bicx_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2023

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission file number: 000-54208

BioCorRx Inc.

(Exact name of registrant as specified in its charter)

Nevada		90-0967447
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2390 East Orangewood Avenue, Suite 500 Anaheim, CA		92806
(Address of principal executive offices)		(Zip Code)

(714) 462-4880

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

N/A

Indicate by check 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. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 13, 2023, there were 8,599,076 shares of registrant’s common stock outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022	4
	Condensed Consolidated Statement of Deficit for the three and nine months ended September 30, 2023	5
	Condensed Consolidated Statement of Deficit for the three and nine months ended September 30, 2022	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	45
ITEM 4.	Controls and Procedures	45

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	46
ITEM 1A.	Risk Factors	46
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
ITEM 3.	Defaults Upon Senior Securities	46
ITEM 4.	Mine Safety Disclosures	46
ITEM 5.	Other Information	46
ITEM 6.	Exhibits	47

SIGNATURES		48

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these 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.

Unless expressly indicated or the context requires otherwise, the terms “BioCorRx,” “Company,” “we,” “us,” and “our” in this document refer to BioCorRx Inc., a Nevada corporation, and, where appropriate, its wholly owned subsidiaries.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOCORRX INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2023			2022
	(unaudited)
ASSETS
Current assets:
Cash	$	156,409		$	68,615
Accounts receivable		12,215			35,378
Grant receivable		4,991			130,152
Prepaid expenses		72,172			82,765
Total current assets		245,787			316,910

Property and equipment, net		57,363			76,572

Right to use assets		177,454			270,406

Other assets:
Patents, net		9,322			10,206
Software development costs		-			47,980
Deposits, long term		44,520			44,520
Total other assets		53,842			102,706

Total assets	$	534,446		$	766,594

LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable and accrued expenses, including related party payables of $1,491,414 and $1,077,088, respectively	$	4,443,567		$	3,907,954
Deferred revenue, short term		7,092			33,256
Lease liability, short term		146,187			134,343
Notes payable, net of debt discount of $113,242 and $23,878, respectively		408,238			297,602
Notes payable, related parties, net of debt discount of $106,801 and $49,473, respectively		941,581			990,637
Total current liabilities		5,946,665			5,363,792

Long term liabilities:
Economic Injury Disaster loan, long term		72,817			73,850
Royalty obligation, net of discount of $5,021,128 and $5,376,790, related parties		3,700,972			3,345,310
Lease liability, long term		70,350			181,328
Deferred revenue, long term		4,045			4,045

Total liabilities		9,794,849			8,968,325

Commitments and contingencies

Deficit:
Preferred stock, no par value, 600,000 authorized
Series A convertible preferred stock, no par value; 80,000 designated; 80,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022		16,000			16,000
Series B convertible preferred stock, no par value; 160,000 designated; 160,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022		5,616			5,616
Common stock, $0.001 par value; 750,000,000 shares authorized, 8,591,797 and 7,718,636 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		8,592			7,719
Common stock subscribed		100,000			100,000
Additional paid in capital		67,872,232			66,130,296
Accumulated deficit		(77,134,478	)		(74,336,105	)
Total deficit attributable to BioCorRx Inc.		(9,132,038	)		(8,076,474	)
Non-controlling interest		(128,365	)		(125,257	)
Total deficit		(9,260,403	)		(8,201,731	)

Total liabilities and deficit	$	534,446		$	766,594

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOCORRX INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three months ended						Nine months ended
	September 30,						September 30,
	2023			2022			2023			2022

Revenues, net	$	10,145		$	94,441		$	70,222		$	130,961

Operating expenses:
Cost of implants and other costs		3,881			2,343			22,933			6,603
Research and development		286,962			342,553			762,768			923,354
Selling, general and administrative		674,456			771,810			2,181,532			2,692,574
Impairment of intellectual property		-			-			47,980			-
Depreciation and amortization		6,714			6,863			20,093			20,588
Total operating expenses		972,013			1,123,569			3,035,306			3,643,119

Loss from operations		(961,868	)		(1,029,128	)		(2,965,084	)		(3,512,158	)

Other income (expenses):
Interest expense - related parties		(169,582	)		(239,487	)		(501,787	)		(765,105	)
Interest expense, net		(36,883	)		(13,624	)		(90,412	)		(127,226	)
Loss on settlement of debt		-			(198,939	)		(34,338	)		(198,939	)
Grant income		300,985			390,857			790,140			1,250,231
Other miscellaneous income		-			139,315			-			139,381
Total other income		94,520			78,122			163,603			298,342

Loss before provision for income taxes		(867,348	)		(951,006	)		(2,801,481	)		(3,213,816	)

Income taxes		-			-			-			-

Net loss		(867,348	)		(951,006	)		(2,801,481	)		(3,213,816	)

Non-controlling interest		1,068			1,888			3,108			4,195

Net loss attributable to BioCorRx Inc.	$	(866,280	)	$	(949,118	)	$	(2,798,373	)	$	(3,209,621	)

Net loss per common share, basic and diluted	$	(0.10	)	$	(0.13	)	$	(0.34	)	$	(0.46	)

Weighted average number of common shares outstanding, basic and diluted		8,537,320			7,161,039			8,250,725			7,040,469

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOCORRX INC.

