ICORECONNECT INC. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the notes to those financial statements included elsewhere in this annual report. This discussion contains forward-looking statements, which are based on our assumptions about the future of our business. Our actual results will likely differ materially from those contained in the forward-looking statements. Please read "Cautionary Note Regarding Forward-Looking Statements" included at the beginning of this annual report for additional information.
About the Company
During 2021 we developed our newest products iCoreVerify and iCoreCloud and enhanced our iCoreRx product.
iCoreVerify is a HIPAA compliant SaaS solution that allows practices to verify patient insurance benefits automatically and on-demand using our real time technology. It provides the practice with the ability to check available patient benefits directly from the payer's in real-time. The system returns results typically in less than one second for most responses. This substantially reduces the phone calls and labor hours for the practice. This tool integrates with most popular practice management systems.
iCoreCloud offers customers the ability to backup their on-premise servers and computers to the cloud. iCoreCloud is a HIPAA compliant and automated backup solution. The data backed up is encrypted both in transit and while at rest. In case of full data loss, the mirrored data in the cloud can be seamlessly restored back to the practice on a new computer or a server. The data is stored encrypted in HIPAA compliant data centers with multiple layers of redundancy. The data centers are physically secure with restricted personnel and biometric access. The locations are also guarded by security 24 hours a day, 365 days a year.
iCoreRx is a HIPAA compliant electronic prescription software that integrates with popular Practice Management and EHR systems. The software can also be a stand-alone product. The software is cloud based allowing providers flexibility and freedom to access the software anytime or anywhere they have an internet connection. There is a built-in drug and medication directory that provides clear, concise, point-of-care drug information including dosing, warning, and precautions, as well as clinical content. iCoreRx provides a doctor's "favorites" list (templates) and warns the doctor when there is the potential for drug interactions, and drug allergy interactions. Within the software we provide a medication and drug history giving the doctor a more complete picture of a patient's medication history for better informed, efficient, and safer care decisions. iCorePDMP - is an add-on to our iCoreRx software that seamlessly integrates with state databases to automate prescription drug monitoring. Providers in many states are required to check the patient's Prescription Drug Monitoring Program (PDMP/PMP) medication history before prescribing controlled substances. This service provides a one-click real-time access to the state databases without the need to manually enter data. The state PDMP sites may provide Narx Scores and an interactive visualization of usage patterns to help the prescriber identify potential risk factors.
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SaaS Offerings
The Company currently markets secure Health Insurance Portability and Accountability Act (HIPAA) compliant cloud-based software as a service (SaaS) offering under the names of iCoreRx, iCorePDMP, iCoreEPCS, iCoreVerify, iCoreHuddle, iCoreHuddle+, iCoreCodeGenius, iCoreExchange, iCoreCloud, iCorePay, iCoreSecure, and iCoreIT. The Company's software is sold under annual recurring revenue subscriptions.
Managed IT Services (MSP and MSaaS)
The trend in IT Services companies for over a decade has been to move away from a "Break/Fix '' model to a "Managed Service Provider (MSP)" model with recurring revenue. TrinIT was an early adopter operating in the MSP and MSaaS market.
The MSP/MSaaS approach, by using preventative measures, keeps computers and networks up and running while data is accessible and safeguarded. Installation of critical patches and updates to virus protection are automated. Systems are monitored and backed up in real-time. They are fixed or upgraded before they cause a service disruption. A Unified Threat Management solution is deployed to protect against virus, malware, SPAM, phishing and ransomware attacks. Remote technical support is a click away. All support is delivered at a predictable monthly cost. By leveraging managed services with our expertise in cloud computing, our customers can easily scale their business without extensive capital investment or disruption in services.
The Company is positioned to address the growing need for managed services: Our current and future customers need managed IT services, along with cloud computing, storage and HIPAA compliant backup and encryption; Managed service providers that can support the migration to cloud computing are in high demand; The decision makers for our current technology and those for managed services are, in many cases, the same person or group of people; Our management team has decades of experience operating successful IT companies; and the MSP revenue model matches our SaaS, MSaaS MRR (monthly recurring revenue) models.
Financing
We are currently funding our business capital requirements through revenues from product sales and services and sales of our Common Stock and debt arrangements. While we intend to seek additional funding, if revenue increases to a point where we are able to sustain ourselves and increase our budget to match our growth needs, we may significantly reduce the amount of investment capital we seek. The amount of funds raised, and revenue generated, if any, will determine how aggressively we can grow and what additional projects we will be able to undertake. No assurance can be given that we will be able to raise additional capital when needed or at all, or that such capital, if available, will be on terms acceptable to us. If we are unable to, or do not raise additional capital in the near future or if our revenue does not begin to grow as we expect, we will have to curtail our spending and downsize our operations.
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Critical Accounting Policies and Estimates
Our financial statements, which were prepared in accordance with generally
accepted accounting principles as recognized in
Revenue Recognition
We have 5 primary sources of revenue as of
1.Electronic Prescription Software 2. Insurance Verifications 3.ICD-10 Medical Coding Software 4. Encrypted and HIPAA Compliant Secure email 5. MSaaS software
1) Electronic Prescription software services are provided an annual subscription basis using the software as a service ('SaaS') model with revenue recognized ratably over the contract term.
2) Insurance verification services are provided on an annual subscription basis using the software as a service ('SaaS') model with revenue recognized ratably over the contract term.
3) ICD-10 Medical Coding services are provided on an annual subscription basis using the software as a service ("SaaS") model with revenues recognized ratably over the contract term.
4) Encrypted and HIPAA compliant and secure email services are provided on an annual subscription basis using the software as a service ("SaaS") model with revenues recognized ratably over the contract term.
