~~[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

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 ~~[X]~~ ☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ~~[X]~~ ☒ 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 the definitions of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: ~~(Check one)~~

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 ~~[X]~~ ☒

As of November ~~17, 2017,~~6, 2023, the registrant had ~~5,639,669~~40,551,322,257 shares of its Common Stock, ~~$0.01~~$0.0001 par value, outstanding.

							September 30,			December 31,
	September 30, 2017			December 31, 2016			2023			2022
	(unaudited)							(unaudited)
ASSETS
Current assets:
Cash	$	41,019		$	75,017		$	123,898		$	499,470
Accounts receivable, net		401,026			1,199,899			1,790,952			3,110,969
Note receivable / receivable from related party								2,502,459			1,457,253
Inventory								265,957			242,645
Prepaid expenses and other current assets		146,713			149,385			156,308			215,365
Inventory		73,732			-
Income tax refunds receivable		1,458,438			1,458,438			837,460			837,460
Current assets of AMSG classified as held for sale		68,775			337,900
Total current assets		2,189,703			3,220,639			5,677,034			6,363,162

Property and equipment, net		3,090,047			3,043,590			4,267,538			4,194,299
Intangible asset								259,443			259,443
Investment								9,016,072			9,016,072
Deposits		157,461			141,402			224,413			165,530
Non-current assets of AMSG classified as held for sale		928,722			76,762
Right-of-use assets								400,937			574,256
Total assets	$	6,365,933		$	6,482,393		$	19,845,437		$	20,572,762

LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable (includes related parties of $0.3 and $0.2 milion, respectively)	$	4,296,213		$	2,928,524
Accounts payable (includes related party amounts of $27,715 and $47,636, respectively)							$	12,122,246		$	11,514,322
Accrued expenses		5,010,298			2,882,029			19,460,163			19,563,808
Income taxes payable		490,436			942,433			1,674,986			1,348,425
Current portion of notes payable		7,299,088			9,011,247			1,194,451			2,917,390
Current portion of notes payable, related party		223,500			328,500
Current portion of capital lease obligations		1,491,666			1,796,053
Current liabilities of AMSG classified as held for sale		1,368,612			1,675,981
Current portion of loan payable, related party								2,198,000			2,995,000
Current portion of debentures								8,222,240			8,622,240
Current portion of right-of-use operating lease obligations								175,923			215,063
Current portion of finance lease obligation								220,461			220,461
Derivative liability								455,336			455,336
Current liabilities of discontinued operations								1,465,325			1,456,112
Total current liabilities		20,179,813			19,564,767			47,189,131			49,308,157

Other liabilities:
Debentures		4,239,005			-
Capital lease obligations, net of current portion		735,538			1,774,121
Derivative liabilities		-			2,803
Non-current liabilities of AMSG classified as held for sale		-			26,598

Right-of-use operating lease obligations, net of current portion								225,014			359,193
Total liabilities		25,154,356			21,368,289			47,414,145			49,667,350

Commitments and contingencies								-			-

Stockholders' deficit:
Series G preferred stock, $0.01 par value, 14,000 shares authorized, 215 shares issued and outstanding	$	2			2
Series H preferred stock, $0.01 par value, 14,202 shares authorized, 60 and 10,019 shares issued and outstanding		-			100
Series F preferred stock, $0.01 par value, 1,750,000 shares authorized, 1,750,000 and 0 shares issued and outstanding		17,500			-
Common stock, $0.01 par value, 500,000,000 shares authorized, 1,354,171 and 186,692 shares issued and outstanding		13,542			1,867
Stockholders’ deficit:
Series H preferred stock, $0.01 par value, $1,000 stated value per share, 14,202 shares authorized, 10 shares issued and outstanding								-			-
Series L preferred stock, $0.01 par value, $1.00 stated value per share, 250,000 shares authorized, 250,000 shares issued and outstanding								2,500			2,500
Series M preferred stock, $0.01 par value, $1,000 stated value per share, 30,000 shares authorized, 20,810 shares issued and outstanding								208			208
Series N preferred stock, $0.01 par value, $1,000 stated value per share, 50,000 shares authorized, 2,404 and 2,900 shares issued and outstanding, respectively								24			29
Series O preferred stock, $0.01 par value, $1,000 stated value per share, 10,000 shares authorized, 8,465 and 8,685 shares issued and outstanding, respectively								85			87
Series P preferred stock, $0.01 par value, $1,000 stated value per share, 30,000 shares authorized, 10,195 shares issued and outstanding								102			102
Preferred stock value
Common stock, $0.0001 par value, 250,000,000,000 shares authorized, 37,051,322,257 and 29,084,322,257 shares issued and outstanding, respectively								3,705,132			2,908,432
Additional paid-in-capital		126,335,119			45,752,999			1,670,775,141			1,671,571,834
Accumulated deficit		(145,154,586	)		(60,640,864	)		(1,702,042,616	)		(1,703,577,780	)
Total stockholders' deficit		(18,788,423	)		(14,885,896	)
Total liabilities and stockholders' deficit	$	6,365,933		$	6,482,393
Total Rennova’s stockholders’ deficit								(27,559,424	)		(29,094,588	)
Noncontrolling interest								(9,284	)		-
Total stockholders’ deficit								(27,568,708	)		(29,094,588	)
Total liabilities and stockholders’ deficit							$	19,845,437		$	20,572,762

