthly basis satisfying the performance obligation. The Company did not have material product sales or service sales related to the QVH units included during the three and nine months ended September 30, 2018 and September 30, 2017. However, for the three and nine months  ended September 30,2018 or 2017,  the Company recorded $22,935 and $0 in deferred revenue related to a QVH services contract beginning in the fourth quarter 2018. As such, for the purposes of the condensed consolidated financial statements, there is no material disaggregation of revenues as the material portion of revenues consisted of the service revenues.

 

Our credit policy has been established based upon extensive experience by management in the industry and has been determined to ensure that collectability is reasonably assured.  Payment for services are primarily made to us by a third party and the credit policy includes terms of net 240 days for collections; however, collections occur upon settlement or judgment of cases (see Note 4). As of September 30, 2018, and 2017, there were no material contract assets, contract liabilities, or deferred contract costs recorded on the condensed consolidated financial statements.

 

 

Fair Value of Financial Instruments

 

Cash, accounts receivable, accounts payable and accrued liabilities, and notes payable, as reflected in the condensed consolidated financial statements, approximates fair value.  Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of liquid investments with original maturities of three months or less.  Cash equivalents are stated at cost, which approximates fair value.  We maintain cash and cash equivalents in banks, which at times may exceed federally insured limits. We have not experienced any losses on these deposits.

 

Inventories

 

Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method, whereas market is based on the net realizable value. All inventories at September 30, 2018 and December 31, 2017 are classified as finished-goods and consist of our Quad Video Halo units.

 

Property and Equipment

 

Property and equipment are carried at cost.  When retired or otherwise disposed of, the related carrying cost and accumulated depreciation are removed from the respective accounts, and the net difference, less any amount realized from the disposition, is recorded in operations.  Maintenance and repairs are charged to operating expenses as incurred. Costs of significant improvements and renewals are capitalized.

 

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

 

Intangible Assets and Goodwill

 

Intangible assets acquired are initially recognized at cost. Intangible assets acquired in a business combination are recognized at their estimated fair value at the date of acquisition. Intangibles with a finite life are amortized, ratably, based on the contractual terms of the associated agreements.

 

Goodwill recognized in a business combination is subjective and represents the value of the excess amount given to the acquired company above the estimated fair market value of the identifiable net assets on the acquisition date. The goodwill amount is tested for impairment when events or circumstances indicate the asset might be impaired, but at least annually. Impairment occurs when the original amount of goodwill exceeds the value of the expected future net cash flows from the business acquired.  As of September 30, 2018 and December 31, 2017, no impairment to the asset was determined to have occurred.

 

Long-Lived Assets

 

We periodically review and evaluate long-lived assets such as intangible assets, when events and circumstances indicate that the carrying amount of these assets may not be recoverable. In performing our review for recoverability, we estimate the future cash flows expected to result from the use of such assets and its eventual disposition. If the sum of the expected undiscounted future operating cash flows is less than the carrying amount of the related assets, an impairment loss is recognized in the consolidated statements of operations. Measurement of the impairment loss is based on the excess of the carrying amount of such assets over the fair value calculated using discounted expected future cash flows. At September 30, 2018 and December 31, 2017, no impairment of the long-lived assets was determined to have occurred.

 

 

Concentrations of Credit Risk

 

Assets that expose us to credit risk consist primarily of cash and accounts receivable. Our accounts receivable are from a diversified customer base and, therefore, we believe the concentration of credit risk is minimal. We evaluate the creditworthiness of customers before any services are provided.  We record a discount based on the nature of our business, collection trends, and an assessment of our ability to fully realize amounts billed for services.  Additionally, we have established an allowance for doubtful accounts in the amount of $51,209 and $106,443, at September 30, 2018 and December 31, 2017, respectively.

  

Stock Based Compensation

 

We account for the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values.  Under authoritative guidance issued by the Financial Accounting Standards Board (“FASB”), companies are required to estimate the fair value or calculated value of share-based payment awards on the date of grant using an option-pricing model.  The value of awards that are ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations.  We use the Black-Scholes Option Pricing Model to determine the fair-value of stock-based awards.  During the nine months ended September 30, 2018 and 2017, we recognized compensation expense for issuances of our common stock in exchange for services of $5,000 and $10,900, respectively. During the three months ended September 30, 2018 and 2017, we recognized compensation expense for issuances of our common stock in exchange for services of $5,000 and $5,800, respectively.

 

Income Taxes

 

We account for income taxes in accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.

 

Uncertain Tax Positions

 

Accounting Standards Codification “ASC” Topic 740-10-25 defines the minimum threshold a tax position is required to meet before being recognized in the financial statements as “more likely than not” (i.e., a likelihood of occurrence greater than fifty percent). Under ASC Topic 740-10-25, the recognition threshold is met when an entity concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

 

We are subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, we will adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate, as well as impact operating results.

 

Under ASC Topic 740-10-25, only the portion of the liability that is expected to be paid within one year is classified as a current liability. As a result, liabilities expected to be resolved without the payment of cash (e.g. resolution due to the expiration of the statute of limitations) or are not expected to be paid within one year are not classified as current. We estimated interest and penalties as income tax expense and tax credits as a reduction in income tax expense. For the nine months ended September 30, 2018 and 2017, we recognized no estimated interest or penalties as income tax expense.

 

Legal Costs and Contingencies

 

In the normal course of business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received.

 

If a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss.

 

 

Earnings ( Loss ) per Share

 

Basic and diluted earnings (loss) per common share is presented in accordance with ASC Topic 260, “Earnings per Share,” for all periods presented. During the nine months ended September 30, 2018 and 2017, common stock equivalents from outstanding stock options, warrants and convertible debt have been excluded from the calculation of the diluted earnings (loss) per share in the statements of operations, because all such securities were anti-dilutive.  The earnings (loss) per share is calculated by dividing the net income (loss) by the weighted average number of shares outstanding during the periods.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606).   This ASU is designed to create greater comparability for financial statement users across industries and jurisdictions.  The provisions of ASU No. 2014-09 include a five-step process by which entities will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which an entity expects to be entitled in exchange for those goods or services.  The standard also will require enhanced disclosures, provide more comprehensive guidance for transactions such as service revenue and contract modifications, and enhance guidance for multiple-element arrangements.  In July 2015, the FASB issued ASU No. 2015-14 which delayed the effective date of ASU No. 2014-09 by one year (effective for annual periods beginning after December 15, 2017).  Early adoption is not permitted.  We have adopted the provisions within this ASU and it did not have a material impact on the financial statements other than the required disclosures included here-in.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under ASU No. 2016-02, lessor accounting is largely unchanged. ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018 with early application permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Management has determined that based on current accounting and lease contract information, the adoption of ASU No. 2016-02 is not expected to have a significant impact on the Company’s consolidated financial position, results of operations and disclosures. However, management is continually evaluating the future impact of ASU No. 2016-02 based on changes in the Company’s consolidated financial statements through the period of adoption.

 

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU No. 2016-12 provides narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. The amendment also provides a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers and are expected to reduce the judgment necessary to comply with Topic 606. The effective date and transition requirements for ASU No. 2016-12 are the same as the effective date and transition requirements for ASU No. 2014-09. We have adopted the provisions within this ASU and it did not have a material impact on the financial statements other than the required disclosures included here-in.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting principles (“GAAP”) and, instead, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU No. 2016-13 is effective for annual periods beginning after December 15, 2020, with early application permitted in annual periods beginning after December 15, 2018. The amendments of ASU No. 2016-13 should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the future impact of ASU No. 2016-13 on the Company’s consolidated financial position, results of operations and disclosures.

 

 

In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. ASU No. 2016-20 allows entities not to make quantitative disclosures about remaining performance obligations in certain cases and require entities that use any of the new or previously existing optional exemptions to expand their qualitative disclosures. The amendment also clarifies narrow aspects of ASC 606, including contract modifications, contract costs, and the balance sheet classification of items as contract assets versus receivables, or corrects unintended application of the guidance. The effective date and transition requirements for ASU No. 2016-20 are the same as the effective date and transition requirements for ASU No. 2016-09. We have adopted the provisions within this ASU and it did not have a material impact on the financial statements other than the required disclosures included here-in.

 

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU No. 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of a business or as acquisitions (or disposals) of assets. ASU No. 2017-01 is effective for annual periods beginning after December 15, 2018, with early adoption permitted under certain circumstances. The amendments of ASU No. 2017-01 should be applied prospectively as of the beginning of the period of adoption. Management is currently evaluating the future impact of ASU No. 2017-01 on the Company’s consolidated financial position, results of operations and disclosures.

 

In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. The amendments in this update relate to disclosures of the impact of recently issued accounting standards. The SEC staff’s view is that a registrant should evaluate ASC updates that have not yet been adopted, to determine the appropriate financial disclosures about the potential material effects of the updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact of an update, then in addition to making a statement to that effect, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact. The staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies expected to be applied compared to current accounting policies. Also, the registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments specifically addressed recent ASC amendments to ASU No. 2016-13, Financial Instruments – Credit Losses, ASU No. 2016-02, Leases, and ASU No. 2014-09, Revenue from Contracts with Customers, although the amendments apply to any subsequent amendments to guidance in the ASC. ASU No. 2017-03 is effective upon issuance and did not have a significant impact on the Company’s consolidated financial position, results of operations and disclosures.

 

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments in this update provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. ASU No. 2017-09 is effective for annual periods, including interim periods, beginning after December 15, 2017, with early adoption permitted for interim periods of public business entities within reporting periods for which financial statements have not yet been issued. The amendments of ASU No. 2017-09 should be applied prospectively as of the beginning of the period of adoption. Management has adopted the provisions of this ASU, January 1, 2018 and there were no significant effects on the consolidated financial statements or disclosures.