CONDENSED CONSOLIDATED STATEMENT OF DEFICIT

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

	Series A				Series B								Common
	Convertible				Convertible								Stock			Common		Additional					Non-
	Preferred stock				Preferred stock				Common stock				Subscription			stock		Paid in		Accumulated			Controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Receivable			Subscribed		Capital		Deficit			Interest			Total
Balance, December 31, 2022		80,000	$	16,000		160,000	$	5,616		7,718,636	$	7,719	$	-		$	100,000	$	66,130,296	$	(74,336,105	)	$	(125,257	)	$	(8,201,731	)
Common stock issued for services rendered		-		-		-		-		36,660		37		-			-		63,107		-			-			63,144
Common stock issued in connection with issuance of promissory notes		-		-		-		-		4,285		4		-			-		5,996		-			-			6,000
Common stock issued in connection with subscription agreement		-		-		-		-		342,592		343		(300,000	)		-		599,657		-			-			300,000
Share-based compensation		-		-		-		-		-		-		-			-		16,074		-			-			16,074
Net loss		-		-		-		-		-		-					-		-		(1,009,652	)		(934	)		(1,010,586	)
Balance, March 31, 2023 (unaudited)		80,000	$	16,000		160,000	$	5,616		8,102,173	$	8,103	$	(300,000	)	$	100,000	$	66,815,130	$	(75,345,757	)	$	(126,191	)	$	(8,827,099	)
Common stock issued for services rendered		-		-		-		-		35,301		35		-			-		62,256		-			-			62,291
Common stock issued in connection with conversion of promissory notes and accounts payable		-		-		-		-		207,606		208		-			-		361,684		-			-			361,892
Common stock issued in connection with subscription agreement		-		-		-		-		174,409		174		300,000			-		299,826		-			-			600,000
Share-based compensation		-		-		-		-		-		-		-			-		15,953		-			-			15,953
Net loss		-		-		-		-		-		-		-			-		-		(922,441	)		(1,106	)		(923,547	)
Balance, June 30, 2023 (unaudited)		80,000	$	16,000		160,000	$	5,616		8,519,489	$	8,520	$	-		$	100,000	$	67,554,849	$	(76,268,198	)	$	(127,297	)	$	(8,710,510	)
Common stock issued for services rendered		-		-		-		-		36,308		36		-			-		65,089		-			-			65,125
Common stock issued in connection with issuance of promissory notes		-		-		-		-		36,000		36		-			-		59,544		-			-			59,580
Warrants issued in connection with issuance of promissory notes		-		-		-		-		-		-		-			-		176,545		-			-			176,545
Share-based compensation		-		-		-		-		-		-		-			-		16,205		-			-			16,205
Net loss		-		-		-		-		-		-		-			-		-		(866,280	)		(1,068	)		(867,348	)
Balance, September 30, 2023 (unaudited)		80,000	$	16,000		160,000	$	5,616		8,591,797	$	8,592	$	100,000		$	-	$	67,872,232	$	(77,134,478	)	$	(128,365	)	$	(9,260,403	)

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOCORRX INC .

CONDENSED CONSOLIDATED STATEMENT OF DEFICIT

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

	Series A				Series B
	Convertible				Convertible								Common		Additional					Non-
	Preferred stock				Preferred stock				Common stock				stock		Paid in		Accumulated			Controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Subscribed		Capital		Deficit			Interest			Total
Balance, December 31, 2021		80,000	$	16,000		160,000	$	5,616		6,698,968	$	6,699	$	100,000	$	62,994,739	$	(69,966,692	)	$	(117,838	)	$	(6,961,476	)
Common stock issued for services rendered		-		-		-		-		25,423		25		-		100,005		-			-			100,030
Common stock issued in connection with subscription agreement		-		-		-		-		229,886		230		-		999,770		-			-			1,000,000
Share-based compensation		-		-		-		-		-		-		-		52,882		-			-			52,882
Net loss		-		-		-		-		-		-		-		-		(944,440	)		(551	)		(944,991	)
Balance, March 31, 2022 (unaudited)		80,000	$	16,000		160,000	$	5,616		6,954,277	$	6,954	$	100,000	$	64,147,396	$	(70,911,132	)	$	(118,389	)	$	(6,753,555	)
Common stock issued for services rendered		-		-		-		-		17,389		17		-		42,508		-			-			42,525
Common stock issued in connection with subscription agreement		-		-		-		-		110,619		111		-		249,889		-			-			250,000
Warrants issued in connection with loan default		-		-		-		-		-		-		-		86,821		-			-			86,821
Warrants issued in connection with loan default – related party		-		-		-		-		-		-		-		214,975		-			-			214,975
Share-based compensation		-		-		-		-		-		-		-		15,495		-			-			15,495
Net loss		-		-		-		-		-		-		-		-		(1,316,063	)		(1,756	)		(1,317,819	)
Balance, June 30, 2022 (unaudited)		80,000	$	16,000		160,000	$	5,616		7,082,285	$	7,082	$	100,000	$	64,757,084	$	(72,227,195	)	$	(120,145	)	$	(7,461,558	)
Common stock issued for services rendered		-		-		-		-		23,054		23		-		49,227		-			-			49,250
Common stock issued in connection with conversion of promissory notes and accounts payable		-		-		-		-		485,220		485		-		1,062,147		-			-			1,062,632
Common stock issued in connection with issuance of promissory notes		-		-		-		-		33,000		33		-		76,857		-			-			76,890
Share-based compensation		-		-		-		-		-		-		-		23,326		-			-			23,326
Net loss		-		-		-		-		-		-		-		-		(949,118	)		(1,888	)		(951,006	)
Balance, September 30, 2022 (unaudited)		80,000	$	16,000		160,000	$	5,616		7,623,559	$	7,623	$	100,000	$	65,968,641	$	(73,176,313	)	$	(122,033	)	$	(7,200,466	)

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOCORRX INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months ended
	September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,801,481	)	$	(3,213,816	)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization		20,093			20,588
Amortization of discount on royalty obligation		355,662			355,662
Amortization of debt discount		61,094			76,890
Impairment of intellectual property		47,980			-
Amortization of right-of-use asset		92,952			84,848
Loss on settlement of debt		34,338			198,939
Stock based compensation		238,792			283,508
Gain on forgiveness of debt		-			(133,424	)
Warrants issued in connection with loan default		-			301,796
Changes in operating assets and liabilities:
Accounts receivable		23,163			(65,192	)
Grant receivable		125,161			(42,996	)
Prepaid expenses		10,593			(18,831	)
Accounts payable and accrued expenses		597,505			674,304
Lease liability		(99,134	)		(88,309	)
Deferred revenue		(26,164	)		(26,164	)
Net cash used in operating activities		(1,319,446	)		(1,592,197	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock subscription and royalty agreement		900,000			1,250,000
Payment to Economic Injury Disaster loan		(1,033	)		(112	)
Payment of notes payable – related party		(35,000	)		-
Proceeds from notes payable		200,000			-
Proceeds from notes payable – related party		343,273			320,000
Net cash provided by financing activities		1,407,240			1,569,888

Net increase (decrease) in cash and restricted cash		87,794			(22,309	)
Cash and restricted cash, beginning of the period		68,615			85,838

Cash and restricted cash, end of period	$	156,409		$	63,529

Cash and restricted cash consist of the following, end of period:
Cash	$	156,409		$	39,100
Restricted cash		-			24,429
Total	$	156,409		$	63,529

Cash and restricted cash consist of the following, beginning of the period:
Cash	$	68,615		$	85,838
Restricted cash		-			-
Total	$	68,615		$	85,838

Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-
Taxes paid	$	-		$	-
Common stock issued in connection with conversion of promissory notes and accounts payable	$	361,892		$	1,062,632
Warrants issued in connection with issuance of promissory notes	$	176,545		$	-
Common stock issued in connection with issuance of promissory notes	$	65,580		$	76,890

See the accompanying notes to the unaudited condensed consolidated financial statements

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BIOCORRX INC .