5) MSaaS software services are provided on an annual subscription basis using the software as a service ('SaaS') model with revenue recognized ratably over the contract term.
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Software Development Capitalization and Amortization
We account for software development costs, including costs to develop software products or the software component of products to be marketed to external users.
In accordance with ASC 350, Internal-Use-Software, research and planning phase costs are expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs are capitalized.
We have determined that technological feasibility for our products to be marketed to external users was reached before the release of those products and, as a result, the development costs and related acquisition costs after the establishment of technological feasibility were capitalized as incurred. Capitalized costs for software to be marketed to external users are amortized based on current and projected future revenue for each product with an annual minimum cost equal to the straight-line amortization of the costs over three years.
Income Taxes
The Company follows the asset and liability approach to accounting for income taxes. Under this method, deferred tax assets and liabilities are measured based on differences between the financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. Valuation allowances are established when it is necessary to reduce deferred income tax assets to the amount, if any, expected to be realized in future years.
ASC 740, Accounting for Income taxes ('ASC 740'), requires that deferred tax assets be evaluated for future realization and reduced by a valuation allowance to the extent we believe a portion more likely than not will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our recent cumulative loss experience and expectations of future taxable income by taxing jurisdictions, the carry-forwarding periods available to us for tax reporting purposes and other relevant factors.
Stock Based Compensation
The Company estimates the fair value of each option award on the date of grant
using a Black-Scholes option pricing model that uses the following assumptions.
The Company estimates the fair value of its shares of restricted Common Stock
using the closing stock price of its common stock on the date of the award. The
Company estimates the volatility of its Common Stock at the date of grant based
on its historical stock prices. The Company determines the expected life based
on historical experience with similar awards, giving consideration to the
contractual terms, vesting schedules and post-vesting forfeitures. The Company
uses the risk-free interest rate of the implied yield currently available on
Long-Lived Assets and
The Company accounts for long-lived assets in accordance with the provisions of
ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal of
Long-lived Assets. This accounting standard requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to
future undiscounted net cash flows expected to be generated by the asset. If the
carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the asset. As of
The Company accounts for goodwill and intangible assets in accordance with ASC
350, Intangibles -
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Results of Operations
The following table sets forth our selected financial data for the periods
indicated below:
iCoreConnect Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Twelve Months Ended
December 31, December 31,
2021 2020
Revenue $ 4,956,552 $ 2,123,587
Cost of sales 1,580,390 1,008,843
Gross profit 3,376,162 1,114,744
Expenses
Selling, general and administrative 5,232,839 3,447,014
Depreciation and amortization 1,430,805 906,060
Total operating expenses 6,663,644 4,353,074
Loss from operations (3,287,482 ) (3,238,330 )
Other income (expense)
Interest expense (500,878 ) (238,820 )
Financing costs (1,513,366 ) -
Other income (expense) 7,497 (50,733 )
PPP loan forgiveness 330,047 -
Gain on cancellation of liabilities - 36,642
Total other income (expense) (1,676,700 ) (252,911 )
Net loss $ (4,964,182 ) $ (3,491,241 ) Net loss per share available to common stockholders, basic and diluted
$ (0.03 ) $ (0.05 )
Weighted average number of shares, basic and diluted 146,726,959 76,459,645
The accompanying notes are an integral part of these consolidated financial
statements
Twelve months ended
Revenues. Net revenues grew to
Cost of sales. Cost of sales of
Selling, general and administrative expenses. Selling, general and
administrative expenses of
Depreciation and amortization expenses. Depreciation and amortization expenses
of
Interest expense. Interest expense of
Other income (expense). Other income of
Financing costs. The Company incurred financing costs of
PPP loan forgiveness. The Company received notice of forgiveness for its
Paycheck Protection Plan loan in 2021 including all related interest in the
amount of
Gain on cancellation of debt. The Company did not incur a cancellation of other
debts in 2021 compared
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GOING CONCERN AND LIQUIDITY
The following table sets forth our selected financial data for the periods
indicated below and the percentage dollar increase (decrease) of such items from
period to period:
December 31, December 31, % Incr/
Balance Sheet Data 2021 2020 (Decr)
Total Current Assets $ 1,013,140 $ 154,194 557 %
Total Current Liabilities 4,054,246 3,185,195 33 %
Working capital (deficit) (3,041,106 ) (3,031,001 ) 6 %
Deferred Revenue - 73,033 (100 )%
Weighted Average Common Shares
Outstanding 146,726,959 76,459,645
The increase in shares outstanding was driven by issuance of Common Stock for cash and asset acquisitions, the conversion of convertible notes payable and stock compensation expense.
The following table summarizes the impact of operating, investing and financing
activities on our cash flows for the years ended
Twelve Months Ended
December 31, December 31,
2021 2020
Net cash used in operating activities $ (2,896,248 ) $ (1,270,491 )
Net cash used in investing activities (3,518,504 ) (917,900 )
Net cash provided by financing activities 6,478,940 1,751,010
Net Increase / (Decrease) in cash 64,188 (437,381
Cash and cash equivalents at the beginning of the
year 7,619 445,000
Cash and cash equivalents at the end of the year
The primary factors that influence our liquidity include, but are not limited to, the amount and timing of our revenues, cash collections from our clients, investments in research and development, and ongoing capital raise efforts.
Operating Activities: Net cash required by operating activities for the year
ended
Investing Activities: Net cash used by investing activities for the year ended
Financing Activities: Net cash provided by financing activities of
U. S. GAAP requires management to assess a company's ability to continue as a going concern within one year from the financial statement issuance and to provide related note disclosures in certain circumstances.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
For the fiscal year period ended
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In October of 2020, the Company signed a
The Company issued a note payable to a related party on
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