 

NOTE 4 . ACCOUNTS RECEIVABLE

 

Our net revenues include service and product revenues. Service revenues arise from the delivery of medical diagnostic services provided to the patient by medical professionals at the spine injury diagnostic centers, only after the patient completes and signs required medical and financial paperwork. Service revenues are recorded as net patient service revenues based on variable consideration elements described below. Product sales arise from the sale and transfer of control of our QVH units to a consumer. We did not have material sales of QVH units included in our condensed consolidated financial statements.

 

We manage certain spine injury diagnostic centers where independent healthcare providers perform medical services for patients. We pay the healthcare providers a fixed rate for medical services performed. The patients are billed based on Current Procedural Terminology (“CPT”) codes for the contract’s performance obligation, i.e. the medical procedure performed. CPT codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services. CPT codes are developed, maintained and copyrighted by the American Medical Association. Patients are billed at the normal billing amount, based on national averages, for a particular CPT code procedure. We take control of the patients’ unpaid bills.

 

 

Our revenue and corresponding accounts receivable are recognized by reference to “net revenue” and “accounts receivable, net” due to variable consideration elements within the contract allowing for settlement for less than billed amounts. We have elected to use the expected value method for estimating the variable consideration elements within the service revenue contracts and use the sum of probability weighted amounts or collectability percentages as applied to the gross amounts billed using CPT codes. While we do collect 100% of the accounts on some patients, our estimated variable consideration method is used to calculate the carrying balance of the accounts receivable and the estimated revenue to be recorded. A variable consideration discount rate of 48%, based on the expected value method, was used to reduce revenue to 52% of CPT code billings (“gross revenue”) during the three and nine months ended September 30, 2018 and 2017.

 

The patients who receive medical services at the diagnostic centers are typically plaintiffs in accident lawsuits. The timing of collection of receivables is dependent on the timing of a settlement or judgment of each individual case associated with these patients. Historical experience, through 2017, demonstrated that the collection period for individual cases may extend for two years or more. Accordingly, we have classified receivables as current or long term based on our experience, which indicates that as of September 30, 2018 and December 31, 2017, 30% of cases will be subject to a settlement or judgment within one year of a medical procedure.

 

In addition to the variable consideration discount as described above, we maintain an allowance for doubtful accounts for net accounts receivable in which management has determined factors leading to possible uncollectability, such as resignation of patient legal counsel, stale cases, or other credit deteriorations. As of September 30, 2018 and December 31, 2017, we have $51,209 and $106,443 recorded as an allowance for doubtful accounts, respectively. For the three months ended September 30, 2018 and 2017, we recorded $115,000 and $50,000 in bad debt expense, respectively. For the nine months ended September 30, 2018 and 2017, we recorded $215,000 and $170,000 in bad debt expense, respectively. For the three months ended September 30, 2018 and 2017, we recorded $43,220 and $0 in recoveries associated with previously written off receivables, respectively. For the nine months ended September 30, 2018 and 2017, we recorded $63,145 and $0 in recoveries associated with previously written off receivables, respectively.

 

NOTE 5 . DUE TO RELATED PARTIES

 

We have an agreement with North Shore Orthopedics (“NSO”), which is 100% owned by our Chief Executive Officer, William Donovan, M.D., to provide medical services as our independent contractor at the Houston and Odessa spine injury diagnostic centers. For the nine months ended September 30, 2018 and 2017 we expensed $358,335 and $421,260 related to services provided by NSO. For the three months ended September 30, 2018 and 2017 we recorded $139,944 and $142,745 related to services provided by NSO. As of September 30, 2018 and December 31, 2017, we had balances payable to NSO of $21,307 and $27,910, respectively. This outstanding payable is non-interest bearing, due on demand and does not follow any specific repayment schedule. We do not directly pay Dr. Donovan (in his individual capacity as a physician) any fees in connection with NSO. However, Dr. Donovan is the sole owner of NSO, and we pay NSO under the terms of our agreement.  

 

NOTE 6. STOCKHOLDERS’ EQUITY

 

In July 2018 we issued 25,000 shares of common stock to a consultant for services, valued at $.20 per share. In January 2017, we issued 10,000 shares of common stock to a consultant for services, valued at $0.21 per share. In May 2017, we issued 10,000 shares of common stock to a consultant for services, valued at $0.30 per share. For the three months ended September 30, 2018 and 2017 we recorded $5,000 and $0 in compensation expense related to these issuances. For the nine months ended September 30, 2018 and 2017 we recorded a total of $5,000 and $10,900 in compensation expense related to these issuances.

 

NOTE 7 . NOTES PAYABL E

 

Convertible and secured notes payable

 

On August 29, 2012, we issued Peter Dalrymple, a director of the Company, a $1,000,000 three-year secured promissory note bearing interest at 12% per year, with thirty-five monthly payments of interest commencing on September 29, 2013, and continuing thereafter on the 29th day of each successive month throughout the term of the promissory note.  Under the terms of the secured promissory note, the holder received a detachable warrant to purchase 333,333 shares of our common stock at the price of $1.60 per share that was to expire on August 29, 2015; however, the promissory note was extended as described below.  This promissory note is secured by $3,000,000 in gross accounts receivable.  On the maturity date, one balloon payment of the entire outstanding principal amount plus any accrued and unpaid interest is due.

 

 

On August 20, 2014, we entered into a Financing Agreement with Mr. Dalrymple whereby, he agreed to assist us in obtaining financing in the form of a $2,000,000 revolving line of credit (see Line of Credit below) from a commercial lender and provide a personal guaranty of the line of credit. Under the terms of the Financing Agreement, upon finalization of the line of credit with Wells Fargo Bank on September 8, 2014, we (i) extended the term of the $1,000,000 promissory note, discussed above, by one year to mature on August 29, 2016, (ii) reduced the interest rate on the promissory note to 6%, (iii) extended the expiration date on the warrants issued in connection with the promissory note by one year to an expiration date of August 29, 2016 and (iv) used $500,000 of advances under the line of credit as payment of principal and interest on the promissory note. In August 2016, the note and associated warrant were amended to extend the maturity date to August 29, 2018. And in September 2017, we extended the maturity date of the promissory note to September 8, 2018. In connection with the extension of the Wells Fargo line of credit discussed in Note 8, on September 5, 2018 we entered into a Financing Agreement with Mr. Dalrymple  and an Amendment to Amended and Restated Secured Promissory Note, under which we extended the maturity date of the promissory note originally entered into with Mr. Dalrymple in August 2012 to be due and payable on September 8, 2019. We will continue to provide collateral to Mr. Dalrymple in an amount of $3,000,000 in our gross accounts receivable to secure payment of both his promissory note with us and his obligations in connection with the line of credit with Wells Fargo.  As of September 30, 2018 and December 31, 2017, the note had a principle balance of $90,000 and $225,000, respectively. For the three months ended September 30, 2018 and 2017, we recorded $2,005 and $3,750, respectively, in interest expense related to this note. For the nine months ended September 30, 2018 and 2017, we recorded $8,255 and $12,36, respectively, in interest expense related to this note.

 

NOTE 8 . LINE OF CREDIT

 

On September 3, 2014, we entered into a $2,000,000 revolving line of credit agreement with Wells Fargo Bank, N.A. Outstanding principal on the line of credit bears interest at the 30-day London Interbank Offered Rate (“LIBOR”) plus 2.0%, resulting in an effective rate of 4.0% at September 30, 2018.  In September 2017, the line of credit agreement was amended, whereby the outstanding principle was due and payable in full on August 31, 2018 and the maximum amount we can borrow under the line of credit is $1,750,000. On September 7, 2018 we entered into an Amended and Restated Revolving Line of Credit Note to extend our revolving line of credit facility, whereby the outstanding principal is now due and payable in full on August 31, 2019. The maximum amount we can borrow under the line of credit remains $1,750,000.  The line of credit also remains guaranteed by Peter L. Dalrymple, a member of our Board of Directors, and is secured by a first lien interest in certain of his assets.  As of September 30, 2018 and December 31, 2017, outstanding borrowings under the line of credit totaled $1,490,000 and $1,325,000 respectively. For the three months ended September 30, 2018 and 2017, we recorded $14,758 and $13,518, respectively, in interest expense related to this note. For the nine months ended September 30, 2018 and 2017, we recorded $39,515 and $24,730, respectively, in interest expense related to this note.

 

NOTE 9 . INCOME TAXES

 

We have not made a provision for (benefit from) income taxes for the three and nine months ended September 30, 2018 or 2017, which reflects our valuation allowance established against our benefits from net operating loss carryforwards.

 

 

 

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

 

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

 

Critical Accounting Policies

 

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

 

Management Overview

 

We are a technology, marketing, management, billing, and collection company facilitating diagnostic services for patients who have sustained spine injuries resulting from traumatic accidents.  We deliver turnkey solutions to spine surgeons, orthopedic surgeons and other healthcare providers for necessary and appropriate treatment of musculo-skeletal spine injuries resulting from automobile and work-related accidents.  Our goal is to become a leader in providing management services to spine and orthopedic surgeons and other healthcare providers to facilitate proper treatment of their injured clients.  By pre-funding the providers’ accounts receivable, which includes diagnostic testing and non-invasive surgical care, patients are not unnecessarily delayed or prevented from obtaining needed treatment.  By facilitating early treatment through affiliated doctors, we believe that health conditions can be prevented from escalating and injured victims can be quickly placed on the road to recovery.  Through our affiliate system, we facilitate spine surgeons, orthopedic surgeons and other healthcare providers to provide reasonable, necessary, and appropriate treatments to patients with musculo-skeletal spine injuries. We assist the centers that provide the spine diagnostic injections and treatment and pay the doctors a fee for the medical procedures they performed. After a patient is billed for the procedures performed by the affiliated doctor, we take control of the patients’ unpaid bills and oversee collection. In most instances, the patient is a plaintiff in an accident case, where the patient is represented by an attorney. Typically, the defendant (and/or the insurance company of the defendant) in the accident case pays the patient’s bill upon settlement or final judgment of the accident case. The payment to us is made through the attorney of the patient. In most cases, we must agree to the settlement price and the patient must sign off on the settlement. Once we are paid, the patient’s attorney can receive payment for his or her legal fee.