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(UNAUDITED)

NOTE 1 - BUSINESS

BioCorRx Inc., through its subsidiaries, develops and provides innovative treatment programs for substance abuse and related disorders. The BioCorRx ® Recovery Program is a non-addictive, medication-assisted treatment (MAT) program for substance abuse that includes peer recovery support. The UnCraveRx™ Weight Loss Management Program is a medically assisted weight management program that is combined with a virtual platform application. The full program officially launched October 1, 2019. The Company’s majority owned subsidiary BioCorRx Pharmaceuticals Inc. is also engaged in the research and development of sustained release naltrexone products for the treatment of addiction and other possible disorders. Specifically, the Company is developing an injectable (BICX101) and implantable naltrexone with the goal of future regulatory approval with the Food and Drug Administration. On May 7, 2021, the U.S. Food and Drug Administration (FDA) cleared the Company’s Investigational New Drug Application (IND) for its implantable naltrexone (BICX104) candidate. On October 31, 2020, the Company entered into a written management services agreement with Joseph DeSanto MD, Inc. (“Medical Corporation”) under which the Company provides management and other administrative services to the Medical Corporation. These services include billing, collection of accounts receivable, accounting, management and human resource functions. Pursuant to the management services agreement, a management fee equal to 65% of the Medical Corporation’s gross collected monthly revenue. Through this arrangement, the Company is directing the activities that most significantly impact the financial results of the respective Medical Corporation; however, all clinical treatment decisions are made solely by licensed healthcare professionals. The Company has determined that it is the primary beneficiary, and, therefore, has consolidated the Medical Corporation as variable interest entity (“VIE”). The medical corporation: (i) had not yet generated any revenues and (ii) had no significant assets or liabilities since inception through September 30, 2023.

On July 28, 2016, BioCorRx Inc. formed BioCorRx Pharmaceuticals, Inc., a Nevada Corporation, for the purpose of developing certain business lines. In connection with the formation, the sub issued 24.2% ownership to officers of BioCorRx Inc. with the Company retaining 75.8%. In 2018, BioCorRx Pharmaceuticals, Inc. began operating activities (Note 17).

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements

The following (a) condensed consolidated balance sheet as of December 31, 2022, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of results that may be expected for the year ending December 31, 2023. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023.

Basis of presentation

The consolidated financial statements include the accounts of: (i) BioCorRx Inc. and its wholly owned subsidiary, Fresh Start Private, Inc., (ii) its majority owned subsidiary, BioCorRx Pharmaceuticals, Inc., and (iii) and the Medical Corporation (“VIE”) (collectively, “the Company”) under which the Company provides management and other administrative services pursuant to the management services agreement in which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

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Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standards Board “FASB” Accounting Standards Codification “ASC” 606. A five-step analysis a must be met as outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

The Company has elected the following practical expedients in applying ASC 606:

	·	Unsatisfied Performance Obligations - all performance obligations relate to contracts with a duration of less than one year. The Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

	·	Contract Costs - all incremental customer contract acquisition costs are expensed as they are incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less in duration.

	·	Significant Financing Component - the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

	·	Sales Tax Exclusion from the Transaction Price - the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer.

	·	Shipping and Handling Activities - the Company elected to account for shipping and handling activities as a fulfillment cost rather than as a separate performance obligation.

The Company’s net sales are disaggregated by product category. The sales/access fees consist of product sales, which is recognized upon the transfer of promised goods to customers. The project support income is generated from administrative support to Biotechnology research customers, which is recognized upon the transfer of promised services to customers. The distribution rights income consists of the income recognized from the amortization of distribution agreements entered into for its products. The membership/program fees are generated from the Company’s UnCraveRx™ Weight Loss Management Program, which is recognized upon the transfer of promised goods to customers.

The following table presents the Company’s net sales by product category for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,
	2023		2022
Sales/access fees	$	390	$	2,250
Project support income		-		79,263
Distribution rights income		8,817		11,129
Membership/program fees		938		1,799
Net sales	$	10,145	$	94,441

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	Nine Months Ended September 30,
	2023		2022
Sales/access fees	$	10,645	$	12,810
Project support income		25,817		79,263
Distribution rights income		26,164		28,476
Membership/program fees		7,596		10,412
Net sales	$	70,222	$	130,961

Deferred revenue

The Company licenses proprietary products and protocols to customers under licensing agreements that allow those customers to access the products and protocols in services they provide to their customers during the term of the license agreement. The timing and amount of revenue recognized from license agreements depends upon a variety of factors, including the specific terms of each agreement. Such agreements are reviewed for multiple performance obligations. Performance obligations can include amounts related to initial non-refundable license fees for the use of the Company’s products and protocols and additional royalties on covered services.

The Company granted license and sub-license agreements for various regions or States in the United States allowing the licensee to market, distributes and sell solely in the defined license territory, as defined, the products provided by the Company. The agreements are granted for a defined period or perpetual and are effective as long as annual milestones are achieved.

Terms for payments for licensee agreements vary from full cash payment to defined terms. In cases where license or sub-license fees are uncollected and deferred; the Company nets those uncollected fees with the deferred revenue for balance sheet presentation.

The Company amortizes license fees over the shorter of the economic life of the related contract life or contract terms for each licensee.

On October 1, 2019, the Company launched the UnCraveRx™ Weight Loss Management Program. Customers are charged a membership fee and are requested to pay for three training programs at inception. The payments are recorded as deferred revenue until earned.