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

~~FOR THE NINE MONTHS ENDED SEPTEMBER~~For Each of the Quarters in the Nine-Month Period Ended September 30, ~~2017~~2023

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

~~Notes to Condensed Consolidated Financial Statements~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

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

Note 1 – Organization and ~~Basis~~Summary of ~~Presentation~~Significant Accounting Policies

Rennova Health, Inc. (“Rennova”), together with its subsidiaries, ~~(the~~the “Company”, “we”, “us”, “its” or “our”), is a ~~vertically integrated~~ provider of ~~healthcare related products and~~health care services. The Company owns one operating hospital in Oneida, Tennessee, a hospital located in Jamestown, Tennessee that it plans to reopen and operate and an operating rural health clinic in Kentucky. In addition, the Company owns a subsidiary providing services in the behavioral health sector on the campus of its hospital in Oneida, Tennessee. The Company’s ~~principal lines~~operations consist of ~~business are (i) clinical~~only one segment.

On January 13, 2017, we acquired certain assets related to Scott County Community Hospital, based in Oneida, Tennessee (the “Oneida Assets”). The Oneida Assets include a 52,000-square foot hospital building and 6,300-square foot professional building on approximately 4.3 acres. Scott County Community Hospital has 25 beds, a 24/7 emergency department and a laboratory ~~operations; (ii) supportive software solutions~~that provides a range of diagnostic services. Scott County Community Hospital closed in July 2016 in connection with the bankruptcy filing of its parent company, Pioneer Health Services, Inc. We acquired the Oneida Assets out of bankruptcy for a purchase price of $1.0 million. The hospital, which has since been renamed Big South Fork Medical Center, became operational on August 8, 2017. The hospital became certified as a Critical Access Hospital (rural) hospital in December 2021, retroactive to ~~healthcare providers including Electronic~~June 30, 2021.

On March 5, 2019, we acquired certain assets related to an outpatient clinic located in Williamsburg, Kentucky, known as CarePlus Clinic. The clinic and its associated assets, which were acquired from CarePlus Rural Health ~~Records~~Clinic, LLC, offers compassionate care in a modern, patient-friendly facility. The CarePlus Clinic is located 32 miles northwest of our Big South Fork Medical Center.

In the second quarter of 2022, the Company formed a subsidiary, Myrtle Recovery Centers, Inc. (“~~EHR”~~Myrtle”), to pursue opportunities in the behavioral health sector, initially in our core, rural markets. We are leveraging our existing physical locations and corporate and regional infrastructure to offer behavioral health services, including substance abuse treatment. Services are provided on either an inpatient, residential basis or an outpatient basis.

On August 10, 2023, Myrtle was granted a license by the Department of Mental Health and Substance Abuse Services of Tennessee to operate an alcohol and drug treatment facility in Oneida Tennessee. The facility, which is located at Rennova’s Big South Fork Medical ~~Billing Services~~Center campus, commenced operations and ~~Laboratory Information Services;~~began accepting patients on August 14, 2023. The facility offers alcohol and ~~(iii)~~drug residential detoxification and residential rehabilitation treatment services for up to 30 patients. Myrtle began offering outpatient opiate treatment services at its Oneida facility on November 1, 2023 as more fully discussed in Note 15.

On April 11, 2023, Myrtle sold shares of its common stock equivalent to a 1.961% ownership stake in the ~~recent addition~~subsidiary for de minimis value to an unaffiliated individual licensed as a physician in Tennessee. The shares have certain transfer restrictions, including the right of the subsidiary to transfer the shares to another physician licensed in Tennessee for de minimis value. The shares were sold to the individual for Tennessee healthcare regulatory reasons.

On June 1, 2018, we acquired from Community Health Systems, Inc. certain assets related to an acute care hospital located in Jamestown, Tennessee, referred to as Jamestown Regional Medical Center, for a ~~rural critical access hospital.~~purchase price of $0.7 million. The hospital is an 85-bed facility of approximately 90,000-square feet on over eight acres of land, which offered a 24-hour emergency department with two trauma bays and seven private exam rooms, inpatient and outpatient medical services and a progressive care unit which provided telemetry services. The acquisition also included a separate physician practice known as Mountain View Physician Practice, Inc.