 

We continue to further refine and market our Quad Video Halo System 3.0 (“QVH”). We anticipate that we will begin recognizing additional revenue from sales and subscriptions of the QVH during the fourth quarter of 2018.

 

Results of Operations

 

The unaudited financial statements for the three and nine months ended September 30, 2018 and 2017 have been prepared in accordance with U.S. GAAP for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2018 and the results of operations and cash flows for the three and nine months ended September 30, 2018 and 2017. The results for the nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for any subsequent quarter or of the entire year ending December 31, 2018.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2017, as included in our previously filed report on Form 10-K.

 

As noted earlier in the description of the business in Note 1 of the Notes to Condensed Consolidated Financial Statements, we own a video recording system known as the (“QVH”).

 

Comparison of the three-month period ended September 30, 2018 with the three-month period ended September 30 , 201 7 .

 

We recorded $1,228,754 in gross revenue for the three months ended September 30, 2018, offset by $667,048 of the expected settlement discount resulting in net revenue of $561,706. We recorded $876,774 in gross revenue for the three months ended September 30, 2017, offset by $311,572 of the expected settlement discount resulting in net revenue of $565,202.    For the three months ended September 30, 2018, we worked with four spine injury diagnostic centers: Houston, Texas; Tyler, Texas, Odessa, Texas and Las Cruces New Mexico. The increase in gross revenue and associated service cost is attributable to the higher case volume in New Mexico and Odessa.

 

 

During the three months ended September 30, 2018, we incurred $394,539 of operating, general and administrative expenses compared to $378,063 for the same period in 2017. The increase is due mainly to collection of receivables of $43,000 previously written off, decreases of travel and entertainment expense of $21,000, coupled with an increase of investor relations costs of $10,000, bad debt of $65,000 and other expense increases netting out to $5,000.

 

As a result of the foregoing, we had a net loss of $54,116 for the three months ended September 30, 2018, compared to a net income of $7,589 for the three months ended September 30, 2017.

 

Comparison of the nine-month period ended September 30, 2018 with the nine-month period ended September 30, 201 7 .

 

We recorded $3,340,943 in gross revenue for the nine months ended September 30, 2018, offset by $1,540,101 of the expected settlement discount resulting in net revenue of $1,800,842.  We recorded $2,438,988 in gross revenue for the nine months ended September 30, 2017, offset by $946,559 of the expected settlement discount resulting in net revenue of $1,492,429.  Revenue was positively affected by the addition of the New Mexico locations.

 

Service cost was $611,354 for the nine months ended September 30, 2018 compared to $462,737 for the same period in 2017.  The increase in service cost is attributable to higher case volume in New Mexico.

 

During the nine months ended September 30, 2018, we incurred $1,090,357 of operating, general and administrative expenses compared with the $1,177,558 for the same period in 2017. The decrease is due mainly to collection of receivables of $63,000 previously written off, decreases in payroll and consulting costs of $59,000, marketing costs of $5,500, website planning of $9,000, travel and entertainment expense of $13,000, coupled with an increase of investor relations costs of $20,000, increase in bad debt expense of $45,000 and other expense decreases netting out to $13,000.  During the nine months ended September 30, 2017, we incurred $12,203 of research and development expenses compared with $0 for the same period in 2018.  

 

As a result of the foregoing, we had net income of $58,809 for the nine months ended September 30, 2018, compared to a net loss of $197,329 for the nine months ended September 30, 2017.

 

For the nine months ended September 30, 2018, cash used in operations was $60,257 which primarily included uses of cash from operating sources due to a decrease in related party payables of $6,603, increases in accounts receivable of $359,716, prepaid expenses of $11,296, inventory of $21,090, and increases in cash from operating sources including an increase of accounts payable of $21,981 and deferred revenue of $22,935. For the same period in 2017 cash used in operations was $86,991 which primarily included decreases in cash flows from operating sources attributable to increases in accounts receivable of $76,421, increases in prepaid expenses of $9,250, offset by increases in cash flows from operating sources due to a decrease in accounts payable of $16,457, and an increase in related party payables of $10,396. We used no cash in investing activities for the nine months ended September 30, 2018 and we used cash to purchase $3,614 in fixed assets for the nine months ended September 30, 2017.

 

The deferred revenue consists of the first three months of a subscription agreement with our Quad Video Halo subsidiary and a healthcare provider at an out of state location. The revenue will be recognized beginning in October 2018.

 

Cash used in financing activities for the nine months ended September 30, 2018 and 2017 consisted of repayments on our notes payable in the amount of $135,000 and $50,000, respectively, and net draws on our line of credit of $165,000 and $25,000, respectively.

 

Going Concern Considerations

 

Since our inception in 1998, until commencement of our spine injury diagnostic operations in August 2009, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit from operations of $15,004,698 as of December 31, 2009. Since that time, our accumulated deficit has increased $2,493,057 to $17,497,755 as of September 30, 2018. Successful business operations and our transition to positive cash flows from operations are dependent upon obtaining additional financing and achieving a level of collections adequate to support our cost structure. Considering the nature of our business, we are not generating immediate liquidity and sufficient working capital within a reasonable period of time to fund our planned operations and strategic business plan through September 30, 2019. The company is seeking to increase revenue from services and obtain additional capital from borrowings and selling securities as needed to fund our operations. There can be no assurances that there will be adequate financing available to us. The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

 

 

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Our principal executive officer and principal financial officer are responsible for establishing and maintaining our disclosure controls and procedures. Such officers have concluded (based upon their evaluation of these controls and procedures as of the end of the period covered by this report) that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in this report is accumulated and communicated to management, including our principal executive and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

 

Our principal executive officer and principal financial officer have also indicated that, upon evaluation, there were no changes in our internal control over financial reporting or other factors during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal controls will prevent all error and all fraud. 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. In addition, 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 a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. 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. Because of these 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 1A. RISK FACTORS

 

In addition to the other information set forth in this report, one should carefully consider the discussion of various risks and uncertainties contained in Part I, Item 1A, “Risk Factors” in our 2017 Annual Report on Form 10-K.  We believe the risk factors presented in this filing and those presented on our 2017 Form 10-K are the most relevant to our business and could cause our results to differ materially from any forward-looking statements made by us.  


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

 

In July 2018, we issued 25,000 shares of common stock to a consultant as consideration for consulting services. The securities were issued under the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 and the rules and regulations promulgated thereunder.  The issuance of securities did not involve a “public offering” based upon the following factors: (i) the issuance of securities was an isolated private transaction; (ii) a limited number of securities were issued to a single purchaser; (iii) there were no public solicitations; (iv) the investment intent of the purchaser; and (v) the restriction on transferability of the securities issued.

 

ITEM 6. EXHIBITS

 

Exhibit No.

 

Description

3.1

 

Articles of Incorporation dated March 4, 1998. (Incorporated by reference from Form 10-KSB filed with the SEC on January 5, 2000.) *

 

 

 

3.2

 

Amended Articles of Incorporation dated April 23, 1998. (Incorporated by reference from Form 10-KSB filed with the SEC on January 5, 2000.) *

 

 

 

3.3

 

Amended Articles of Incorporation dated January 4, 2002. (Incorporated by reference from Form 10KSB filed with the SEC on May 21, 2003.) *

 

 

 

3.4

 

Amended Articles of Incorporation dated December 19, 2003. (Incorporated by reference from Form 10-KSB filed with the SEC on May 20, 2004.) *

 

 

 

3.5

 

Amended Articles of Incorporation dated November 4, 2004. (Incorporated by reference from Form 10-KSB filed with the SEC on April 15, 2005) *

 

 

 

3.6

 

Amended Articles of Incorporation dated September 7, 2005. (Incorporated by reference from Form 10-QSB filed with the SEC on November 16, 2005) *

 

 

 

3.7

 

Certificate of Amendment to Certificate of Incorporation (Incorporated by reference from Form 8-K filed with the SEC on October 7, 2015.) *

 

 

 

3.8

 

By-Laws dated April 23, 1998. (Incorporated by reference from Form 10K-SB filed with the SEC on January 5, 2000.) *

 

 

 

10.1

 

Employment Agreement with William F. Donovan, M.D. dated September 18, 2014 (Incorporated by reference from Form 8-K filed with the SEC on September 22, 2014) *

 

 

 

10.2

 

Financing Agreement with Peter Dalrymple (Incorporated by reference from Form 8-K filed with the SEC on August 26, 2014) *

 

 

 

10.3

 

Wells Fargo Loan Documentation (Incorporated by reference from Form 10-Q filed with the SEC on May 13, 2015) *

 

 

 

10.4

 

Letter agreement between Spine Injury Solutions, Inc. and Jeffrey Cronk (Incorporated by reference from Form 8-K filed with the SEC on September 7, 2017) *

 

 

 

 

 

10.5

 

Amended and Restated Revolving Line of Credit Note and Amended and Restated Credit Agreement with Wells Fargo Bank dated August 17, 2017 (Incorporated by reference from Form 10-Q filed with the SEC on November 13, 2017) *

 

 

 

10.6

 

Financing Agreement, Amended and Restated Secured Promissory Note and Amended Security Agreement with Peter Dalrymple dated September 8, 2017 (Incorporated by reference from Form 10-Q filed with the SEC on November 13, 2017) *

 

 

 

10.7

 

Amended and Restated Revolving Line of Credit Note and Amended and Restated Credit Agreement with Wells Fargo Bank dated September 7, 2018

 

 

 

10.8   Amended and Restated Continuing Guaranty from Peter Dalrymple dated September 7, 2018
     

10.9

 

Financing Agreement and Amended and Restated Secured Promissory Note with Peter Dalrymple dated September 5, 2018

 

 

 

31.1

 

Certification of principal executive officer required by Rule 13a – 14(1) or Rule 15d – 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2

 

Certification of principal financial officer required by Rule 13a – 14(1) or Rule 15d – 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1

 

Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63.