The following table presents the changes in deferred revenue, reflected as current and long term liabilities on the Company’s unaudited condensed consolidated balance sheet:

Balance as of December 31, 2022
Short term	$	33,256
Long term		4,045
Total as of December 31, 2022	$	37,301
Net sales recognized		(26,164	)
Balance as of September 30, 2023		11,137
Less short term		7,092
Long term	$	4,045

Deferred Revenue-Grant

The Company recognizes grant revenues in the period during which the related research and development costs are incurred. The timing and amount of revenue recognized from reimbursement for research and development costs depends upon the specific terms for the contracted work. Such costs are reviewed for multiple performance obligations which can include amounts related to contracted work performed or as milestones have been achieved.

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Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions used in the fair value of other equity and debt instruments.

Accounts Receivable

Accounts receivable are recorded at original invoice amount less an allowance for uncollectible accounts that management believes will be adequate to absorb estimated losses on existing balances. Management estimates the allowance based on collectability of accounts receivable and prior bad debt experience. Accounts receivable balances are written off against the allowance upon management’s determination that such accounts are uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Management believes that credit risks on accounts receivable will not be material to the financial position of the Company or results of operations. The allowance for doubtful accounts was $0 as of September 30, 2023 and December 31, 2022.

Fair Value of Financial Instruments

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of cash, accounts receivable, grant receivable, accounts payable and accrued expenses, and notes payable approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of lease liability and royalty obligation also approximates fair value since these instruments bear market rates of interest. None of these instruments are held for trading purposes.

See Note 13 and 14 for stock based compensation and other equity instruments.

Segment Information

Accounting Standards Codification subtopic Segment Reporting 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein materially represents all of the financial information related to the Company’s principal operating segment.

Long-Lived Assets

The Company follows a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of the assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. No impairments were recognized for the three and nine months ended September 30, 2023 and 2022.

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Intangible Assets

Intangible assets with finite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized, but are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. $0 impairment was recognized for the three and nine months ended September 30, 2023 and 2022.

Software Development Costs

The Company has adopted the provision of ASC 985-20-25, Costs of Software to Be Sold, Leased or Marketed, whereby costs incurred to establish the technological feasibility of a computer software product to be sold, leased or marketed are research and development costs. Research costs are expensed as incurred; costs of producing product masters incurred subsequent to establishing technological feasibility are capitalized; and costs incurred when the product is available for general release to the customers are expensed as incurred. Upgrades and enhancements are capitalized if they result in added functionality which enables the software to perform tasks it was previously incapable of performing.

On July 1, 2021, the Company began development of a proprietary cloud based app that will be marketed and commercialized, for which $47,980 of costs have been capitalized. During the nine months ended September 30, 2023, the Company wrote off the $47,980 as impairment loss.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset’s estimated useful life of 5 to 15 years. Expenditures for maintenance and repairs are expensed as incurred. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in earnings.

Leases

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets (“ROU assets”) and short-term and long-term lease liabilities are included on the face of the consolidated balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date over the respective lease term in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. For lease agreements with terms less than 12 months, the Company has elected the short-term lease measurement and recognition exemption, and it recognizes such lease payments on a straight-line basis over the lease term.

Net (loss) Per Share

The Company accounts for net loss per share in accordance with Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”), which requires presentation of basic and diluted earnings per share (“EPS”) on the face of the statement of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS.

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. It excludes the dilutive effects of any potentially issuable common shares. The effect of common stock equivalents is anti-dilutive with respect to losses and therefore basic and dilutive is the same.

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Diluted net loss per share is calculated by including any potentially dilutive share issuances in the denominator. The following securities are excluded from the calculation of weighted average diluted shares at September 30, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive.

	Nine Months Ended
	September 30,
	2023		2022
Shares underlying options outstanding		891,443		858,101
Shares underlying warrants outstanding		1,150,856		333,855
Convertible preferred stock outstanding		240,000		240,000
		2,282,299		1,431,956

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $25,846 and $106,073 as advertising costs for the three months ended September 30, 2023 and 2022, respectively. The Company charged to operations $88,633 and $295,119 as advertising costs for the nine months ended September 30, 2023 and 2022, respectively.

Grant Income

On January 17, 2019, the Company received a Notice of Award from the United States Department of Health and Human Services for a grant from the National Institutes of Health (“NIH”) in support of BICX102 from the National Institute on Drug Abuse. The grant provides for (i) $2,842,430 in funding during the first year and (ii) $2,831,838 during the second year subject to the terms and conditions specified in the grant, including satisfactory progress of project and the availability of funds. On August 27, 2021, the Company received a Notice of Award from the United States Department of Health and Human Services for a grant from National Institute on Drug Abuse. The grant provides for $3,453,367 in funding during the third year subject to the terms and conditions specified in the grant, including satisfactory progress of project and the availability of funds. On March 31, 2022, the Company received a Notice of Award from the United States Department of Health and Human Services for a grant from National Institute on Drug Abuse. The grant provides for $99,431 in additional funding during the third year subject to the terms and conditions specified in the grant, including satisfactory progress of project and the availability of funds. Grant payments received prior to the Company’s performance of work required by the terms of the research grant are recorded as deferred income and recognized as grant income once work is performed and qualifying costs are incurred. Grant receivables were $4,991 and $122,652 as of September 30, 2023 and December 31, 2022, respectively. Deferred revenues related to the grant were $0 as of September 30, 2023 and December 31, 2022. $300,985 and $390,857 were recorded as grant income for the three months ended September 30, 2023 and 2022, respectively. $790,140 and $1,250,231 were recorded as grant income for the nine months ended September 30, 2023 and 2022, respectively. The F&A indirect costs were $0 and $253,208 as of September 30, 2023 and December 31, 2022, respectively. The grant provides for $516,218 in funding for F&A indirect costs. The remaining facilities and administrative indirect cost over allocation is $9,671 as of September 30, 2023. The Company will credit the F&A indirect cost rate.

Research and development costs

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $286,962 and $342,553 for the three months ended September 30, 2023 and 2022, respectively. The Company incurred research and development expenses of $762,768 and $923,354 for the nine months ended September 30, 2023 and 2022, respectively.

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Stock Based Compensation

Share-based compensation issued to employees is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The Company measures the fair value of the share-based compensation issued to non-employees at the grant date using the stock price observed in the trading market (for stock transactions) or the fair value of the award (for non-stock transactions), which were considered to be more reliably determinable measures of fair value than the value of the services being rendered.