The Company suspended operations at the hospital and physician practice in June 2019, as a result of the termination of the hospital’s Medicare agreement and other factors. The Company is evaluating whether to reopen the facility as an acute care hospital or as another type of healthcare facility. Jamestown is located 38 miles west of Big South Fork Medical Center.

The ~~accompanying~~ unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the ~~2016 audited~~consolidated financial statements ~~included~~as filed in the Company’s Annual Report on Form 10-K ~~filed with~~for the ~~U.S. Securities and Exchange Commission (the “SEC”) on April 10, 2017. These~~year ended December 31, 2022. In the opinion of management, the unaudited condensed consolidated ~~interim~~ financial statements included herein contain all adjustments necessary to present fairly the Company’s consolidated financial position as of September 30, 2023, and the results of its operations and changes in stockholders’ deficit for the three and nine months ended September 30, 2023 and 2022 and its cash flows for the nine months ended September 30, 2023 and 2022. Such adjustments are of a normal recurring nature. The results of operations for the three and nine months ended September 30, 2023 may not be indicative of results for the year ending December 31, 2023.

The unaudited condensed consolidated financial statements, which have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC, and therefore omit or condense certain footnotes and other information normally included in consolidated interim financial statements prepared in accordance with U.S.accounting principles generally accepted ~~accounting principles~~in the United States of America (“U.S. GAAP”)., include the accounts of Rennova and its wholly-owned and majority-owned subsidiaries. All ~~material~~ intercompany ~~balances~~transactions and ~~transactions~~balances have been eliminated in ~~consolidation. In~~ the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) considered necessary for the fair presentation of the financial position and results of operations and cash flows for the interim periods reported herein. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.consolidation.

During the three and nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, comprehensive ~~loss~~income (loss) was equal to the net ~~loss~~income (loss) amounts presented in the ~~accompanying~~unaudited condensed consolidated statements of operations. ~~In addition, certain~~

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of net revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include the estimates of fair values of assets acquired and liabilities assumed in business combinations, contractual allowances and bad debt reserves, the recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, the valuations of investments, equity and derivative instruments, deemed dividends, litigation and related reserves, among others. Actual results could differ from those estimates and would impact future results of operations and cash flows.

Certain prior year ~~balances~~amounts have been reclassified to conform to the current year presentation.

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.

We recognize revenue in accordance with Accounting Standard Codification (“ASC”), “Revenue from Contracts with Customers (Topic 606),” including subsequently issued updates. Under the accounting guidance, our revenues are presented net of estimated contractual allowances and estimated implicit price concessions. We also do not present “allowances for doubtful accounts” on our balance sheets.

Our revenues relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods averaging approximately three days, and revenues are recognized based on charges incurred. Our performance obligations for outpatient services, including emergency room-related services, are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare, because of the Big South Fork Medical Center’s designation as a Critical Access Hospital, generally pays for inpatient and outpatient services at rates related to the hospital’s costs. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Our net revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual allowances under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect.

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined (in relation to certain government programs, primarily Medicare, this is generally referred to as the “cost report” filing and settlement process). As of September 30, 2023, $0.9 million of Medicare cost report settlement reserves were recorded as liabilities on the condensed consolidated balance sheet, as more fully discussed in Note 5.

The collection of outstanding receivables for Medicare, Medicaid, managed care payers, other third-party payers and patients is our primary source of operating cash and is critical to our operating performance. The primary collection risks relate to uninsured patient accounts, including patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Estimated implicit price concessions are recorded for all uninsured accounts, regardless of the aging of those accounts. Accounts are written off when all reasonable internal and external collection efforts have been performed. The estimates for implicit price concessions are based upon management’s assessment of historical write offs and expected net collections, business and economic conditions, trends in federal, state and private employer health care coverage and other collection indicators. Management relies on the results of detailed reviews of historical write-offs and collections at facilities that represent a majority of our revenues and accounts receivable (the “hindsight analysis”) as a primary source of information in estimating the collectability of our accounts receivable.

Accounts receivable are reported at realizable value, net of estimated contractual allowances and estimated implicit price concessions (also referred to as doubtful accounts), which are estimated and recorded in the period the related revenue is recorded. The Company has ~~reclassified certain amounts~~a standardized approach to estimating and reviewing the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to contractual allowances and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the ~~2016 condensed consolidated financial statements~~receivables or reserve estimates. Receivables deemed to be ~~consistent with~~uncollectible are charged against the ~~2017 presentation. These principally relate~~allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to ~~classification~~the allowance for doubtful accounts. Revisions to the allowances for doubtful accounts are recorded as an adjustment to revenues.