 

 

 

32.2

 

Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63.

 

101.INS

 

XBRL Instance Document

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definitions Linkbase

 

 

 

101.LAB

 

XBRL Taxonomy Extension Label Linkbase

 

 

 

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase

 

* Incorporated by reference from our previous filings with the SEC

 

 

 

SIGNATURES

 

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

 

  

Spine Injury Solutions, Inc.

  

  

  Date: November 13, 2018

By: /s/ William F. Donovan, M.D.

  

William F. Donovan, M.D.

  

Chief Executive Officer (Principal Executive Officer)

  

  

  

  

 

  Date: November 13, 2018

By: /s/ John Bergeron

  

John Bergeron

  

Chief Financial Officer (Principal Financial Officer)

  

  

  

  

 

 

 

20

 

 

 

Exhibit 10.7

 

WELLS FARGO AMENDED AND RESTATED REVOLVING LINE OF CREDIT NOTE

 

$1,750,000.00

Houston, Texas

 

August 31, 2018

 

This Note amends, modifies, restates and replaces, but does not satisfy nor act as a novation of the obligations under, relating to, or in connection with, that certain Amended and Restated Revolving Line of Credit Note dated as of August 24, 2017 , executed and delivered by some or all Borrower hereunder in favor of Bank.

 

FOR VALUE RECEIVED, the undersigned SPINE INJURY SOLUTIONS, INC. (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at Private Banking - Houston, 1000 Louisiana St 7th Floor, Houston, TX 77002 , or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of One Million Seven Hundred Fifty Thousand and 00/100 Dollars ($1,750,000.00) , or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein.

 

1.       DEFINITIONS :

 

As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the place defined:

 

1.1     “Daily One Month LIBOR” means, for any day, the rate of interest equal to LIBOR then in effect for delivery for a one (1) month period.

 

1.2     “LIBOR” means the rate of interest per annum determined by Bank based on the rate for United States dollar deposits for delivery of funds for one (1) month as published by the ICE Benchmark Administration Limited, a United Kingdom company, at approximately 11:00 a.m., London time, or, for any day not a London Business Day, the immediately preceding London Business Day (or if not so reported, then as determined by Bank from another recognized source or interbank quotation); provided, however, that if LIBOR determined as provided above would be less than zero percent (0.0%), then LIBOR shall be deemed to be zero percent (0.0%).

 

1.3     “London Business Day” means any day that is a day for trading by and between banks in dollar deposits in the London interbank market.

 

2.      INTEREST:

 

2.1      Interest . The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed, unless such calculation would result in a usurious rate, in which case interest shall be computed on the basis of a 365/366-day year, as the case may be, actual days elapsed) at the lesser of (a) a fluctuating rate per annum determined by Bank to be two percent (2.0%) above Daily One Month LIBOR in effect from time to time, or (b) the Maximum Rate. Bank is hereby authorized to note the date and interest rate applicable to this Note and any payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule attached to this Note, which notations shall be prima facie evidence of the accuracy of the information noted.

 

2.2      Taxes and Regulatory Costs . Borrower shall pay to Bank immediately upon demand, in addition to any other amounts due or to become due hereunder, any and all (a) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR, and (b) costs, expenses and liabilities arising from or in connection with reserve percentages prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority or resulting from compliance by Bank with any request or directive (whether or not having the force of law) from any central bank or other governmental authority and related in any manner to LIBOR. In determining which of the foregoing are attributable to any LIBOR option available to Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding upon Borrower.

 

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2.3      Payment of Interest . Interest accrued on this Note shall be payable on the 3rd day of each month, commencing October 3, 2018.

 

2.4      Default Interest . From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, or at Bank’s option upon the occurrence, and during the continuance of an Event of Default, the outstanding principal balance of this Note shall bear interest at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed, unless such calculation would result in a usurious rate, in which case interest shall be computed on the basis of a 365/366-day year, as the case may be, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note, but in no event at a rate greater than the Maximum Rate.

 

2.5      Collection of Payments . Borrower authorizes Bank to collect all principal, interest, fees and other sums due hereunder by charging Borrower’s deposit account number XXXXXXXXXX with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

 

3.       BORROWING AND REPAYMENT:

 

3.1      Borrowing and Repayment . Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with or governing this Note; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount stated above. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on August 31,2019.

 

3.2      Advances . Advances hereunder, to the total amount of the principal sum available hereunder, may be made by the holder at the oral or written request of (a) William Donovan, any one acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of such authority is received by the holder at the office designated above, or (b) any person, with respect to advances deposited to the credit of any deposit account of Borrower, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of Borrower regardless of the fact that persons other than those authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance is or has been authorized by Borrower.

 

3.3      Application of Payments . Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof.

 

4.       LATE CHARGE:

 

If any payment required hereunder or under any contract, instrument and other document required hereby, or at any time hereafter delivered to Bank in connection herewith, is not paid within fifteen (15) days following the date it becomes due, Borrower shall pay a late charge equal to five percent (5%) of the amount of such unpaid payment.

 

5.      FINANCIAL INFORMATION:

 

Borrower shall promptly provide to Bank, in form and detail satisfactory to Bank, copies of such financial statements, tax returns, brokerage, investment management and similar securities account statements, and other financial information regarding the financial condition of Borrower and any Third Party Obligor as Bank may reasonably request from time to time.

 

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6.       DEPOSIT RELATIONSHIP:

 

Borrower shall maintain Borrower’s primary deposit relationship with Bank.

 

7.       EVENTS OF DEFAULT:

 

7.1     The occurrence of any of the following shall constitute an “Event of Default” under this Note:

 

(a)     Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.

 

(b)     Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Note or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.

 

(c)     Any default in the performance of or compliance with (1) any collateral value requirement set forth herein or in any other Loan Document; or (2) any other obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an “Event of Default” in this Note) and with respect to any such default under this subdivision (2) that by its nature can be cured, such default shall continue for a period of twenty (20) days from its occurrence, provided that the foregoing cure period shall only be available once during each 12 month period for each such obligation, agreement or provision.

 

(d)     Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner, and/or joint venturer referred to herein as a ‘Third Party Obligor”) has incurred any debt or other liability to any person or entity, including Bank.

 

(e)     Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

 

(f)     The filing of a notice of judgment lien against Borrower or any Third Party Obligor; or the recording of any abstract of judgment against Borrower or any Third Party Obligor in any county in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor.

 

(g)     (i) Borrower shall directly or indirectly use any of the proceeds to (a) provide financing or otherwise fund any targets of Sanctions, or (b) provide financing or otherwise fund any transaction which would be prohibited by Sanctions or would otherwise cause Bank or any of Bank’s affiliates to be in breach of any Sanctions; (ii) any Borrower or guarantor shall fail to comply with the requirements of all applicable laws, rules, regulations and orders of any foreign, federal, state or local governmental authority materially affecting Borrower, guarantor, or the operations or property of either; (iii) any party with a material interest in any collateral given to secure any indebtedness under this Note shall fail to comply with the requirements of the laws, rules, regulations and orders of any governmental authority to and materially affecting such collateral; or (iv) any Borrower, Third Party Obligor, or

 

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other owner of an equity interest in Borrower or any Third Party Obligor, or other owner of an equity interest in Borrower or any Third Party Obligor, or any subsidiary owned directly or indirectly by Borrower or any Third Party Obligor, is the target of any Sanctions, or performs or engages in any act or series of acts that Bank reasonably believes could constitute a violation of Sanctions, money laundering or a predicate to crime to money laundering under applicable laws, rules, regulations and orders of any governmental authority, or a violation of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other applicable anti-bribery or anti-corruption laws and regulations.

 

(h)     The death or incapacity of Borrower or any Third Party Obligor if an individual, provided, however, that in the case of death, and so long as no other Event of Default shall then exist or thereafter occur, Bank shall refrain from asserting its rights and remedies (except as may be necessary or desirable to preserve and protect its interests in estate, probate or like proceedings) for a period of time not greater than sixty (60) days from date of such death. The withdrawal, resignation or expulsion of anyone or more of the general partners in Borrower or any Third Party Obligor if a partnership. The dissolution or liquidation of Borrower or any Third Party Obligor if a corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor. If Borrower or any Third Party Obligor is a trustee of a trust, the termination or revocation of any such trust; or any person or entity shall take action seeking to effect the termination or revocation of any such trust; or there shall be no trustee of any such trust for forty-five (45) consecutive days.

 

(i)     Any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of twenty five percent (25%) or more of the common stock, members’ equity or other ownership interest (other than a limited partnership interest).

