BioCorRx Inc. [BICX] Filings

10-Q 1 bicx_10q.htm FORM 10-Q 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, 2022

☐	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		N/A		N/A

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. 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 11, 2022, there were 7,628,304 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, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	4
	Condensed Consolidated Statement of Deficit for the three and nine months ended September 30, 2022	5
	Condensed Consolidated Statement of Deficit for the three and nine months ended September 30, 2021	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	30
ITEM 4.	Controls and Procedures	30

PART II. OTHER INFORMATION		32

ITEM 1.	Legal Proceedings	32
ITEM 1A.	Risk Factors	32
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
ITEM 3.	Defaults Upon Senior Securities	33
ITEM 4.	Mine Safety Disclosures	33
ITEM 5.	Other Information	33
ITEM 6.	Exhibits	34

SIGNATURES		35

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,
	2022			2021
	(unaudited)
ASSETS
Current assets:
Cash	$	39,100		$	85,838
Restricted cash		24,429			-
Accounts receivable		66,692			1,500
Grant receivable		99,355			56,359
Prepaid expenses		103,460			84,629
Total current assets		333,036			228,326

Property and equipment, net		83,139			102,843

Right to use assets		300,073			384,921

Other assets:
Patents, net		10,501			11,385
Software development costs		47,980			47,980
Deposits, long term		44,520			44,520
Total other assets		103,001			103,885

Total assets	$	819,249		$	819,975

LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable and accrued expenses, including related party payables of $951,588 and $1,014,892, respectively	$	3,422,187		$	3,188,560
Deferred revenue, short term		34,981			34,981
Lease liability, short term		130,559			119,733
Notes payable		221,480			221,480
Notes payable, related parties		685,110			790,110
Paycheck Protection Program loan, short term		-			31,580
Total current liabilities		4,494,317			4,386,444

Long term liabilities:
Paycheck Protection Program loan, long term		-			99,860
Economic Injury Disaster loan, long term		74,188			74,300
Royalty obligation, net of discount of $5,498,564 and $5,854,226, related parties		3,223,536			2,867,874
Lease liability, long term		216,537			315,672
Deferred revenue, long term		11,137			37,301

Total liabilities		8,019,715			7,781,451

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, 2022 and December 31, 2021		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, 2022 and December 31, 2021		5,616			5,616
Common stock, $0.001 par value; 750,000,000 shares authorized, 7,623,559 and 6,698,968 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		7,623			6,699
Common stock subscribed		100,000			100,000
Additional paid in capital		65,968,641			62,994,739
Accumulated deficit		(73,176,313	)		(69,966,692	)
Total deficit attributable to BioCorRx, Inc.		(7,078,433	)		(6,843,638	)
Non-controlling interest		(122,033	)		(117,838	)
Total deficit		(7,200,466	)		(6,961,476	)

Total liabilities and deficit	$	819,249		$	819,975

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,
	2022			2021			2022			2021

Revenues, net	$	94,441		$	8,817		$	130,961		$	34,659

Operating expenses:
Cost of implants and other costs		2,343			1,022			6,603			3,450
Research and development		342,553			589,985			923,354			1,371,484
Selling, general and administrative		771,810			892,232			2,692,574			2,638,051
Impairment of intellectual property		-			141,480			-			141,480
Depreciation and amortization		6,863			18,747			20,588			57,465
Total operating expenses		1,123,569			1,643,466			3,643,119			4,211,930

Loss from operations		(1,029,128	)		(1,634,649	)		(3,512,158	)		(4,177,271	)

Other income (expenses):
Interest expense - related parties		(239,487	)		(136,815	)		(765,105	)		(385,472	)
Interest expense, net		(13,624	)		(4,325	)		(127,226	)		(5,825	)
Loss on settlement of debt		(198,939	)		-			(198,939	)		-
Grant income		390,857			412,552			1,250,231			531,134
Other miscellaneous income		139,315			-			139,381			28,229
Total other income		78,122			271,412			298,342			168,066