During the three months ended September 30, 2023 and 2022, estimated contractual allowances of ~~certain revenues, cost~~$9.5 million and $10.2 million, respectively, and estimated implicit price concessions of $2.0 million and $1.6 million, respectively, have been recorded as reductions to our revenues and accounts receivable balances to enable us to record our revenues and accounts receivable at the estimated amounts we expect to collect. As required by Topic 606, after estimated implicit price concessions and contractual and related ~~segment data,~~allowance adjustments to revenues of $11.5 million and $11.8 million, respectively, for the three months ended September 30, 2023 and 2022, we reported net revenues of $3.5 million and $2.8 million, respectively.

During the nine months ended September 30, 2023 and 2022, estimated contractual allowances of $29.1 million and $23.4 million, respectively, and estimated implicit price concessions of $4.3 million and $5.7 million, respectively, have been recorded as ~~well as balance sheet classifications~~reductions to our revenues and accounts receivable balances to enable us to record our revenues and accounts receivable at the estimated amounts we expect to collect. As required by Topic 606, after estimated implicit price concessions and contractual and related allowance adjustments to revenues of $33.4 million and $29.1 million, respectively, for the nine months ended September 30, 2023 and 2022, we reported net revenues of $14.8 million and $7.6 million, respectively.

We continue to review the provisions for implicit price concessions and contractual allowances. See Note 4 – Accounts Receivable.

We account for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board (the “FASB”) ASC Topic 360, Property, Plant and Equipment (“ASC 360”). ASC 360 clarifies the accounting for the impairment of long-lived assets and ~~liabilities held~~ for ~~sale. Reclassifications relating~~long-lived assets to be disposed of, including the ~~discontinued operations~~disposal of ~~AMSG~~business segments and major lines of business. Long-lived assets are ~~described further in Note 14.~~reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally either based on appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. The ~~reclassifications had no impact on operations or cash flows for~~Company did not record an asset impairment charge during the three and nine months ended September 30, ~~2016.~~2023 and 2022.

On February 7, 2017, the Company’s Board of Directors approved an amendment to the Company’s Certificate of Incorporation to effect a 1-for-30 reverse stock split of the Company’s shares of common stock effective on February 22, 2017 and on September 21, 2017, the Company’s Board of Directors approved an amendment to the Company’s Certificate of Incorporation to effect a 1-for-15 reverse stock split effective October 5, 2017 (the “Reverse Stock Splits”). The stockholders of the Company had approved these amendments to the Company’s Certificate of Incorporation on December 22, 2016We account for the February 7, 2017 reverse stock split and on September 20, 2017 for the October 5, 2017 reverse stock split. In both cases, the Company’s stockholders had granted authorization to the Board of Directors to determine in its discretion the specific ratio, subject to limitations, and the timing of the reverse splits within certain specified effective dates.

As a result of the Reverse Stock Splits, every 30 shares of the Company’s then outstanding common stock was combined and automatically converted into one share of the Company’s common stock, par value $0.01 per share, on February 7, 2017 and every 15 shares of the Company’s then outstanding common stock was combined and automatically converted into one share of the Company’s common stock, par value $0.01 per share, on October 5, 2017. In addition, the conversions and exercise prices of all of the Company’s outstanding preferred stock, common stock purchase warrants, stock options, restricted stock, equity incentive plans and convertible notes payable were proportionately adjusted at the 1:30 reverse split ratio and again at the 1:15 reverse split ratioleases in accordance with the terms of such instruments. In addition, proportionate voting rights and other rights of common stockholders were not affected by the Reverse Stock Splits, other than as a result of the rounding up of fractional shares in the February reverse split and the payment of cash in lieu of fractional shares in the October reverse split, as no fractional shares were issued in connection with the Reverse Stock Splits.

The par value and other terms of the common stock were not affected by the Reverse Stock Splits. The authorized capital of the Company of 500,000,000 shares of common stock and 5,000,000 shares of preferred stock were also unaffected by the Reverse Stock Splits.

~~All share, per share and capital stock amounts for all periods presented have been restated to give effect to the Reverse Stock Splits.~~

~~In July 2017, the Financial Accounting Standards Board (“FASB”) issued~~ Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which requires leases with durations greater than 12 months to be recognized on the balance sheet. Upon adoption in 2019, we elected the package of transition provisions available which allowed us to carry forward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. We lease property and equipment under finance and operating leases. For operating leases with terms greater than 12 months, we record the related right-of-use assets and right-of-use obligations at the present value of lease payments over the term. For finance leases, we record the present value of the lease payments as finance lease obligations. We do not separate lease and non-lease components of contracts. Our finance and operating leases are more fully discussed in Note 8.