 

(j)     Any transfer (including, without limitation, transfers to a trust or other entity for estate planning purposes) or other disposition, except in the ordinary course of its business, of all or a substantial or material portion of the assets of Borrower or any Third Party Obligor.

 

8. MISCELLANEOUS:

 

8.1      Remedies . Upon the sale, transfer, hypothecation, assignment, or other encumbrance, whether voluntary, involuntary or by operation of law, of all or any interest in any real property securing this Note, if applicable, or upon the occurrence of any Event of Default, the holder of this Note, at the holder’s option, may declare all sums of principal and accrued and unpaid interest outstanding hereunder to be immediately due and payable without presentment, demand, or any notices of any kind, including without limitation notice of nonperformance, notice of protest, protest, notice of dishonor, notice of intention to accelerate or notice of acceleration, all of which are expressly waived by Borrower, and the obligation, if any, of the holder to extend any further credit hereunder shall immediately cease and terminate. Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of the holder’s in-house counsel to the extent permissible), expended or incurred by the holder in connection with the enforcement of the holder’s rights and/or the collection of any amounts which become due to the holder under this Note, whether or not suit is brought, and the prosecution or defense of any action in anyway related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity.

 

8.2      Representations and Warranties . . Borrower agrees that (any financial information furnished to Bank in connection with the transaction evidenced by this Note is materially true and correct as of the date of execution; (b) that this Note and any and all agreements, contracts, Instruments and other documents required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the “Loan Documents”) have been duly authorized, and upon execution and delivery will constitute legal, valid and binding agreements and obligations, enforceable in accordance with their terms; (c) the execution, delivery and performance of the Loan Documents does not violate any applicable law, or the terms of any organizational documents that govern Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound; (d) Borrower is not in default on any obligation for borrowed money, any purchase

 

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money obligation or any other material lease, commitment, contract, instrument or obligation, and (e) Borrower is not the target of any trade or economic sanctions promulgated by the United Nations or the governments of the United States, the United Kingdom, the European Union, or any other jurisdiction in which the Borrower is located or operates (collectively, “Sanctions”). Borrower further agrees that the representations and warranties contained herein and in each of the other Loan Documents shall be true as of the date of execution and on the date of each extension of credit evidenced by this Note, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing.

 

8.3      Obligations Joint and Several . Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several.

 

8.4      Notices . All notices, requests and demands required under this Note must be in writing, addressed to Bank at the address specified above and to Borrower at the address of its chief executive office (or principal residence, if applicable) specified below or to such other address as any party may designate by written notice to each other party, and shall be deemed to have been given or made as follows: (a) if personally delivered, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by facsimile, by electronic mail (“e-mail”) or by any proprietary electronic service offered by Bank, if separately agreed to by Bank and Borrower, upon the sender’s receipt of a facsimile confirmation or an acknowledgement from the intended recipient, such as the “return receipt requested” function, return e-mail, or other forms of acknowledgement as may be applicable.

 

8.5      Costs. Expenses and Attorneys’ Fees . Borrower shall pay upon demand the Bank’s expenses, including, to the extent permitted by applicable law, reasonable attorneys’ fees, incurred by Bank in connection with the enforcement and exercise of any right or remedy conferred by this Note. All of the foregoing shall be paid by Borrower with interest from the date of demand until paid in full at the rate of Interest in effect from time to time under this Note.

 

8.6      Successors; Assignment . This Note is binding upon the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer any of its interests or rights under this Note without Bank’s prior written consent. Bank may sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any indebtedness of Borrower to Bank and any obligations under this Note, and for such purposes, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, or any collateral required hereunder.

 

8.7      Entire Agreement : Amendment This Note constitutes the entire agreement between Debtor and Bank and supersedes all prior negotiations, communications, discussions and correspondence concerning the subject matter. No agreement to amend or modify this Note shall be effective unless memorialized in writing that states it is intended to amend or modify this Note.

 

8.8      Severability; Counterparts: Governing Law . If any provision of this Note shall be determined to be invalid under applicable law, the provision shall be ineffective only to the extent of the invalidity, without invalidating any remaining provisions of this Note. This Note may be executed in as many counterparts as may be required to reflect all parties assent; all counterparts will collectively constitute a single agreement. This Note shall be governed by and construed in accordance with the laws of the State of Texas.

 

8.9      Cross-Collateral Exclusion . Borrower acknowledges and agrees no deed of trust, mortgage, security deed, or similar real estate collateral agreement, nor any security Interest In goods or other tangible personal property granted in a personal property security agreement provided to Bank by Borrower or any other party, shall now or hereafter secure the indebtedness and other obligations of Borrower to Bank subject to this Note, unless such documentation specifically describes the indebtedness subject to this Note as part of the indebtedness secured thereby.

 

8.10      Election for Electronic Communication and Signatures . To facilitate execution of this Note, this Note and each contract, Instrument and other document required by this Note or at any time delivered to Bank in connection with

 

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any credit facility memorialized in this Note, or as a condition to the execution of this Note, may be executed by one or more of the Borrower or Bank in the form of an “Electronic Record” (as such term is defined in the Electronic Signatures in Global and National Commerce Act at 15 U.S.C. §7001 et seq. (“ESIGN Act”)). An “Electronic Signature” (as defined in ESIGN) will constitute an original and binding signature of Bank and Borrower. The fact that a document is in the form of an Electronic Record and/or is signed using an Electronic Signature will not, in and of itself, be grounds for invalidating such document. When information (such as a disclosure, notice, permission, waiver, demand or amendment) is to be provided in writing under this Note, that writing may be provided by electronic means and in an electronic format.

 

This election for electronic communications and signatures is subject to the following conditions: (i) the prior consent of Borrower, and if Borrower is a “Consumer” (as defined by ESIGN Act) such consent must be obtained in accordance with the ESIGN Act, (ii) the prior consent of Bank and (iii) utilization of an electronic transmission process with audit, security and authentication controls satisfactory to Bank. Notwithstanding any election for electronic communication, Bank may always in its sole discretion provide to Borrower or require from Borrower information in writing in a paper format.

 

Any writing (whether on paper or in electronic format) prepared by Borrower and delivered to Bank will be deemed materially true, correct and complete by Borrower and each officer or employee of Borrower who prepared and authenticated same, and may be legally relied upon by Bank without regard to the medium in which the record is maintained or the method of delivery or transmission.

 

8.11     Savings Clause. It is the intention of the parties to comply strictly with applicable usury laws. Accordingly, notwithstanding any provision to the contrary in this Note, or in any contract, instrument or document evidencing or securing the payment hereof or otherwise relating hereto (each, a “Related Document”), in no event shall this Note or any Related Document require the payment or permit the payment, taking, reserving, receiving, collection or charging of any sums constituting interest under applicable laws that exceed the maximum amount permitted by such laws, as the same may be amended or modified from time to time (the “Maximum Rate”). If any such excess interest is called for, contracted for, charged, taken, reserved or received in connection with this Note or any Related Document, or in any communication by Bank or any other person to Borrower or any other person, or in the event that all or part of the principal or interest hereof or thereof shall be prepaid or accelerated, so that under any of such circumstances or under any other circumstance whatsoever the amount of interest contracted for, charged, taken, reserved or received on the amount of principal actually outstanding from time to time under this Note shall exceed the Maximum Rate, then in such event it is agreed that: (a) the provisions of this paragraph shall govern and control; (b) neither Borrower nor any other person or entity now or hereafter liable for the payment of this Note or any Related Document shall be obligated to pay the amount of such interest to the extent it is in excess of the Maximum Rate; (c) any such excess interest which is or has been received by Bank, notwithstanding this paragraph, shall be credited against the then unpaid principal balance hereof or thereof, or if this Note or any Related Document has been or would be paid in full by such credit, refunded to Borrower; and (d) the provisions of this Note and each Related Document, and any other communication to Borrower, shall immediately be deemed reformed and such excess interest reduced, without the necessity of executing any other document, to the Maximum Rate. The right to accelerate the maturity of this Note or any Related Document does not include the right to accelerate, collect or charge unearned interest, but only such interest that has otherwise accrued as of the date of acceleration. Without limiting the foregoing, all calculations of the rate of interest contracted for, charged, taken, reserved or received in connection with this Note and any Related Document which are made for the purpose of determining whether such rate exceeds the Maximum Rate shall be made to the extent permitted by applicable laws by amortizing, prorating, allocating and spreading during the period of the full term of this Note or such Related Document, including all prior and subsequent renewals and extensions hereof or thereof, all interest at any time contracted for, charged, taken, reserved or received. The terms of this paragraph shall be deemed to be incorporated into each Related Document.

 

To the extent that either Chapter 303 or 306, or both, of the Texas Finance Code apply in determining the Maximum Rate, Bank hereby elects to determine the applicable rate ceiling by using the weekly ceiling from time to time in effect, subject to Bank’s right subsequently to change such method in accordance with applicable law, as the same may be amended or modified from time to time.

 

8.12     Right of Setoff: Deposit Accounts. Upon and after the occurrence of an Event of Default, (a) Borrower hereby authorizes Bank, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Bank shall have declared this Note to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower’s obligations and liabilities under this Note

 

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(whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Bank, in its sole discretion, may elect. Borrower hereby grants to Bank a security interest in all deposits and accounts maintained with Bank and with any other financial institution to secure the payment of all obligations and liabilities of Borrower to Bank under this Note.

 

8.13      Business Purpose . Borrower represents and warrants that all loans evidenced by this Note are for a business, commercial, investment, agricultural or other similar purpose and not primarily for a personal, family or household use.