Net loss before provision for income taxes		(951,006	)		(1,363,237	)		(3,213,816	)		(4,009,205	)

Income taxes		-			-			-			-

Net loss		(951,006	)		(1,363,237	)		(3,213,816	)		(4,009,205	)

Non-controlling interest		1,888			398			4,195			1,866

Net loss attributable to BioCorRx Inc.	$	(949,118	)	$	(1,362,839	)	$	(3,209,621	)	$	(4,007,339	)

Net loss per common share, basic and diluted	$	(0.13	)	$	(0.21	)	$	(0.46	)	$	(0.62	)

Weighted average number of common shares outstanding, basic and diluted		7,161,039			6,630,850			7,040,469			6,424,770

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 (audited)		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 STATEMENT OF DEFICIT

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

	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, 2020 (audited)		80,000	$	16,000		160,000	$	5,616		5,463,444	$	5,463	$	100,000	$	60,466,333	$	(64,688,311	)	$	(115,454	)	$	(4,210,353	)
Common stock issued for services rendered		-		-		-		-		26,013		26		-		53,199		-			-			53,225
Common stock issued in connection with subscription agreement		-		-		-		-		1,125,000		1,125		-		2,248,875		-			-			2,250,000
Share-based compensation		-		-		-		-		-		-		-		5,029		-			-			5,029
Net loss		-		-		-		-		-		-		-		-		(1,583,287	)		(776	)		(1,584,063	)
Balance, March 31, 2021 (unaudited)		80,000	$	16,000		160,000	$	5,616		6,614,457	$	6,614	$	100,000	$	62,773,436	$	(66,271,598	)	$	(116,230	)	$	(3,486,162	)
Common stock issued for services rendered		-		-		-		-		13,867		14		-		52,986		-			-			53,000
Share-based compensation		-		-		-		-		-		-		-		3,686		-			-			3,686
Net loss		-		-		-		-		-		-		-		-		(1,061,213	)		(692	)		(1,061,905	)
Balance, June 30, 2021 (unaudited)		80,000	$	16,000		160,000	$	5,616		6,628,324	$	6,628	$	100,000	$	62,830,108	$	(67,332,811	)	$	(116,922	)	$	(4,491,381	)
Common stock issued for services rendered		-		-		-		-		13,955		14		-		51,386		-			-			51,400
Net loss		-		-		-		-		-		-		-		-		(1,362,839	)		(398	)		(1,363,237	)
Balance, September 30, 2021 (unaudited)		80,000	$	16,000		160,000	$	5,616		6,642,279	$	6,642	$	100,000	$	62,881,494	$	(68,695,650	)	$	(117,320	)	$	(5,803,218	)

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,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,213,816	)	$	(4,009,205	)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization		20,588			57,465
Amortization of discount on royalty obligation		355,662			355,662
Impairment of intellectual property		-			141,480
Amortization of right-of-use asset		84,848			77,506
Stock based compensation		283,508			166,340
Loss on settlement of debt		198,939			-
Gain on forgiveness of debt		(133,424	)		(28,229	)
Noncash interest for debt discount		76,890			-
Warrants issued in connection with loan default		301,796			-
Changes in operating assets and liabilities:
Accounts receivable		(65,192	)		500
Grant receivable		(42,996	)		121,879
Prepaid expenses		(18,831	)		34,322
Accounts payable and accrued expenses		674,304			390,640
Lease liability		(88,309	)		(78,321	)
Deferred revenue		(26,164	)		(54,513	)
Deferred revenue-grant		-			(65,560	)
Net cash used in operating activities		(1,592,197	)		(2,890,034	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Software development costs					(35,985	)
Purchase of equipment		-			(2,017	)
Net cash used in investing activities		-			(38,002	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock subscription and royalty agreement		1,250,000			2,250,000
Proceeds from Paycheck Protection Program loan		-			131,440
Payment to Economic Injury Disaster loan		(112	)		-
Proceeds from notes payable		-			200,000
Proceeds from notes payable – related party		320,000			500,000
Net cash provided by financing activities		1,569,888			3,081,440