In accordance with ASC 820, “Fair Value Measurements and Disclosures,” the Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

On September 30, 2023 and December 31, 2022, we applied the Level 3 fair value hierarchy in determining the fair value of InnovaQor, Inc.’s Series B-1 Non-Voting Convertible Preferred Stock (the “InnovaQor Series B-1 Preferred Stock”), which is reflected on our condensed consolidated balance sheets as an investment. Also, on September 30, 2023 and December 31, 2022, we applied the Level 3 fair value hierarchy in determining the fair value of a derivative liability for an embedded conversion option of an outstanding convertible debenture. Our determination of fair value is more fully discussed in Note 9.

Derivative Financial Instruments and Fair Value, Including ASU 2017-11 and ASU 2021-04

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings (loss) per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common ~~shareholders~~stockholders in basic and diluted EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). ~~The amendments in Part II of this Update recharacterize~~

In May 2021, the ~~indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect.~~

Under current GAAP, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, DerivativesFASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Hedging, to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting. Generally, for warrantsExtinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure at fair value initially and at each subsequent reporting date.

~~The amendments in this Update revise the guidance for instruments with down round features in Subtopic 815-40,~~ Derivatives and Hedging—Contracts in Entity’s Own Equity ~~which is considered~~(Subtopic 815-40), Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued this update to clarify and reduce diversity in ~~determining~~an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The guidance clarifies whether an ~~equity-linked financial instrument qualifies~~issuer should account for a ~~scope exception from derivative accounting. An entity still~~modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity (that is, ~~required~~deemed dividends) and, if so, the related earnings per share (EPS) effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. We adopted this new accounting guidance on January 1, 2022. Under the new guidance, the FASB decided not to ~~determine whether~~include convertible debt instruments ~~would be classified~~ in ~~equity under~~ the guidance because ASU No 2016-01, Financial Instruments – Overall (Subtopic 825-10) requires that an entity capture the impact of changes in ~~Subtopic 815-40~~down round provision features of convertible debt within the fair value of the instruments. During the three and nine months ended September 30, 2023 and 2022, there were no changes in ~~determining whether they qualify for that scope exception. If they do qualify, freestanding instruments~~the fair values of the Company’s convertible debentures with down round provision features as these debentures issued in 2018 have floors of $0.052 per share and were not in-the-money during these periods. Debentures are more fully discussed in Note 6.

There were no ~~longer classified as liabilities and embedded conversion options with~~ triggers of down round ~~features are no longer bifurcated.~~

For entities that present EPS in accordance with Topic 260, and when the down round feature is included in an equity-classified freestanding financial instrument, the value of the effect of the down round feature is treated as a dividend when it is triggered and as a numerator adjustment in the basic EPS calculation. This reflects the occurrence of an economic transfer of valueprovisions to the holder of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on an ongoing basis. Convertible instruments are unaffected by the Topic 260 amendments in this Update.

Those amendments in Part 1 of this Update are a cost savings relative to current GAAP. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period.

The amendments in Part II of this Update replace the indefinite deferral of certain guidance in Topic 480 with a scope exception. This has the benefit of improving the readability of the Codification and reducing the complexity associated with navigating the guidance in Topic 480.

For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part 1 of this Update should be applied in either of the following ways: 1. Retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the first fiscal year and interim period(s) in which the pending content that links to this paragraph is effective; or 2. Retrospectively to outstanding financial instruments with a down round feature for each prior reporting period presented in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-10.

~~The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect.~~

The Company has determined that this amendment had a material impact on its condensed consolidated financial statements and has early adopted this accounting standard update. The cumulative effect of the adoption of ASU 2017-11 resulted in the reclassification of the derivative liability recorded of $56 million and the reversal of $41 million of interest expense recorded in the Company’s first fiscal quarter of 2017. The remaining $16 million was offset to additional paid in capital (discount on convertible debenture). Additionally, the Company recognized a deemed dividend from the trigger of the down round provision feature of $53.3 million. A $51 million deemed dividend was recorded retrospectively as of the beginning of the issuance of the March 2017 debentures where the initial derivative liability was recorded. A $2.3 million deemed dividend adjustment was recorded inwarrants during the three months ended September 30, ~~2017~~2023 and 2022 and the nine months ended September 30, 2023. The incremental value of modification to warrants as a result of triggers of the down round provisions of $330.5 million were recorded as deemed dividends in the nine months ended September 30, 2022. See Note 9 for an additional discussion of derivative financial instruments and deemed dividends.

In addition, we recorded deemed dividends of approximately $0.3 million during the nine months ended September 30, 2022 as a result of the ~~down round provision feature.~~issuances of shares of our Series P Convertible Redeemable Preferred Stock (the “Series P Preferred Stock”), which is more fully discussed in Note 10.

Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The ~~Company’s condensed consolidated financial statements~~effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are ~~prepared using U.S. GAAP applicable~~recognized to ~~a going concern~~the extent that ~~contemplates~~they are considered more likely than not to be realized. When projected future taxable income is insufficient to provide for the realization of deferred tax assets, ~~and liquidation~~the Company recognizes a valuation allowance.

In accordance with U.S. GAAP, the Company is required to determine whether a tax position of ~~liabilities~~the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the ~~normal course~~Company recording a tax liability (or reducing a tax asset) that would reduce net assets. The Company did not have an unrecognized tax benefit at September 30, 2023 and December 31, 2022.

The Company reports earnings (loss) per share in accordance with ASC Topic 260, “Earnings Per Share,” which establishes standards for computing and presenting earnings (loss) per share. Basic earnings (loss) per share of ~~business.~~ common stock is calculated by dividing net earnings (loss) available to common stockholders by the weighted average shares of common stock outstanding during the period, without consideration of common stock equivalents. Diluted earnings (loss) per share is calculated by adjusting the weighted average shares of common stock outstanding for the dilutive effect of common stock equivalents, including preferred stock, convertible debt, stock options and warrants outstanding for the period, with options and warrants determined using the treasury stock method. For purposes of the diluted earnings (loss) per share calculation, common stock equivalents are excluded from the calculation when their effect would be anti-dilutive. See Note 3 for the computation of earnings (loss) per share for the three and nine months ended September 30, 2023 and 2022.

On March 15, 2022, the Company effected a 1-for-10,000 reverse stock split (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every 10,000 shares of the Company’s common stock then outstanding was combined and automatically converted into one share of the Company’s common stock on March 15, 2022. The conversion and exercise prices of all of the Company’s outstanding convertible preferred stock, common stock purchase warrants, stock options and convertible debentures were proportionately adjusted at the applicable reverse split ratio in accordance with the terms of such instruments. The par value and other terms of the common stock were not affected by the Reverse Stock Split. All share, per share and capital stock amounts and common stock equivalents presented herein have been restated where appropriate to give effect to the Reverse Stock Split.

Effective November 5, 2021, the Company filed an Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to provide that the number of authorized shares of the Company’s common stock or preferred stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Company entitled to vote generally in the election of directors, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware (or any successor provision thereto), voting together as a single class, without a separate vote of the holders of the class or classes the number of authorized shares of which are being increased or decreased unless a vote by any holders of one or more series of preferred stock is required by the express terms of any series of preferred stock pursuant to the terms thereof.

The Company has accumulated significant losses and has negative cash flows from operations, and at September 30, 2017 had a working capital deficit and stockholders’ deficit of $18.0 million and $18.8 million, respectively, whichthe responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC, Presentation of Financial Statements-Going Concern (Subtopic 205-40) (“ASC 205-40”), this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. Management has assessed the Company’s ability to continue as a going ~~concern. In addition,~~concern in accordance with the ~~Company’s cash position as~~requirements of ASC 205-40.

At September 30, 2023, the Company had a working capital deficit and a stockholders’ deficit of $41.5 million and $27.6 million, respectively. While the Company had net income of $1.5 million for the nine months ended September 30, 2023, it incurred a net loss of $0.5 million and $3.3 million for the three months ended September 30, 2023 and the year ended December 31, 2022, respectively. As of the date of this report, its cash is ~~critically~~ deficient ~~critical~~and payments ~~are not being made~~for its operations in the ordinary course are not being made. Losses in prior years and other related factors, including past due accounts payable and payroll taxes, as well as payment defaults under the terms of ~~business~~outstanding notes payable and ~~certain indebtedness in the amount of $6.0 million matured on March 31, 2017, which the Company does not have the financial resources to satisfy (see Note 5), all of which~~debentures, raise substantial doubt about the Company’s ability to continue as a going ~~concern.~~concern for 12 months from the filing date of this report.

The Company continues to consider efficiencies and is currently using one laboratory for the majority of its toxicology diagnostics thereby reducing the number of employees and associated operating expenses, in order to reduce costs. In addition,Company’s unaudited condensed consolidated financial statements are prepared assuming the Company ~~received approximately $15.7 million in cash from~~can continue as a going concern, which contemplates continuity of operations through realization of assets, and the ~~issuances~~settling of ~~debentures and warrants~~liabilities in the ~~first nine months~~normal course of ~~2017 (see Note 6), $3.8 million from related parties~~business. The Company’s current financial condition may make it difficult to attract and ~~an additional $4.0 million of proceeds on October 30, 2017 from the issuance of convertible preferred stock (see Note 15). In July 2017, the Company announced that it plans~~maintain adequate expertise in its management team to ~~spin off~~successfully operate its Advanced Molecular Services Group (“AMSG”) as an independent publicly traded company by way of a tax-free distribution to its shareholders. Completion of the spinoff of AMSG is expected to occur during the first quarter of 2018, and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission and consents, including under various funding agreements previously entered into by the Company. The intent of the spinoff of AMSG is to create two public companies, each of which can focus on its own strengths and operational plans. In accordance with ASC 205-20 and having met the criteria for “held for sale”, the Company has reflected amounts relating to AMSG as a disposal group classified as held for sale and included as part of discontinued operations. AMSG is no longer included in the segment reporting following the reclassification to discontinued operations. The discontinued operations of AMSG are described further in Note 14. The Company also announced that the Big South Fork Medical Center received CMS regional office licensure approval and opened its doors on August 8, 2017. The hospital provided services to over 1,854 patients and recognized approximately $0.6 million of revenues during the three months ended September 30, 2017. The Company may amend its current revenue recognition policy and percentage for the hospital when payments are received to support amended revenue recognition methodologies. Therefore, the Company expects that the opening of the hospital will continue to provide additional revenue and cash flow sources.healthcare facilities.