Income Taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is more likely than not that these deferred income tax assets will not be realized.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of September 30, 2023 and December 31, 2022, the Company has not recorded any unrecognized tax benefits.

Variable Interest Entity

The Company evaluates all interests in the VIE for consolidation. When the Company’s interests are determined to be variable interests, an assessment is made on whether the Company is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. Variable interests are considered in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and the Company consolidates the VIE.

Non-Controlling Interest

A non-controlling interest should be allocated its share of net income or loss, and its respective share of each component of other comprehensive income, in accordance with ASC 810-10-45-20. Due to a management fee equal to 65% of the Medical Corporation’s gross collected monthly revenue, 65% of the Medical Corporation’s earnings was allocated to the Company, and 35% to the non-controlling interest. Due to the Company’s retaining 75.8% ownership of BioCorRx Pharmaceuticals, Inc., 75.8% of BioCorRx Pharmaceuticals, Inc.’s earnings was allocated to the Company, and 24.2% to the non-controlling interest. See accounting policy “Variable Interest Entity” for further information.

Royalty Obligations, net

The Company accounted for royalty obligations as debt in accordance with ASC 470-10-25 and derived a debt discount, which is amortized using the straight line method over the expected life of the arrangement, which is 15 years. The Company has no obligation to repay the then outstanding balance if during the expected life of 15 years the treatment is discontinued. In order to record the discount of the liability, the Company fair valued the royalty and the difference between fair value of the royalty obligation and the gross projected future payments was $7,171,200 and was recorded as non-cash interest expense over the life of the liability and offset to additional paid in capital at inception.

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Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 on January 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach on expected losses to estimate credit losses on certain financial instruments, including trade receivables and available-for-sale debt securities. The new guidance was originally due to become effective for the Company beginning in the first quarter of 2020, however the FASB in November 2019 issued ASU 2019-10 which moved the effective date for smaller reporting companies to the first quarter of 2023. The Company adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have an impact on the Company’s financial statements.

There are other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

NOTE 3 - GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

As of September 30, 2023, the Company had cash of $156,409 and working capital deficit of $5,700,878. During the nine months ended September 30, 2023, the Company used net cash in operating activities of $1,319,446. The Company has not yet generated any significant revenues and has incurred net losses since inception. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve-month period since the date of the financial statements were issued.

The Company’s primary source of operating funds since inception has been from proceeds from private placements of convertible and other debt and the sale of common stock. The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced. The spread of COVID-19 around the world in the first quarter of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company is unable to determine if it will have a material impact to its operations.

During the nine months ended September 30, 2023, the Company entered into three subscription agreements pursuant to which the Company issued an aggregate of 517,001 shares of common stock for gross proceeds of $900,000.

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During the nine months ended September 30, 2023, the Company issued one note payable to a third party for a principal of $50,000 with a stated interest rate of 12.5% per annum. Under the terms of the note the Company shall pay quarterly interest payments of $1,563. If the Company fails to make any payment due under the terms of the promissory note, the stated interest rate of the note shall be increased to 20%. As additional consideration for the loan the Company issued 4,285 shares of common stock valued at $6,000, which was recognized as debt discount.

During the nine months ended September 30, 2023, the Company received $50,000 advances from Louis C Lucido, a member of the Company’s Board of Directors. The balance outstanding as of September 30, 2023 was $50,000 which amount is payable on demand. There is no interest rate attached to these advances.

During the nine months ended September 30, 2023, the Company received $143,273 advances from Lourdes Felix, the Company’s Chief Executive Officer and Chief Financial Officer (“CEO” and “CFO”, respectively). The balance outstanding as of September 30, 2023 was $108,273.

On April 3, 2023, the Company entered into an Exchange Agreement (the “Louis 2023 Exchange Agreement”) with Mr. Lucido, pursuant to which Mr. Lucido agreed to exchange of the promissory note then outstanding of $300,000 and the accrued interest on the promissory note of $13,892 into the Company’s 183,606 shares of common stock at $1.71 per share, resulting in the recognition of $34,338 of loss on settlement of debt.

On June 1, 2023, the Company entered into an Exchange Agreement (the “Consultant Exchange Agreement”) with one consultant, pursuant to which the consultant agreed to exchange of the unpaid service fees of $48,000 into the Company’s 24,000 shares of common stock at $2.00 per share.

On September 6, 2023, the Company issued an unsecured promissory note payable to one third party for $150,000 with principal and interest due September 6, 2024, with a stated interest rate of 8% per annum. The third party has the option to select the repayment in cash or in stock of the Company at $2.00 per share. If the Company fails to make any payment due under the terms of the promissory note, the interest rate shall increase to 15% per annum. In connection with the issuance of the promissory note, the Company issued the warrant that entitles the third party to purchase 150,000 common shares. The warrant shall have a term of three years with an exercise price of $2.00 and shall be equitably adjusted to offset the effect of any stock splits and similar events. The Company allocated the proceeds based on the relative fair value of the debt and the warrants, resulting in the recognition of $88,820 of debt discount on such promissory note. As additional consideration for the debt, the Company issued 18,000 shares of common stock valued at $30,240, which was also recognized as debt discount.

Accordingly, the accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

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NOTE 4 - PREPAID EXPENSES

The Company’s prepaid expenses consisted of the following at September 30, 2023 and December 31, 2022:

	September 30,		December 31,
	2023		2022
Prepaid insurance	$	28,480	$	4,284
Prepaid subscription services		31,869		49,901
Prepaid research and development		-		7,480
Other prepaid expenses		11,823		21,100
	$	72,172	$	82,765

NOTE 5 - PROPERTY AND EQUIPMENT

The Company’s property and equipment consisted of the following at September 30, 2023 and December 31, 2022:

	September 30,			December 31,
	2023			2022
Office equipment	$	45,519		$	45,519
Computer equipment		5,544			5,544
Manufacturing equipment		101,200			101,200
Leasehold improvement		42,288			42,288
		194,551			194,551
Less accumulated depreciation		(137,188	)		(117,979	)
	$	57,363		$	76,572

Depreciation expense charged to operations amounted to $6,419 and $6,568, respectively, for the three months ended September 30, 2023 and 2022. Depreciation expense charged to operations amounted to $19,209 and $19,704, respectively, for the nine months ended September 30, 2023 and 2022.