Net (decrease) increase in cash and restricted cash		(22,309	)		153,404
Cash and restricted cash, beginning of the period		85,838			592,053

Cash and restricted cash, end of period	$	63,529		$	745,457

Cash and restricted cash consist of the following, end of period:
Cash	$	39,100		$	745,457
Restricted cash		24,429			-
	$	63,529		$	745,457

Cash and restricted cash consist of the following, beginning of the period:
Cash	$	85,838		$	592,053
Restricted cash		-			-
	$	85,838		$	592,053

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

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, 2022

(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) application 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, 2022.

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 newly formed 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 18).

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements

The following (a) condensed consolidated balance sheet as of December 31, 2021, 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, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. 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, 2021 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2022.

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.

Restricted Cash

Restricted cash is comprised of subscription proceeds received that will exclusively be used for accrued and projected legal fees from Buchalter. Restricted cash was included in current assets as of September 30, 2022.

Paycheck Protection Program (“PPP”) Loan

The Company’s policy is to account for the PPP loan (See Note 11) as debt. The Company will continue to record the loan as debt until either (1) the loan is partially or entirely forgiven and the Company has been legally released, at which point the amount forgiven will be recorded as income or (2) the Company pays off the loan.

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.

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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 goods 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, 2022 and 2021:

	Three Months Ended September 30,
	2022		2021
Sales/access fees	$	2,250	$	-
Project support income		79,263		-
Distribution rights income		11,129		8,817
Membership/program fees		1,799		-
Net sales	$	94,441	$	8,817

	Nine Months Ended September 30,
	2022		2021
Sales/access fees	$	12,810	$	-
Project support income		79,263		-
Distribution rights income		28,476		26,664
Membership/program fees		10,412		7,995
Net sales	$	130,961	$	34,659

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 or 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.

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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, 2021
Short term	$	34,981
Long term		37,301
Total as of December 31, 2021	$	72,282
Net sales recognized		(26,164	)
Balance as of September 30, 2022		46,118
Less short term		34,981
Long term	$	11,137

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.

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 stock-based compensation, the fair value of other equity and debt instruments, fair value of intangible assets, useful lives of assets and allowance for doubtful accounts.

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, 2022 and December 31, 2021, respectively.

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 14 and 15 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, 2022 and 2021.

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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 and $141,480 impairment was recognized for the three and nine months ended September 30, 2022 and 2021.

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 $47,980. The app was not placed in use as of September 30, 2022.

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.

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, 2022 and 2021, respectively, because their inclusion would have been anti-dilutive.

	Nine months Ended
	September 30,
	2022		2021
Shares underlying options outstanding		858,101	$	818,631
Shares underlying warrants outstanding		333,855		15,000
Convertible preferred stock outstanding		240,000		240,000
		1,431,956	$	1,073,631

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $106,073 and $295,119 as advertising costs for the three and nine months ended September 30, 2022, respectively. The Company charged to operations $114,584 and $320,278 for the three and nine months ended September 30, 2021, respectively.

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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 $99,355 and $56,359 as of September 30, 2022 and December 31, 2021, respectively. Deferred revenues related to the grant were $0 as of September 30, 2022 and December 31, 2021. $390,857 and $1,250,231 was recorded as grant income for the three and nine months ended September 30, 2022, respectively. $412,552 and $531,134 was recorded as grant income for the three and nine months ended September 30, 2021, respectively. The F&A indirect costs were $289,927 and $272,681 as of September 30, 2022 and December 31, 2021, 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, 2022. The Company will contact NIH to request an update to 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 $342,553 and $923,354 for the three and nine months ended September 30, 2022, respectively. The Company incurred research and development expenses of $589,985 and $1,371,484 for the three and nine months ended September 30, 2021, respectively.

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, 2022 and December 31, 2021, 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.

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.

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, 2022, the Company had cash and restricted cash of $63,529 and working capital deficit of $4,161,281. During the nine months ended September 30, 2022, the Company used net cash in operating activities of $1,592,197. 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.