There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital or secure the additional financing necessary to implement its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to ~~significantly reduce~~raise adequate capital to fund its operations and repay its outstanding debt and other past due obligations, fully align its operating costs, increase its net revenues, and ~~eventually regain~~maintain profitable operations. The ~~accompanying~~unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company received HHS Provider Relief Funds, which were provided to eligible healthcare providers out of the $100 billion Public Health and Social Services Emergency Fund provided for in the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The funds were allocated to eligible healthcare providers for expenses and lost revenue attributable to the COVID-19 pandemic. As of September 30, 2023, our facilities have received approximately $13.6 million in relief funds. The fund payments are grants, not loans, and HHS will not require repayment, but the funds must be used only for grant approved purposes. Based on an analysis of the compliance and reporting requirements of the Provider Relief Funds and the impact of the pandemic on our operating results through September 30, 2023, we have recognized a net of $13.3 million of these funds as income of which $0.3 million was recognized in the three and nine months ended September 30, 2023, and $0.6 million, $4.4 million and $8.0 million were recognized as income during the years ended December 31, 2022, 2021 and 2020, respectively. Accordingly, approximately $0.3 million of relief funds received as of September 30, 2023 are included on our balance sheets in accrued expenses – see Note 5.

As of September 30, 2023, the Company’s ~~common stock (RNVA)~~estimate of the amount for which it is reasonably assured of meeting the underlying terms and ~~warrants~~conditions of the grants was based on, among other things, the various notices issued by HHS on September 19, 2020, October 22, 2020, and January 15, 2021 and the Company’s results of operations during the three and nine months ended September 30, 2023 and the years ended December 31, 2022, 2021 and 2020. The Company believes that it was appropriate to ~~purchase common stock (RNVAW) were no longer listed~~recognize a net of $13.3 million of the HHS Provider Relief Funds as income in various periods, as discussed in the paragraph above. Accordingly, the $13.3 million is not recognized as a liability at September 30, 2023. Additional guidance or new and amended interpretations of existing guidance on the ~~Nasdaq Stock Market but began trading on~~terms and conditions of such payments may result in changes in the ~~OTCQB instead,~~Company’s estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in derecognition of amounts of income previously recognized, which may be material. If we are unable to attest to or comply with current or future terms and conditions, and there is no assurance we will be able to do so, our ability to retain some or all of the funds received may be impacted.

The Company has been served with a qui tam complaint with regards to the use of monies received from HHS Provider Relief Funds, as more fully discussed in Note ~~15.~~12.

The earnings (loss) per share accounting guidance is discussed in Note 1. Diluted loss per share excludes all dilutive potential shares if their effect is anti-dilutive. The following table sets forth the computation of the Company’s basic and diluted net earnings (loss) per share available to common stockholders (unaudited) for the three and nine months ended September 30, 2023 and 2022:

~~RENNOVA HEALTH, INC.~~For the three months ended September 30, 2023 and 2022, the following potential common stock equivalents were excluded from the calculation of diluted loss per share as their effect was anti-dilutive:

~~Notes to Condensed Consolidated Financial Statements~~Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

~~(unaudited)~~For the nine months ended September 30, 2023 and 2022, the following potential common stock equivalents were excluded from the calculation of diluted loss per share as their effect was anti-dilutive:

~~On October 30, 2017,~~The terms of certain of the warrants, convertible preferred stock and convertible debentures issued by the Company ~~issued its Series I-1 Convertible Preferred Stock,~~provide for reductions in the per share exercise prices of the warrants and ~~modified~~ the ~~anti-dilution provisions~~per share conversion prices of ~~certain outstanding~~the debentures and preferred stock (if applicable and subject to floors in certain cases) in the event that the Company issues common stock or common stock equivalents (as that term is defined in the agreements) at an effective exercise/conversion price that is less than the then exercise/conversion prices of the outstanding warrants, preferred stock or debentures, as the case may be. In addition, many of these securities contain exercise or conversion prices that ~~were issued~~vary based upon the price of the Company’s common stock on the date of exercise/conversion (see Notes 6, 9 and 10). These provisions have resulted in ~~March 2017,~~significant dilution of the Company’s common stock.