NOTE 6 - LEASE

Operating leases

Prior to 2020, the Company entered into several lease amendments with landlord whereby the Company agreed to lease office space in Anaheim, California. The current term expires on January 31, 2025. The current lease has escalating payments from $9,905 per month to $11,018 per month. The Company recorded an aggregate value of right to use assets and lease liability of $500,333.

On June 16, 2020, the Company entered into a lease agreement, whereby the Company agreed to lease office space in Costa Mesa, California for a term of 5 years. Due to COVID-19, the Company was not able to move in or take possession until 30 days after shelter in place has been lifted in Orange County, CA. The Company will owe monthly rental payments ranging from $2,286 to $2,584 over the term of the lease. On September 20, 2020, the Company took possession of the office space and recorded right to use assets and lease liability of $120,346.

Lease liability is summarized below:

	September 30,		December 31,
	2023		2022
Total lease liability	$	216,537	$	315,671
Less: short term portion		146,187		134,343
Long term portion	$	70,350	$	181,328

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Maturity analysis under these lease agreements are as follows:

	Total
2023	$	39,308
2024		159,420
2025		31,690
Subtotal		230,418
Less: Present value discount		(13,881	)
Lease liability	$	216,537

Lease expense for the three and nine months ended September 30, 2023 and 2022 was comprised of the following:

	Three Months Ended
	September 30,
	2023		2022
Operating lease expense	$	34,522	$	36,192
	$	34,522	$	36,192

	Nine Months Ended
	September 30,
	2023		2022
Operating lease expense	$	107,326	$	108,576
	$	107,326	$	108,576

During the nine months ended September 30, 2023 and 2022, the Company paid $113,508 and $112,036 lease expense in cash, respectively.

Weighted-average remaining lease term and discount rate for operating leases are as follows:

	September 30,		December 31,
	2023		2022
Weighted-average remaining lease term		1.4		2.1

NOTE 7 - INTELLECTUAL PROPERTY/ LICENSING RIGHTS

On October 12, 2018 the Company’s majority owned subsidiary, BioCorRx Pharmaceuticals Inc. acquired six patent families for sustained delivery platforms for the local delivery of biologic and small molecule drugs for an aggregate purchase price of $15,200. Amortization is computed on straight-line method based on estimated useful lives of 13 years. During the three months ended September 30, 2023 and 2022, the Company recorded amortization expense of $295 and $294, respectively. During the nine months ended September 30, 2023 and 2022, the Company recorded amortization expense of $884 and $884, respectively. As of September 30, 2023, the accumulated amortization of these patents was $5,878.

The future amortization of the patents are as follows:

Year	Amount
2023		285
2024		1,169
2025		1,169
2026		1,169
2027 and after		5,530
	$	9,322

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NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of September 30, 2023 and December 31, 2022:

	September 30,		December 31,
	2023		2022
Accounts payable	$	2,389,884	$	2,013,250
Interest payable on notes payable		1,246,085		1,206,753
Interest payable on notes payable, related parties		439,402		332,567
Deferred insurance		13,650		-
Accrual of loss on contingency		322,000		322,000
Interest payable on EIDL loan		5,711		5,860
Accrued expenses		26,835		27,524
	$	4,443,567	$	3,907,954

NOTE 9 - NOTES PAYABLE

As of September 30, 2023 and December 31, 2022, the Company had an advance from a third party. The advance bears no interest and is due on demand. The balance outstanding as of September 30, 2023 and December 31, 2022 is $21,480.

On September 9, 2021, the Company issued an unsecured promissory note payable to one third party for $200,000 with principal and interest due June 8, 2022, with a stated interest rate of 25% per annum. The balance outstanding as of September 30, 2023 and December 31, 2022 is $200,000. The interest expense during the three months ended September 30, 2023 and 2022 were $12,602. The interest expense during the nine months ended September 30, 2023 and 2022 were $37,397. If the Company fails to make any payment due under the terms of the promissory note, the Company shall issue a warrant to the third party to which the number of common shares that the third party has the right to purchase equals 48,309 common shares. The warrant shall have a term of 3 years with an exercise price of $4.14 and shall be equitably adjusted to offset the effect of any stock splits and similar events. On June 8, 2022, the Company issued the warrant that entitles the third party to purchase 48,309 common shares due to the loan default. The fair value of the warrant on June 8, 2022 was $86,821, which the Company recognized as interest expense.

On October 6, 2022, the Company issued an unsecured promissory note payable to a third party for $100,000 with principal and interest due October 6, 2023, with a stated interest rate of 12.5% per annum. Under the terms of the note the Company shall pay quarterly interest payments of $3,125. The balance outstanding as of September 30, 2023 and December 31, 2022 was $100,000. The interest expense during the three months ended September 30, 2023 was $3,150. The interest expense during the nine months ended September 30, 2023 was $9,349. The Company made an interest payment of $9,375 during the nine months ended September 30, 2023. If the Company fails to make any payment due under the terms of the promissory note, the stated interest rate of the note shall be increased to 25%. As additional consideration for the loan the Company issued 16,500 shares of common stock and valued at $31,350, which was recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $7,902 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $23,448 of debt discount as interest expense.

On January 25, 2023, the Company issued an unsecured promissory note payable to a third party for $50,000 with principal and interest due January 25, 2024, with a stated interest rate of 12.5% per annum. Under the terms of the note the Company shall pay quarterly interest payments of $1,563. The balance outstanding as of September 30, 2023 was $50,000. The interest expense during the three months ended September 30, 2023 was $1,576. The interest expense during the nine months ended September 30, 2023 was $4,264. The Company made an interest payment of $3,125 during the nine months ended September 30, 2023. If the Company fails to make any payment due under the terms of the promissory note, the stated interest rate of the note shall be increased to 20%. As additional consideration for the loan the Company issued 4,285 shares of common stock and valued at $6,000, which was recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $1,513 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $4,093 of debt discount as interest expense.