On January 3, 2022, the Company entered into a Subscription Agreement (the “Lucido 2022 Subscription Agreement”) with Louis C Lucido and Carolyn M. Lucido, or their Successors, as Trustee of the Lucido Family Trust, Dated May 23, 2017, managed by Mr. Louis Lucido, a member of the Company’s Board of Directors. Although the Lucido Subscription Agreement was dated January 3, 2022 and signed on January 4th, it did not become effective until the aggregate purchase price owed pursuant to the Lucido Subscription Agreement was paid in cash to the Company on January 12, 2022. Pursuant to the Lucido 2022 Subscription Agreement, Mr. Lucido purchased shares of the Company’s common stock, par value $0.001 per share, in the aggregate amount of $500,000 at a purchase price of $4.35 per share, for a total of 114,943 shares of Common Stock.

On January 3, 2022, the Company entered into a Subscription Agreement (the “Galligan 2022 Subscription Agreement”) with The J and R Galligan Revocable Trust, managed by Mr. Joseph Galligan, a member of the Company’s Board. Although the Galligan Subscription Agreement was dated January 3, 2022 and signed on January 11th, it did not become effective until the aggregate purchase price owed pursuant to the Galligan Subscription Agreement was paid in cash to the Company on January 19, 2022. The terms, amounts, and conditions of the Galligan 2022 Subscription Agreement (including the number of shares of common stock purchased and the purchase price) are substantially the same as the Lucido 2022 Subscription Agreement.

On May 5, 2022, the Company entered into a Subscription Agreement (the “DeCsepel 2022 Subscription Agreement”) with David DeCsepel, a consultant of the Company. Pursuant to the DeCespel 2022 Subscription Agreement, Mr. DeCsepel purchased shares of the Company’s common stock, par value $0.001 per share, in the aggregate amount of $250,000 at a purchase price of $2.26 per share, for a total of 110,619 shares of Common Stock. The aggregate Purchase Price owed pursuant to the DeCsepel 2022 Subscription Agreement was paid in cash to the Company on May 6, 2022.

On August 2, 2022, the Company issued an unsecured promissory note payable to Louis C Lucido for $300,000 with principal and interest due August 2, 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. 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 33,000 shares of common stock and valued at $76,890. On September 21, 2022, the Company entered into an Exchange Agreement (the “Louis Exchange Agreement”) with Mr. Lucido, pursuant to which Mr. Lucido agreed to exchange of the promissory note then outstanding of $300,000, the accrued interest on the promissory note of $2,055, and the unpaid service fees of $215,000 into the Company’s 290,480 shares of common stock.

.The Company has applied for forgiveness of all of the loan granted under the PPP and forgiveness of the PPP has been granted effective August 22, 2022.

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, 2022 was $20,000.

On September 21, 2022, the Company entered into an Exchange Agreement (the “Joseph Exchange Agreement”) with Joseph J Galligan, a member of the Company’s Board, pursuant to which Mr. Joseph Galligan agreed to exchange of the promissory note then outstanding of $125,000, the accrued interest on the promissory note of $46,548, and the unpaid service fees of $175,090 into the Company’s 194,740 shares of common stock.

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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.

NOTE 4 - PREPAID EXPENSES

The Company’s prepaid expenses consisted of the following at September 30, 2022 and December 31, 2021:

	September 30,		December 31,
	2022		2021
Prepaid insurance	$	-	$	3,680
Prepaid subscription services		62,392		79,455
Prepaid R&D		18,700		-
Other prepaid expenses		22,368		1,494
	$	103,460	$	84,629

NOTE 5 - PROPERTY AND EQUIPMENT

The Company’s property and equipment consisted of the following at September 30, 2022 and December 31, 2021:

	September 30,			December 31,
	2022			2021
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		(111,412	)		(91,708	)
	$	83,139		$	102,843

Depreciation expense charged to operations amounted to $6,568 and $19,704, respectively, for the three and nine months ended September 30, 2022. Depreciation expense charged to operations amounted to $6,663 and $21,211, respectively, for the three and nine months ended September 30, 2021.