 

8.14      Certain Tri-Party Accounts . Borrower and Bank agree that Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and revolving tri-party accounts) shall not apply to any revolving loan accounts created under this Note or maintained in connection herewith.

 

9. ARBITRATION:

 

9.1      Arbitration . The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (a) any credit subject hereto, or this Note or any contract, instrument or document relating to this Note, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (b) requests for additional credit. In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.

 

9.2      Governing Rules . Any arbitration proceeding will (a) proceed in a location in Texas selected by the American Arbitration Association (“AAA”); (b) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (c) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there Is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

 

9.3      No Waiver of Provisional Remedies, Self-Help and Foreclosure . The arbitration requirement does not limit the right of any party to (a) foreclose against real or personal property collateral; (b) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (c) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (a), (b) and (c) of this paragraph.

 

9.4      Arbitrator Qualifications and Powers . Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of Texas with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute

 

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to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of Texas and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

 

9.5      Discovery . In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available.

 

9.6      Class Proceedings and Consolidations . No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed this Note or any contract, instrument or document relating to this Note, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

 

9.7      Payment Of Arbitration Costs And Fees . The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

9.8      Miscellaneous . To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of Information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the documents between the parties or the subject matter of the dispute shall control. This Note may be amended or modified only in writing signed by each party hereto. If any provision of this Note shall be held to be prohibited by or invalid under applicable law such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remaining provisions of this Note. This arbitration provision shall survive termination, amendment or expiration of any of the documents or any relationship between the parties.

 

9.9      Small Claims Court . Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

 

NOTICE: THIS NOTE AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS EVIDENCED HEREBY CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY .

 

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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

 

SPINE INJURY SOLUTIONS, INC.

 

By:

 
 

William Donovan, President

 

 

STATE OF TEXAS

§

 

§

COUNTY OF Harns

§

 

This instrument was ACKNOWLEDGED before me on September 4 th , 2018, by William Donovan the notary of Spine Injury Solutions, a Delaware Corporation, on behalf of said corporation.

 

 

SEAL

 

Notary Public, State of Texas

     

My commission expires:

 

Printed Name of Notary Public Ashleigh Senigal 

10/26/2019

 

Notary ID No._________________________

 

 

 

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Exhibit 10.8

 

WELLS FARGO AMENDED AND RESTATED CONTINUING GUARANTY

 

 

 

 

TO: WELLS FARGO BANK, NATIONAL ASSOCIATION

 

This Guaranty amends, modifies, restates and replaces, but does not satisfy nor act as a novation of the obligations under, relating to, or in connection with, that certain Amended and Restated Continuing Guaranty dated as of March 16, 2015 executed and delivered by Guarantor hereunder in favor of Bank.

 

1.    GUARANTY; DEFINITIONS. In consideration of any credit or other financial accommodation heretofore, now or hereafter extended or made to SPINE INJURY SOLUTIONS, INC. ("Borrowers"), or any of them, by WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank"), and for other valuable consideration, the undersigned PETER L. DALRYMPLE ("Guarantor") , jointly and severally unconditionally guarantees and promises to pay to Bank or order, on demand in lawful money of the United States of America and in immediately available funds, any and all Indebtedness of any of the Borrowers to Bank. The term "Indebtedness" is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Borrowers, or any of them, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent , liquidated or unliquidated, determined or undetermined, including under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement , and whether Borrowers may be liable individually or jointly with others, or whether recovery upon such indebtedness may be or hereafter becomes unenforceable . This Guaranty is a guaranty of payment and not collection.

 

2.     MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION UNDER OTHER GUARANTIES. This is a continuing guaranty and all rights, powers and remedies hereunder shall apply to all past, present and future Indebtedness of each of the Borrowers to Bank, including that arising under successive transactions which shall either continue the Indebtedness, increase or decrease it, or from time to time create new Indebtedness after all or any prior Indebtedness has been satisfied, and notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of any of the Borrowers or Guarantor or any other event or proceeding affecting any of the Borrowers or Guarantor. This Guaranty shall not apply to any new Indebtedness created after actual receipt by Bank of written notice of its revocation as to such new Indebtedness; provided however, that loans or advances made by Bank to any of the Borrowers after revocation under commitments existing prior to receipt by Bank of such revocation, and extensions , renewals or modifications, of any kind, of Indebtedness incurred by any of the Borrowers or committed by Bank prior to receipt by Bank of such revocation, shall not be considered new Indebtedness. Any such notice must be sent to Bank by registered U.S. mail, postage prepaid, addressed to its office at Private Banking - Houston, 1000 Louisiana St 7th Floor, Houston, TX 77002 , or at such other address as Bank shall from time to time designate. Any payment by Guarantor with respect to the Indebtedness shall not reduce Guarantor's maximum obligation hereunder unless written notice to that effect is actually received by Bank at or prior to the time of such payment. The obligations of Guarantor hereunder shall be in addition to any obligations of Guarantor under any other guaranties of any liabilities or obligations of any of the Borrowers or any other persons heretofore or hereafter given to Bank unless said other guaranties are expressly modified or revoked in writing; and this Guaranty shall not, unless expressly herein provided, affect or invalidate any such other guaranties.

 

3.     OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint and several and independent of the obligations of Borrowers, and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against any of the Borrowers or any other person, or whether any of the Borrowers or any other person is joined in any such action or actions. Guarantor acknowledges that this Guaranty is absolute and unconditional, there are no conditions precedent to the effectiveness of this Guaranty, and this Guaranty is in full force and effect and is binding on Guarantor as of the date written below, regardless of whether Bank obtains collateral or any guaranties from others or takes any other action contemplated by Guarantor. Guarantor waives the benefit of any statute of limitations affecting Guarantor's liability hereunder or the enforcement thereof, and Guarantor agrees that any payment of any Indebtedness or other act which shall toll any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to Guarantor's liability hereunder . The liability of Guarantor hereunder shall be reinstated and revived and the rights of Bank shall continue if and to the extent that for any reason any amount at any time paid on account of any Indebtedness guaranteed hereby is rescinded or must otherwise be restored by Bank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise,

 

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all as though such amount had not been paid. The determination as to whether any amount so paid must be rescinded or restored shall be made by Bank in its sole discretion; provided however, that if Bank chooses to contest any such matter at the request of Guarantor, Guarantor agrees to indemnify and hold Bank harmless from and against all costs and expenses, including reasonable attorneys' fees, expended or incurred by Bank in connection therewith, including without limitation, in any litigation with respect thereto.

 

4.     AUTHORIZATIONS TO BANK. Guarantor authorizes Bank either before or after revocation hereof, without notice to or demand on Guarantor , and without affecting Guarantor's liability hereunder, from time to time to: (a) alter, compromise, renew, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of, the Indebtedness or any portion thereof, including increase or decrease of the rate of interest thereon ; (b) take and hold security for the payment of this Guaranty or the Indebtedness or any portion thereof, and exchange , enforce, waive, subordinate or release any such security; (c) apply such security and direct the order or manner of sale thereof , including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage or deed of trust, as Bank in its discretion may determine; (d) release or substitute any one or more of the endorsers or any other guarantors of the Indebtedness, or any portion thereof, or any other party thereto; and (e) apply payments received by Bank from any of the Borrowers to any Indebtedness of any of the Borrowers to Bank, in such order as Bank shall determine in its sole discretion, whether or not such Indebtedness is covered by this Guaranty, and Guarantor hereby waives any provision of law regarding application of payments which specifies otherwise. Bank may without notice assign this Guaranty in whole or in part. Upon Bank's request, Guarantor agrees to provide to Bank copies of Guarantor's financial statements .

 

5.     REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Bank that: (a) this Guaranty is executed at Borrowers' request; (b) Guarantor shall not, without Bank's prior written consent, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or a substantial or material part of Guarantor's assets other than in the ordinary course of Guarantor's business; (c) Bank has made no representation to Guarantor as to the creditworthiness of any of the Borrowers; and (d) Guarantor has established adequate means of obtaining from each of the Borrowers on a continuing basis financial and other information pertaining to Borrowers' financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor's risks hereunder, and Guarantor further agrees that Bank shall have no obligation to disclose to Guarantor any information or material about any of the Borrowers which is acquired by Bank in any manner.

 

6.     GUARANTOR'S WAIVERS .

 

6.1     Guarantor waives any right to require Bank to: (a) proceed against any of the Borrowers or any other person; (b) marshal assets or proceed against or exhaust any security held from any of the Borrowers or any other person; (c) give notice of the terms, time and place of any public or private sale or other disposition of personal property security held from any of the Borrowers or any other person; (d) take any action or pursue any other remedy in Bank's power; or (e) make any presentment or demand for performance, or give any notices of any kind, including without limitation, any notice of nonperformance, protest, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration hereunder or in connection with any obligations or evidences of indebtedness held by Bank as security for or which constitute in whole or in part the Indebtedness guaranteed hereunder, or in connection with the creation of new or additional Indebtedness.