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On September 6, 2023, the Company issued an unsecured promissory note payable to one third party for $150,000 with principal and interest due September 6, 2024, with a stated interest rate of 8% per annum. The third party has the option to select the repayment in cash or in stock of the Company at $2.00 per share. The balance outstanding as of September 30, 2023 was $150,000. The interest expense during the three months ended September 30, 2023 was $822. The interest expense during the nine months ended September 30, 2023 was $822. If the Company fails to make any payment due under the terms of the promissory note, the interest rate shall increase to 15% per annum. In connection with the issuance of the promissory note, the Company issued the warrant that entitles the third party to purchase 150,000 common shares. The warrant shall have a term of three years with an exercise price of $2.00 and shall be equitably adjusted to offset the effect of any stock splits and similar events. The Company allocated the proceeds based on the relative fair value of the debt and the warrants, resulting in the recognition of $88,820 of debt discount on such promissory note. As additional consideration for the debt, the Company issued 18,000 shares of common stock valued at $30,240, which was also recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $8,155 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $8,155 of debt discount as interest expense.

The interest expense during the three months ended September 30, 2023 and 2022 were $36,883 and $13,624, respectively. The interest expense during the nine months ended September 30, 2023 and 2022 were $90,412 and $127,226, respectively. As of September 30, 2023 and December 31, 2022, the accumulated interest on notes payable was $1,246,085 and $1,206,753, respectively, and was included in accounts payable and accrued expenses on the balance sheet.

The outstanding notes payables as of September 30, 2023 and December 31, 2022 were summarized as below:

	September 30,		December 31,
	2023		2022
Advances from a third party	$	21,480	$	21,480
Promissory note payable dated September 9, 2021		200,000		200,000
Promissory note payable dated October 6, 2022, net of debt discount of $430 and $23,878, respectively		99,570		76,122
Promissory note payable dated January 25, 2023, net of debt discount of $1,907 and $0, respectively		48,093		-
Promissory note payable dated September 6, 2023, net of debt discount of $110,905 and $0, respectively		39,095		-
	$	408,238	$	297,602

NOTE 10 - NOTES PAYABLE-RELATED PARTIES

As of September 30, 2023 and December 31, 2022, the Company had advances from Kent Emry (Chairman of the Company). The balance outstanding as of September 30, 2023 and December 31, 2022 was $1,500.

On January 22, 2013, the Company issued an unsecured promissory note payable to Kent Emry (Chairman of the Board) for $200,000 due January 1, 2018, with a stated interest rate of 12% per annum beginning three months from issuance, payable monthly. Principal payments were due starting February 1, 2015 at $6,650 per month. The lender has an option to convert the note to licensing rights for the State of Oregon. The Company currently is in default of the principal and interest. The balance outstanding as of September 30, 2023 and December 31, 2022 was $163,610.

On September 9, 2021, the Company issued an unsecured promissory note payable to Kent Emry for $500,000 with principal and interest due June 8, 2022, with a stated interest rate of 25% per annum. The balance outstanding as of September 30, 2023 and December 31, 2022 is $500,000. The interest expense during the three months ended September 30, 2023 and 2022 were $31,507. The interest expense during the nine months ended September 30, 2023 and 2022 were $93,493. If the Company fails to make any payment due under the terms of the promissory note, the Company shall issue a warrant to Kent Emry to which the number of common shares that Kent Emry has the right to purchase equals 119,617 common shares. The warrant shall have a term of three years with an exercise price of $4.14 and shall be equitably adjusted to offset the effect of any stock splits and similar events. On June 8, 2022, the Company issued the warrant that entitles Kent Emry to purchase 119,617 common shares due to the loan default. The fair value of the warrant on June 8, 2022 was $214,975, which the Company recognized as interest expense - related party.

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On September 20, 2022, the Company received $20,000 advances from Louis C Lucido, a member of the Company’s Board of Directors. The balance outstanding as of September 30, 2023 and December 31, 2022 was $20,000.

On November 1, 2022, the Company issued an unsecured promissory note payable to Louis C Lucido for $300,000 with principal and interest due November 1, 2023, with a stated interest rate of 5% per annum. Under the terms of the note the Company shall pay quarterly interest payments of $3,750. On April 3, 2023, the Company entered into the Louis 2023 Exchange Agreement, pursuant to which Mr. Lucido agreed to exchange of the promissory note then outstanding of $300,000 and the accrued interest on the promissory note of $13,892 into the Company’s 183,606 shares of common stock at $1.71 per share, resulting in the recognition of $34,338 of loss on settlement of debt. The balance outstanding as of September 30, 2023 and December 31, 2022 was $0 and $300,000. As the Company failed to make a payment due under the terms of the promissory note, the stated interest rate of the note was increased to 20% on February 1, 2023. The interest expense during the three months ended September 30, 2023 was $0. The interest expense during the nine months ended September 30, 2023 was $11,386. As additional consideration for the loan the Company issued 33,000 shares of common stock and valued at $59,400, which was recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $0 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $15,135 of debt discount as interest expense. The remaining debt discount was written off as a loss on settlement of debt during the nine months ended September 30, 2023.

On December 8, 2022, the Company received $55,000 advances from Mr. Lucido. The balance outstanding as of September 30, 2023 and December 31, 2022 was $55,000.

On March 16, 2023, the Company received $50,000 advances from Mr. Lucido. The balance outstanding as of September 30, 2023 and December 31, 2022 was $50,000.

During the nine months ended September 30, 2023, the Company received $143,273 advances from Lourdes Felix. The balance outstanding as of September 30, 2023 was $108,273.

On August 29, 2023, the Company issued an unsecured promissory note payable to Louis C Lucido for $150,000 with principal and interest due August 29, 2024, with a stated interest rate of 8% per annum. The promissory note, together with all accrued interest, shall be converted into common shares at a conversion price of $2.00 per share on or before August 29, 2024. The balance outstanding as of September 30, 2023 was $150,000. The interest expense during the three months ended September 30, 2023 was $1,052. The interest expense during the nine months ended September 30, 2023 was $1,052. In connection with the issuance of the promissory note, the Company issued the warrant that entitles Mr. Lucido to purchase 150,000 common shares. The warrant shall have a term of three years with an exercise price of $2.00 and shall be equitably adjusted to offset the effect of any stock splits and similar events. The Company allocated the proceeds based on the relative fair value of the debt and the warrants, resulting in the recognition of $87,724 of debt discount on such promissory note. As additional consideration for the debt, the Company issued 18,000 shares of common stock valued at $29,340, which was also recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $10,262 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $10,262 of debt discount as interest expense.