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,
	2022		2021
Total lease liability	$	347,096	$	435,405
Less: short term portion		130,559		119,733
Long term portion	$	216,537	$	315,672

Maturity analysis under these lease agreements are as follows:

	Total
2022	$	38,160
2023		154,771
2024		159,420
2025		31,690
Subtotal		384,041
Less: present value discount		(36,945	)
Lease liability	$	347,096

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Lease expense for the three and nine months ended September 30, 2022 and 2021 was comprised of the following:

	Three Months Ended
	September 30,
	2022		2021
Operating lease expense	$	36,192	$	35,955
	$	36,192	$	35,955

	Nine Months Ended
	September 30,
	2022		2021
Operating lease expense	$	108,576	$	107,865
	$	108,576	$	107,865

During the nine months ended September 30, 2022 and 2021, the Company paid $112,036 and $108,682 lease expense in cash, respectively.

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

	September 30,		December 31,
	2022		2021
Weighted-average remaining lease term		2.3		3.1

NOTE 7 - INTELLECTUAL PROPERTY/ LICENSING RIGHTS

On August 20, 2018, the Company purchased all the worldwide rights of Naltrexone Implants formula(s) with exception of New Zealand and Australia from Trinity Compound Solutions, Inc for $10,000 and 20,000 shares of its common stock for an aggregate purchase price of $236,000. The Company started to amortize the intellectual property corresponding to the launch of the UnCraveRx™ Weight Loss Management Program in October 2019. Amortization is computed on straight-line method based on estimated useful lives of 5 years. During the three and nine months ended September 30, 2022, the Company recorded amortization expense of the intellectual property of $0. During the three and nine months ended September 30, 2021, the Company recorded amortization expense of the intellectual property of $11,790 and $35,370, respectively. The Company tested the intellectual property during 2021 and determined that, based on its qualitative assessment, that it is more likely than not that the fair value of the intellectual property is less than the carrying value, and thus recorded $141,480 impairment loss, which brings the carrying value of the intellectual property to $0.

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 and nine months ended September 30, 2022, the Company recorded amortization expense of $294 and $884, respectively. During the three and nine months ended September 30, 2021, the Company recorded amortization expense of $295 and $884, respectively. As of September 30, 2022, the accumulated amortization of these patents was $4,699.

The future amortization of the patents are as follows:

Year	Amount
2022		285
2023		1,169
2024		1,169
2025		1,169
2026 and after		6,709
	$	10,501

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of September 30, 2022 and December 31, 2021:

	September 30,		December 31,
	2022		2021
Accounts payable	$	1,267,215	$	986,605
Related party payable		658,021		790,300
Interest payable on notes payable		1,191,170		1,153,773
Interest payable on notes payable, related parties		293,567		224,592
Deferred insurance		-		2,561
Interest payable on EIDL loan		5,909		4,076
Interest payable on PPP loan		-		983
Accrued expenses		6,305		25,670
	$	3,422,187	$	3,188,560

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NOTE 9 - NOTES PAYABLE

As of September 30, 2022 and December 31, 2021, 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, 2022 and December 31, 2021 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, 2022 and December 31, 2021 is $200,000. The interest expense during the three and nine months ended September 30, 2022 was $12,603 and $37,397, respectively. The interest expense during the three and nine months ended September 30, 2021 was $3,014 and $3,014, respectively. 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. During the nine months ended September 30, 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.

NOTE 10 - NOTES PAYABLE-RELATED PARTIES

As of September 30, 2022 and December 31, 2021, the Company had advances from Kent Emry (Chairman of the Company). The balance outstanding as of September 30, 2022 and December 31, 2021 was $1,500.