 

6.2     Guarantor waives any defense to its obligations hereunder based upon or arising by reason of: (a) any disability or other defense of any of the Borrowers or any other person; (b) the cessation or limitation from any cause whatsoever , other than payment in full, of the Indebtedness of any of the Borrowers or any other person; (c) any lack of authority of any officer, director, partner, agent or other person acting or purporting to act on behalf of any of the Borrowers which is a corporation, partnership or other type of entity, or any defect in the formation of any such Borrower; (d) the application by any of the Borrowers of the proceeds of any Indebtedness for purposes other than the purposes represented by Borrowers to, or intended or understood by, Bank or Guarantor; (e) any act or omission by Bank which directly or indirectly results in or aids the discharge of any of the Borrowers or any portion of the Indebtedness by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Bank against any of the Borrowers; (f) any impairment of the value of any interest in any security for the Indebtedness or any portion thereof, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; (g) any modification of the Indebtedness, in any form whatsoever, including any modification made after revocation hereof to

 

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any indebtedness incurred prior to such revocation, and including without limitation the renewal, extension , acceleration or other change in time for payment of, or other change in the terms of, the Indebtedness or any portion thereof , including increase or decrease of the rate of interest thereon; or (h) any requirement that Bank give any notice of acceptance of this Guaranty. Until all Indebtedness shall have been paid in full, Guarantor shall have no right of subrogation, and Guarantor waives any right to enforce any remedy which Bank now has or may hereafter have against any of the Borrowers or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Bank. Guarantor further waives all rights and defenses Guarantor may have arising out of (i) any election of remedies by Bank, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for any portion of the Indebtedness, destroys Guarantor's rights of subrogation or Guarantor's rights to proceed against any of the Borrowers for reimbursement, or (ii) any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of any of the Borrowers in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging Borrowers' Indebtedness, whether by operation of law or otherwise, including any rights Guarantor may have to a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness, and Guarantor waives any defense, right of offset or other claim under Texas Property Code (51 .003, or any successor thereto or replacement thereof .

 

6.3     By signing this Guaranty, Guarantor waives (a) each and every right to which it may be entitled by virtue of any suretyship law, including without limitation, any rights arising pursuant to Section 17.001 and Chapter 43 of the Texas Civil Practice and Remedies Code and Rule 31 of the Texas Rules of Civil Procedure, as the same may be amended from time to time, and (b) without limiting any of the waivers set forth herein, any other fact or event that, in the absence of this provision, would or might constitute or afford a legal or equitable discharge or release of or defense to Guarantor.

 

7.     BANK'S RIGHTS WITH RESPECT TO GUARANTOR'S PROPERTY IN BANK'S POSSESSION. In addition to all liens upon and rights of setoff against the monies, securities or other property of Guarantor given to Bank by law, Bank shall have a lien upon and a right of setoff against all monies, securities and other property of Guarantor now or hereafter in the possession of or on deposit with Bank, whether held in a general or special account or deposit or for safekeeping or otherwise, and every such lien and right of setoff may be exercised without demand upon or notice to Guarantor. No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Bank, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing, and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by Bank in writing.

 

8.     SUBORDINATION. Any Indebtedness of any of the Borrowers now or hereafter held by Guarantor is hereby subordinated to the Indebtedness of Borrowers to Bank. Such Indebtedness of Borrowers to Guarantor is assigned to Bank as security for this Guaranty and the Indebtedness and, if Bank requests, shall be collected and received by Guarantor as trustee for Bank and paid over to Bank on account of the Indebtedness of Borrowers to Bank but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty . Any notes or other instruments now or hereafter evidencing such Indebtedness of any of the Borrowers to Guarantor shall be marked with a legend that the same are subject to this Guaranty and, if Bank so requests, shall be delivered to Bank. Bank is hereby authorized in the name of Guarantor from time to time to file financing statements and continuation statements and execute such other documents and take such other action as Bank deems necessary or appropriate to perfect, preserve and enforce its rights hereunder.

 

9.     REMEDIES; NO WAIVER. All rights, powers and remedies of Bank hereunder are cumulative. No delay, failure or discontinuance of Bank in exercising any right, power or remedy hereunder shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver , permit, consent or approval of any kind by bank of any breach of this Guaranty, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing .

 

10. COSTS, EXPENSES AND ATTORNEYS' FEES. Guarantor shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses , including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel to the extent permissible) , expended or incurred by Bank in connection with the enforcement of any of Bank's rights, powers or remedies and/or the collection of any amounts which become due to Bank under this Guaranty, and the prosecution or defense of any

 

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action in any way related to this Guaranty, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Guarantor or any other person or entity .

 

11.     SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Guarantor may not assign or transfer any of its interests or rights hereunder without Bank's prior written consent. Guarantor acknowledges that Bank has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any Indebtedness of Borrowers to Bank and any obligations with respect thereto, including this Guaranty. In connection therewith, Bank may disclose all documents and information which Bank now has or hereafter acquires relating to Guarantor and/or this Guaranty, whether furnished by Borrowers, Guarantor or otherwise . Guarantor further agrees that Bank may disclose such documents and information to Borrowers.

 

12.     AMENDMENT. This Guaranty may be amended or modified only in writing signed by Bank and Guarantor that states it is intended to amend or modify this Guaranty .

 

13.     APPLICATION OF SINGULAR AND PLURAL. In all cases where there is but a single Borrower, then all words used herein in the plural shall be deemed to have been used in the singular where the context and construction so require; and when there is more than one Borrower named herein, or when this Guaranty is executed by more than one Guarantor, the word "Borrowers" and the word "Guarantor" respectively shall mean all or any one or more of them as the context requires.

 

14.     UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS. Guarantor warrants and agrees that each of the waivers set forth herein is made with Guarantor's full knowledge of its significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any waiver or other provision of this Agreement shall be held to be prohibited by or invalid under applicable public policy or law, such waiver or other provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such waiver or other provision or any remaining provisions of this Agreement.

 

15.     COUNTERPARTS; GOVERNING LAW. This Guaranty may be executed in as many counterparts as may be required to reflect all parties assent; all counterparts will collectively constitute a single agreement. This Guaranty shall be governed by and construed in accordance with the laws of the State of Texas.

 

16.     ARBITRATION.

 

16.1      A rbitration . The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise, in any way arising out of or relating to this Guaranty and its negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination. In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party's right to demand arbitration being automatically terminated .

 

16.2      Governing Rules . Any arbitration proceeding will (a) proceed in a location in Texas selected by the American Arbitration Association ("AAA"); (b) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (c) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA's commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000 .00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA's optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the "Rules"). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any

 

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dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

 

16.3      No Waiver of Provisional Remedies , Self-Help and F oreclosure . The arbitration requirement does not limit the right of any party to (a) foreclose against real or personal property collateral; (b) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (c) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (a), (b) and (c) of this paragraph.

 

16.4       Arbitrator Qualifications and P owers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000 .00. Any dispute in which the amount in controversy exceeds $5,000,000 .00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of Texas with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of Texas and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

 

16.5      D iscovery . In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

 

16.6      Class Proceedings and Consolidation s . No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed this Guaranty or any other contract, instrument or document relating to any Indebtedness, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity .

 

16.7      Payment Of Arbitration Costs And F ees. The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

16.8      M iscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to exercise any judicial review rights set forth herein. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the documents between the parties or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the documents or any relationship between the parties.       

 

16.9      Small Claims Court . Notwithstanding anything herein to the contrary, each party retains the right to pursue in a Justice of the Peace Court any Small Claims Case (as defined in Rule 500.3 of the Texas Rules of Civil Procedure) within the jurisdictional limit (excluding attorneys' fees and costs) of a Small Claims Case.

 

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NOT I CE: TH I S DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THE I NDEBTEDNESS CONSTI TUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY N OT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELAT I NG TO THE I NDEBTEDNESS.

 

17.      ELECTION FOR ELECTRONIC COMMUNICATIONS AND SIGNATURES. To facilitate execution of this Guaranty, this Guaranty and each promissory note, contract, instrument and other document required by this Guaranty or at any time delivered to Bank in connection with the Indebtedness secured by this Guaranty, or as a condition to the execution of this Guaranty , may be executed by one or more of Guarantor or Bank in the form of an "Electronic Record" (as such term is defined in the Electronic Signatures in Global and National Commerce Act at 15

U.S.C. §7001 et seq. ("ESIGN Act")). An "Electronic Signature" (as defined in ESIGN) will constitute an original and binding signature of Bank and Guarantor. The fact that a document is in the form of an Electronic Record and/or is signed using an Electronic Signature will not, in and of itself, be grounds for invalidating such document. When information (such as a disclosure, notice other than a notice to terminate this Guaranty, permission, waiver, demand or amendment) is to be provided in writing under this Guaranty, that writing may be provided by electronic means and in an electronic format.

 

This election for electronic communications and signatures is subject to the following conditions : (i) the prior consent of Guarantor, and if Guarantor is a "Consumer" (as defined by ESIGN Act) such consent must be obtained in accordance with the ESIGN Act, (ii) the prior consent of Bank and (iii) utilization of an electronic transmission process with audit, security and authentication controls satisfactory to Bank. Notwithstanding any election for electronic communication, Bank may always in its sole discretion provide to Guarantor or require from Guarantor information in writing in a paper format.

 

Any writing (whether on paper or in electronic format) prepared by Guarantor and delivered to Bank will be deemed materially true, correct and complete by Guarantor and each officer or employee of Guarantor who prepared and authenticated same, and may be legally relied upon by Bank without regard to the medium in which the record is maintained or the method of delivery or transmission.

 

IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of August 31, 2018 .

 

 /s/ Peter Dalrymple                                 

PETER L. DALRYMPLE

 

Address :

13451 BELHAVEN DR

HOUSTON, TX 77069

 

STATE OF TEXAS      §

                                      §

COUNTY OF                 §

 

 

This instrument was ACKNOWLEDGED before me on       , 20_, by                                    .