The interest expense – related parties during the three months ended September 30, 2023 and 2022 were $169,582 and $239,487, respectively, which includes the amortization of royalty obligations as interest expense of $121,774 and $121,774, respectively (see Note 12). The interest expense – related parties during the nine months ended September 30, 2023 and 2022 were $501,787 and $765,105, respectively, which includes the amortization of royalty obligations as interest expense of $355,662 and $355,662, respectively (see Note 12). As of September 30, 2023 and December 31, 2022, the accumulated interest on related parties notes payable was $439,402 and $332,567, respectively, and was included in accounts payable and accrued expenses on the balance sheet.

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The outstanding notes payables to related parties as of September 30, 2023 and December 31, 2022 were summarized as below:

	September 30,		December 31,
	2023		2022
Advances from Kent Emry	$	1,500	$	1,500
Advances from Louis C Lucido		125,000		75,000
Advances from Lourdes Felix		108,273		-
Promissory notes payables to Kent Emry		663,610		663,610
Promissory note payable to Louis C Lucido, net of debt discount of $106,802 and $49,473, respectively		43,198		250,527
	$	941,581	$	990,637

NOTE 11 - ECONOMIC INJURY DISASTER LOAN

On July 17, 2020, the Company executed the standard loan documents required for securing a loan from SBA under its Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. Pursuant to the loan agreement, the principal amount of the Economic Injury Disaster Loan (“EIDL”) is $74,300, with proceeds to be used for working capital purposes. The EIDL loan is secured by the tangible and intangible personal property of the Company.

In accordance with the terms of the note: (i) interest accrues at the rate of 3.75% per annum, (ii) installment payments, including principal and interest, of $363 monthly, will begin thirty (30) months from the date of the promissory note, (iii) the balance of principal and interest will be payable over thirty (30) years from the date of the promissory note and (iv) SBA is granted a continuing security interest in and to any and all tangible and intangible personal property of the Company to secure payment and performance of all debts, liabilities and obligations of Borrower to SBA.

On April 28, 2020, the Company received $5,000 from the SBA as an advance on the EIDL, and the advance was forgiven during the prior period.

The interest expense during the three months ended September 30, 2023 and 2022 was $702. The interest expense during the nine months ended September 30, 2023 and 2022 was $2,084. As of September 30, 2023 and December 31, 2022, the accumulated interest on EIDL Loan was $5,711 and $5,860, respectively.

During the nine months ended September 30, 2023 and 2022, the Company made interest payment of $2,233 and $251, respectively.

The future principal payments are as follows:

Year	Amount
2023	$	-
2024		-
2025		-
2026		16
2027		1,598
2028 and after		71,203
	$	72,817

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NOTE 12 - ROYALTY OBLIGATIONS, NET

In March 2019, the Company entered into two Subscription and Royalty Agreements (the “Subscription and Royalty Agreements”). One was with Louis and Carolyn Lucido CRT LLC, managed by Mr. Lucido, a member of the Company’s Board of Directors and the other one was with the J and R Galligan Revocable Trust, managed by Mr. Galligan, a holder of between 15% and 20% of the Company’s shares of common stock and a member of the Company’s Board of Directors. Pursuant to the Subscription and Royalty Agreements: (i) each party would purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), in the aggregate amount of $3,000,000 at a purchase price of $15.00 per share (the “Purchase Price”), for a total of 200,000 shares of Common Stock; and (ii) the Company shall pay each (a) a total of $37.50 from the gross revenue derived from each of its weight loss treatments sold in the United States starting on the first (1st) day that the first unit of the treatment is sold (the “Initial Sales Date”) and ending on the third (3rd) anniversary of the Initial Sales Date; and (b) a total of $25.00 from the gross revenue derived from each of its weight loss treatments sold in the United States starting on the day following the third (3rd) anniversary of the Initial Sales Date and ending on the fifteenth (15th) anniversary of the Initial Sales Date (the “Royalty”).

The Company accounted for this transaction as debt in accordance with ASC 470-10-25 and derived a debt discount, which is amortized using the straight line method over the expected life of the arrangement, which is 15 years. The Company has no obligation to repay the then outstanding balance if during the expected life of 15 years the treatment is discontinued. In order to record the discount of the liability, the Company fair valued the royalty and the difference between fair value of the royalty obligation and the gross projected future payments was $7,171,200 and was recorded as non-cash interest expense over the life of the liability and offset to additional paid in capital at inception.

During the three months ended September 30, 2023 and 2022, the Company amortized $121,774 as interest expense. During the nine months ended September 30, 2023 and 2022, the Company amortized $355,662 as interest expense.

NOTE 13 - STOCKHOLDERS’ EQUITY/(DEFICIT)

Convertible Preferred stock

The Company is authorized to issue 600,000 shares of preferred stock with no par value. As of September 30, 2023 and December 31, 2022, the Company had 80,000 shares of Series A preferred stock and 160,000 shares of Series B preferred stock issued and outstanding.

As of September 30, 2023 and December 31, 2022, each share of Series A preferred stock is entitled to one thousand (1,000) votes and is convertible into one share of common stock. 30,000 shares of Series A Preferred Stock are owned by management. The Series A Preferred Stock is not entitled to dividends and there are no liquidation rights associated with Series A. Each share of Series A Preferred Stock may be converted, at the option of the holder each share of Series A Preferred Stock may be converted equal to one (1) fully paid and nonassessable share of Common Stock, par value $0.001.

As of September 30, 2023 and December 31, 2022, each share of Series B stock is entitled to two thousand (2,000) votes and is convertible into one share of common stock. 120,000 shares of Series B Preferred Stock are owned by management. The Series B Preferred Stock is not entitled to dividends and there are no liquidation rights associated with Series B. Each share of Series B Preferred Stock may be converted, at the option of the holder each share of Series B Preferred Stock may be converted equal to one (1) fully paid and nonassessable share of Common Stock, par value $0.001.

Common stock

Nine months ended September 30, 2022

During the nine months ended September 30, 2022, the Company issued an aggregate of 65,866 shares of its common stock for services rendered valued at $191,805 based on the underlying market value of the common stock at the date of issuance, among which 29,750 shares valued at $