The Company issued to Joe Galligan (a holder of between 10% and 15% of the Company’s shares of common stock who became a member of the Board on February 16, 2021) one unsecured promissory notes of $125,000 bearing interest at 8% per annum with both principal and initially interest due July 26, 2018. During 2019 and 2020 the note was extended three times, ultimately rendering the note due on demand. On September 21, 2022, the Company entered into the Joseph Exchange Agreement, pursuant to which Mr. Joseph Galligan agreed to exchange of the promissory note then outstanding of $125,000, the accrued interest on the promissory note of $46,548, and the unpaid service fees of $175,090 into the Company’s 194,740 shares of common stock. The balance outstanding as of September 30, 2022 and December 31, 2021 was $0 and $125,000, respectively.

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, 2022 and December 31, 2021 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, 2022 and December 31, 2021 is $500,000. The interest expense during the three and nine months ended September 30, 2022 was $31,507 and $93,493, respectively. The interest expense during the three and nine months ended September 30, 2021 was $7,534 and $7,534, respectively. 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. During the nine months ended September 30, 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.

On August 2, 2022, the Company issued an unsecured promissory note payable to Louis C Lucido, a member of the Company’s Board of Directors, for $300,000 with principal and interest due August 2, 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. 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 33,000 shares of common stock and valued at $76,890. On September 21, 2022, the Company entered into the Louis Exchange Agreement, pursuant to which Mr. Lucido agreed to exchange of the promissory note then outstanding of $300,000, the accrued interest on the promissory note of $2,055, and the unpaid service fees of $215,000 into the Company’s 290,480 shares of common stock.

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, 2022 was $20,000.

The interest expense during the three and nine months ended September 30, 2022 were $40,822 and $117,578, respectively. The interest expense during the three and nine months ended September 30, 2021 were $15,041 and $29,810, respectively. As of September 30, 2022 and December 31, 2021, the accumulated interest on related parties notes payable was $293,567 and $224,592, respectively, and was included in accounts payable and accrued expenses on the balance sheet.

NOTE 11 - PAYCHECK PROTECTION PROGRAM LOAN

On May 14, 2020, the Company executed a promissory note evidencing an unsecured loan in the amount of $28,000 under the PPP, which was established under the CARES Act and is administered by the U.S. Small Business Administration (“SBA”). The Loan has been made through Citizens Business Bank (“Lender”).

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Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The Company has applied for forgiveness of all of loan granted under the PPP and forgiveness of PPP loan been granted effective March 17, 2021. The Company recognized a gain from the forgiveness of the PPP loan that is included in other miscellaneous income on the statement of operations.

On April 9, 2021 the Company received $131,440 from Citizens Business Bank as the second tranche loan under the PPP Loan. The maximum term of the PPP Loan is five -years and bears interest at a rate of 1.00% per annum. Monthly principal and interest payments are deferred for sixteen months. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The Company has applied for forgiveness of all of the loan granted under the PPP and forgiveness of the PPP has been granted effective August 22, 2022. The Company recognized a gain from the forgiveness of the PPP loan that is included in other miscellaneous income on the statement of operations.

The interest expense during the three and nine months ended September 30, 2022 was $331 and $1,000, respectively. The interest expense during the three and nine months ended September 30, 2021 was $360 and $659, respectively As of September 30, 2022 and December 31, 2021, the accumulated interest on PPP Loan was $0 and $983, respectively.

NOTE 12 - 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 and nine months ended September 30, 2022 was $702 and $2,084, respectively. The interest expense during the three and nine months ended September 30, 2021 was $702 and $2,084, respectively. As of September 30, 2022 and December 31, 2021, the accumulated interest on EIDL Loan was $5,909 and $4,076, respectively.

During the three and nine months ended September 30, 2022, the Company made principal payment of $112 and interest payment of $251.

The future principal payments are as follows:

Year	Amount
2022	$	-
2023		-
2024		-
2025		-
2026		-
2027 and after		74,188
	$	74,188

NOTE 13 - 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 10% and 15% 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.

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During the three and nine months ended September 30, 2022, the Company amortized $121,774 and $355,662, respectively, as interest expense. During the three and nine months ended September 30, 2021, the Company amortized $121,774 and $355,662, respectively, as interest expense.