 

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  Notary Public, State of                                      
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Printed Name of Notary Public                                    

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GUARANTY.TX (03/16) Page 6  

 

 

 

 

 

 

 

Exhibit 10.9

 

 

Financing AGREEMENT

 

This Financing Agreement (this “ Agreement ”) is dated as of September 5, 2018, by and among Spine Injury Solutions , Inc. , a Delaware corporation (the “ Company ”), and Peter Dalrymple , an individual whose address is 13451 Belhaven, Houston TX 77069 (“ Dalrymple ”).

 

Recitals

 

WHEREAS, the Company obtained a Revolving Line of Credit with Wells Fargo Bank, National Association (the “Bank” ), of $2,000,000 in August, 2014, which was due August 31, 2017; and

 

WHEREAS, this debt instrument was amended in August 2017 pursuant to an Amended and Restated Revolving Line of Credit in the amount of $1,750,000, which is due August 31, 2018; and

 

WHEREAS, the Bank has agreed to amend this debt instrument pursuant to an Amended and Restated Revolving Line of Credit Note in the amount of $1,750,000 (the “Amended Line of Credit Note” ) dated August 31, 2018; and

 

WHEREAS, the Bank requires that Dalrymple continue to pledge certain collateral pursuant to the Amended Line of Credit Note in order to enter into the Amended Line of Credit Note with the Company; and

 

WHEREAS, Dalrymple is willing to continue to pledge certain collateral to the Amended Line of Credit Note, subject to the terms of this Agreement; and

 

WHEREAS, the Company entered into a 12% Secured Promissory Note dated August 29, 2012, in the original principal amount of $1,000,000 payable to Dalrymple; and

 

WHEREAS, the Company provided Dalrymple with certain collateral pursuant to a Security Agreement dated August 29, 2012 in connection with the Promissory Note; and

 

WHEREAS, the Promissory Note was subsequently amended in September 2014, in August 2016 and in September 2017 (as amended, the “Promissory Note” ), and the Security Agreement was amended in September 2017 to provide for collateral (as amended, the Amended Security Agreement” ); and

 

WHEREAS, the Promissory Note currently has an outstanding balance of $100,000; and

 

WHEREAS, the Company and Dalrymple have agreed to enter into an Amendment to Amended and Restated Secured Promissory Note to amend the Promissory Note further; and

 

Now, Therefore, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and Dalrymple hereby agree as follows:

 

1.     Dalrymple hereby agrees to (i) enter into an Amended and Restated Security Agreement with the Bank whereby he will continue to provide certain collateral required by the Bank in connection with the Amended Line of Credit Note with the Bank, and (ii) enter into the Amendment to Amended and Restated Promissory Note issued by the Company to Dalrymple, to extend the maturity date to September 8, 2019, a copy of which is attached hereto as Exhibit A .

 

 

 

 

2.     The Company hereby agrees to (i) to continue its Obligations (as defined in the Amended Security Agreement between the Company and Dalrymple) and (ii) to enter into the Amendment to Amended and Restated Promissory Note to extend the maturity date to September 8, 2019, a copy of which is attached hereto as Exhibit A .

 

3.       This Agreement contains the entire understanding of the parties with respect to the subject matter thereof and supersedes all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters.

 

4.       Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing and delivered in person or sent by registered or certified mail (return receipt requested) or nationally recognized overnight delivery service, postage pre-paid, addressed as follows, or to such other address has such party may notify to the other parties in writing:

 

If to the Company:      

Spine Injury Solutions, Inc.

Attn: William Donovan, President

5225 Katy Freeway #600

Houston, TX 77007

   

If to Dalrymple:

Peter Dalrymple

13451 Belhaven

Houston, TX 77069

 

A notice or communication will be effective (i) if delivered in person or by overnight courier, on the business day it is delivered and (ii) if sent by registered or certified mail, three (3) business days after dispatch.

 

5.     Neither this Agreement nor any provision hereof may be amended, modified or supplemented unless in writing, executed by all the parties hereto. Except as otherwise expressly provided herein, no waiver with respect to this Agreement shall be enforceable unless in writing and signed by the party against whom enforcement is sought. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power or remedy by any party, and no course of dealing between or among any of the parties, shall constitute a waiver of, or shall preclude any other or further exercise of, any right, power or remedy.

 

6.     The provisions of this Agreement shall inure to the benefit of and be binding upon the parties and their successors and permitted assigns. This Agreement, or any rights or obligations hereunder, may not be assigned by the Company without the prior written consent of Dalrymple.

 

7.      This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

8.     All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Texas, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state or federal courts sitting in Harris County, Texas (the “ Harris County Courts ”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Harris County Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction

 

 

 

Page 2 – Financing Agreement

 

 

 

 

contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Harris County Courts, or that such Harris County Courts are improper or inconvenient venue for such proceeding.

 

9.     This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “ .pdf ” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “ .pdf ” signature page were an original thereof.

 

10.     If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor and achieves that same or substantially the same effect or result, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

In Witness Whereof , the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

 

 

SPINE INJURY SOLUTIONS , INC.

 

 

 

By: /s/ William F. Donovan

Name: William F. Donovan

Title: President

 

 

 

/s/ Peter Dalrymple _____________________________

PETER DALRYMPLE

 

 

 

 

 

 

Page 3 – Financing Agreement

 

 

 

 

AMENDMENT

TO

AMENDED AND RESTATED SECURED PROMISSORY NOTE

 

THIS AMENDMENT TO AMENDED AND RESTATED SECURED PROMISSORY NOTE (“Amendment”) dated as of September 5, 2018, is to become affixed to, modify and become a part of that certain Amended and Restated Secured Promissory Note in the principal sum of $250,000.00 dated September 8, 2017, which promissory note (hereinafter referred to as the “Note”) was made and executed by Spine Injury Solutions, Inc. , a Delaware corporation (the “Debtor”), and payable to the order of Peter Dalrymple (the “Holder”), which Note is due and payable on September 8, 2018 (“Maturity Date”).

 

WHEREAS , the principal amount of the Note presently outstanding is $100,000; and

 

WHEREAS , the Holder and Debtor desire to amend the Note to extend the Maturity Date; and

 

NOW, THEREFORE , in consideration of the premises, the mutual covenants and agreements and the respective representations and warranties herein contained, and on the terms and subject to the conditions herein set forth, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.     The introductory paragraph of the Note is amended to redefine the Maturity Date as September 8, 2019.

 

2.     The Note is amended and modified by amending section 1 of the Note in its entirety to read as follows:

 

1.      Schedule for Payment of Principal and Interest . The Company shall pay to the Holder eleven (11) monthly payments of interest only on the Principal Amount outstanding hereunder, in cash, in arrears, at the rate of six percent (6%) per annum, commencing on October 8, 2018, and continuing thereafter on the 8 th day of each successive month throughout the term of this Promissory Note. On the Maturity Date, the Company shall pay the Holder one balloon payment of the entire outstanding Principal Amount of this Promissory Note plus any accrued and unpaid interest thereon.”

 

3.     All terms and conditions of the Note shall, except as amended and modified by this Amendment, will remain in full force and effect and all rights, duties, obligations and responsibilities of the Debtor and the Holder shall be governed and determined by the Note as the same has been amended and modified by this Amendment.

 

4.     THIS AMENDMENT IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF TEXAS.

 

5.     This Amendment shall be of no force and effect until receipt and execution of it by the Debtor and the Holder. This Amendment may be executed in counterparts, each of which

 

 

Amendment to Amended and Restated Secured Promissory Note – Page 1

 

 

 

 

shall be deemed an original, but all of which shall be deemed one instrument, by facsimile signature or by e-mail delivery of a “.pdf” format data file signature of any of the parties, each of which shall be deemed an original for all purposes.

 

 

 

IN WITNESS WHEREOF, each of the undersigned has executed and delivered this Amendment to the Note as of the date first written above.

 

DEBTOR :

 

SPINE INJURY SOLUTIONS, INC.

 

 

By: /s/ William F. Donovan                     

William F. Donovan, President/CEO

 

 

HOLDER :

 

 

/s/ Peter Dalrymple _________________________                    

Peter Dalrymple

 

 

 

 

 

 

Amendment to Amended and Restated Secured Promissory Note – Page 2

 

 

 

 

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

 

I, William F. Donovan, M.D., Chief Executive Officer of Spine Injury Solutions, Inc., certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Spine Injury Solutions, Inc. for the quarter ended September 30, 2018;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d- 15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

 

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the issuer's independent registered public accounting firm and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

 

Date: November 13, 2018

By:         /s/ William F. Donovan, M.D.

  

William F. Donovan, M.D.

  

Chief Executive Officer (Principal Executive Officer)

 

 

 

 

 

EXHIBIT 31.2

 

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

 

I, John Bergeron, the Chief Financial Officer of Spine Injury Solutions, Inc., certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Spine Injury Solutions, Inc. for the quarter ended September 30, 2018;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d- 15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

 

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the issuer's independent registered public accounting firm and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

 

Date: November 13, 2018

By:         /s/ John Bergeron

  

John Bergeron

  

Chief Financial Officer (Principal Financial Officer)

 

 

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR

RULE 15d-14(b) and 18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Spine Injury Solutions, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William F. Donovan, M.D., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: November 13, 2018

By:         /s/ William F. Donovan, M.D.

  

William F. Donovan, M.D.

  

Chief Executive Officer (Principal Executive Officer)

 

 

The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and is not to be incorporated by reference into any filing of Spine Injury Solutions , Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

 

 

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR

RULE 15d-14(b) and 18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Spine Injury Solutions, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John Bergeron, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: November 13, 2018

By:         /s/ John Bergeron

  

John Bergeron

  

Chief Financial Officer (Principal Financial Officer)

 

 

The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and is not to be incorporated by reference into any filing of Spine Injury Solutions , Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.