NOTE 14 - 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, 2022 and December 31, 2021, 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, 2022 and December 31, 2021 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, 2022 and December 31, 2021 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, 2021

During the nine months ended September 30, 2021, the Company issued an aggregate of 53,835 shares of its common stock for services rendered valued at $157,625 based on the underlying market value of the common stock at the date of issuance, among which 25,687 shares valued at $77,500 were issued to the board of directors for board compensation.

During the nine months ended September 30, 2021, the Company issued an aggregate of 1,125,000 shares of its common stock pursuant to the Subscription Agreements described in Note 16. The common shares were recorded at a price of $2.00 per shares for gross proceeds to the Company of $2,250,000.

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 $75,000 were issued to the board of directors for board compensation.

During the nine months ended September 30, 2022, the Company issued an aggregate of 229,886 shares of its common stock pursuant to the Lucido 2022 Subscription Agreement and the Galligan 2022 Subscription Agreement. The common shares were recorded at a price of $4.35 per shares for gross proceeds to the Company of $1,000,000.

During the nine months ended September 30, 2022, the Company issued an aggregate of 110,619 shares of its common stock pursuant to the DeCsepel 2022 Subscription Agreement. The common shares were recorded at a price of 2.26 per shares for gross proceeds to the Company of $250,000.

During the nine months ended September 30, 2022, the Company issued an aggregate of 485,220 shares of its common stock in connection with conversion of promissory notes and accounts payable (see Note 10). The 485,220 shares of common stock were valued at an aggregate value of $1,062,632, resulting in $198,939 of loss on settlement of debt recognized for the difference between the fair value of common stock issued and the carrying value of the debt.

During the nine months ended September 30, 2022, the Company issued 33,000 shares as additional consideration for the issuance of a promissory note (see Note 10). The 33,000 shares of common stock were valued at an aggregate value of $76,890.

As of September 30, 2022, and December 31, 2021, the Company had 7,623,559 and 6,698,968 shares of common stock issued and outstanding, respectively.

NOTE 15 - STOCK OPTIONS AND WARRANTS

Options

On November 13, 2014, our Board of Directors authorized and approved the adoption of the Plan effective November 13, 2014 (2014 Stock Option Plan) under which an aggregate of 20% (290,879 shares) of the issued and outstanding shares may be issued. The plan shall terminate ten years after the plan’s adoption by the board of directors. We granted an aggregate 145,000 stock options. As of September 30 2022, an aggregate total of 145,879 can still be granted under the plan.

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On June 15, 2016, our board of Directors authorized and approved the adoption of the Equity Incentive Plan effective June 15, 2016 (2016 Equity Incentive Plan) under which an aggregate of 656,250 shares may be issued. The plan shall terminate ten years after the plan’s adoption by the board of directors. We granted an aggregate of 330,350 stock options. As September 30, 2022, an aggregate total of 325,900 options can still be granted under the plan.

On May 15, 2018, the Board of Directors approved and adopted the BioCorRx Inc. 2018 Equity Incentive Plan (2018 Stock Option Plan) under which an aggregate of 450,000 shares may be issued. The plan shall terminate ten years after the plan’s adoption by the board of directors. The Company has granted an aggregate of 380,008 stock options. As of September 30, 2022, an aggregate total of 69,992 options can still be granted under the plan.

On April 22, 2022, the Board of Directors approved and adopted the BioCorRx Inc. 2022 Equity Incentive Plan (2022 Stock Option Plan) under which an aggregate of 695,000 shares may be issued. The plan shall terminate ten years after the plan’s adoption by the board of directors. The Company has granted an aggregate of 26,373 stock options. As of September 30, 2022, an aggregate total of 668,627 options can still be granted under the plan.

During the nine months ended September 30, 2022, the Company approved the grant of 14,000 stock options to three consultants valued at $31,374. The term of the options was three years, and the vesting period of is among one to two years.

During the nine months ended September 30, 2022, the Company approved the grant of 29,100 stock options to one director valued at $78,742. The term of the options was five years, and the options vested immediately.

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from using the Company’s historical stock prices. The Company accounts for the expected life of options based on the contractual life of options for non-employees. For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.

In applying the Black-Scholes option pricing model, the Company used the following assumptions in 2022:

Risk-free interest rate	0.91% - 4.06%
Expected term (years)	3.00 - 5.00
Expected volatility	129.95%-140.30%
Expected dividends		0.00

The following table summarizes the stock option activity for the nine months ended September 30, 2022:

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding at December 31, 2021		815,351		$	7.85		4.9	$	795,115
Expired		(350	)		1.60		-		-
Grants		43,100			3.85		4.0		-
Outstanding at September 30, 2022		858,101		$	7.66		4.2	$	13,649
Exercisable at September 30, 2022		848,559		$	7.68		4.2	$	13,649

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $2.05 as of September 30, 2022, which would have been received by the option holders had those option holders exercised their options as of that date.

The following table presents information related to stock options at September 30, 2022:

Options Outstanding					Options Exercisable
			Weighted				Weighted
			Average		Exercisable		Average
Exercise	Number of		Remaining Life		Number of		Remaining Life
Price	Options		In Years		Options		In Years

$ 0.01-2.50		351,126		3.7		351,126		3.7
2.51-5.00		62,808		2.9		61,808		2.9
5.01 and up		444,167		4.6		435,625		4.7
		858,101		4.2		848,559		4.2

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The stock-based compensation expense related to option grants was $23,326 and $91,703 during the three and nine months ended September 30, 2022, respectively. The stock-based compensation expense related to option grants was $0 and $8,715 during the three and nine months ended September 30, 2021, respectively.

As of September 30, 2022, stock-based compensation related to options of $18,415 remains unamortized and is expected to be amortized over the weighted average remaining period of 17 months.

Warrants

On May 5, 2022, the Company entered into a Subscription Agreement (the “DeCsepel 2022 Subscription Agreement”) with David DeCsepel, a consultant of the Company. Pursuant to the DeCespel 2022 Subscription Agreement, Mr. DeCsepel purchased shares of the Company’s common stock, par value 0.001 per share, in the aggregate amount of $250,000 at a purchase price of $2.26 per share, for a total of 110,619 shares of common stock. The aggregate purchase price owed pursuant to the DeCsepel 2022 Subs

BioCorRx Inc. [BICX] Filings
10-Q	[2022-11-14]
10-Q	[2022-08-15]
10-Q	[2022-05-16]
10-K	[2022-03-31]
10-Q	[2021-11-15]
10-Q	[2021-08-13]
10-Q	[2021-05-17]
10-K	[2021-03-31]
10-Q	[2020-11-16]
10-Q	[2020-08-14]
10-Q	[2020-05-15]
10-K	[2020-03-30]
10-Q	[2019-11-14]
10-Q	[2019-08-14]
10-Q	[2019-05-15]
10-K	[2019-04-16]
S-1	[2019-02-14]
10-Q	[2018-11-14]
S-1	[2018-08-24]
10-Q	[2018-08-14]
10-Q	[2018-05-18]
10-K	[2018-04-05]
10-Q	[2017-11-14]
10-Q	[2017-08-11]
10-Q	[2017-05-15]
10-K	[2017-04-13]
10-Q	[2016-11-17]
10-Q	[2016-08-17]
10-Q	[2016-05-23]
10-K	[2016-04-14]
10-Q	[2015-11-16]
10-Q	[2015-08-12]
10-Q	[2015-05-15]
10-K	[2015-03-31]
10-Q	[2014-11-10]
10-Q	[2014-08-14]
10-Q	[2014-05-14]
10-K	[2014-04-14]
10-Q	[2013-11-14]
10-Q	[2013-08-19]
10-Q	[2013-05-15]
10-K	[2013-04-15]
10-Q	[2012-11-19]
10-Q	[2012-08-14]
10-Q	[2012-07-10]
10-K	[2012-05-18]