As a result of the Voting Agreement and Irrevocable Proxy (the “Voting Agreement”) discussed in Note 10 and the November 5, 2021 Amendment to the Company’s Certificate of Incorporation, as amended, to provide that the number of authorized shares of the Company’s common stock or preferred stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Company, which is more fully discussed in Note ~~15.~~1, as of the date of filing this report, the Company believes that it has the ability to ensure that it has and/or can obtain sufficient authorized shares of its common stock to cover all outstanding rights to acquire potentially dilutive common shares.

As a result of these down round provisions, the potential common stock and common stock equivalents totaled 1.0 trillion at November 6, 2023. See Note 10 for a discussion of the number of shares of the Company’s authorized common and preferred stock.

Accounts receivable at September 30, ~~2017~~2023 (unaudited) and December 31, ~~2016~~2022 consisted of the following:

~~Property and equipment at September 30, 2017 (unaudited) and December 31, 2016 consisted~~Schedule of ~~the following:~~Accounts Receivable

On January 13, 2017, the Company completed an asset purchase agreement to acquire certain assets related to Scott County Community Hospital, based in Oneida, Tennessee (the “Hospital Assets”). The Hospital Assets include a 52,000 square foot hospital building and 6,300 square foot professional building on approximately 4.3 acres. Scott County Community Hospital, which has since been renamed as Big South Fork Medical Center, is classified as a Critical Access Hospital (rural). The Company acquired the Hospital Assets out of bankruptcy for a purchase price of $1.0 million, and the purchase price has been recorded as property and equipment in the Company’s condensed consolidated balance sheet. The Company opened the hospital on August 8, 2017.

Depreciation expense on property and equipment was $0.5 million and $0.7 million for the three months ended September 30, 2017 and 2016, and $1.5 million and $2.0 million for the nine months ended September 30, 2017 and 2016, respectively. Management periodically reviews the valuation of long-lived assets, including property and equipment, for potential impairment. Management did not recognize any impairment of these assets during the nine months ended September 30, 2017 and 2016.

Accrued expenses at September 30, ~~2017~~2023 (unaudited) and December 31, ~~2016~~2022 consisted of the following:

	September 30, 2017		December 31, 2016		September 30,		December 31,
Commisions payable	$	29,860	$	44,788
					2023		2022
Accrued payroll and related liabilities		1,755,131		493,521	$	8,525,232	$	8,533,710
HHS Provider Relief Funds						266,527		552,099
Accrued interest		2,211,588		1,471,191		6,720,113		5,736,096
Accrued legal expenses and settlements						498,000		534,550
Medicare cost report settlement reserves						861,046		2,101,837
Other accrued expenses		1,013,719		872,529		2,589,245		2,105,516
Total accrued expenses	$	5,010,298	$	2,882,029
Accrued expenses					$	19,460,163	$	19,563,808

~~The Company~~Accrued payroll and ~~its subsidiaries are party to a number of loans with affiliates~~related liabilities included approximately $7.0 million and ~~unrelated parties. At September 30, 2017 (unaudited)~~$7.0 million, respectively, for accrued past due payroll taxes and ~~December 31, 2016, notes payable consisted of the following:~~

On March 31, 2016, the Company entered into an agreement to pledge certain of its accounts receivable as collateral against a prepaid forward purchase contract whereby the Company received consideration in the amount of $5.0 million. The receivables had an estimated collectable value of $8.7 million which had been adjusted down to approximately $1.5 million on the Company’s balance sheet as of December 31, 2016associated penalties and $0interest as of September 30, ~~2017. In exchange for the consideration received, the counterparty received the right to: (i) a 20% per annum investment return from~~2023 and December 31, 2022, respectively.

As of December 31, 2022, the Company ~~on the consideration, with a minimum repayment term~~had Medicare cost reports settlement reserves of six months and minimum return of $0.5 million, (ii) all payments recovered from the accounts receivable up to $5.25 million, if paid in full within six months, or $5.5 million, if not paid in full within six months, and (iii) 20% of all payments of the accounts receivable in excess of amounts received in (i) and (ii). On March 31, 2017, to the extent that the counterparty has not been paid $6.0 million, the Company was required to pay the difference, plus 30% interest per annum on the total balance. To date, the Company has not recovered any payments against the accounts receivable. As of September 30, 2017, the Company has accrued $1.9 million for the counterparty’s required investment return, which is reflected in accrued expenses in the accompanying condensed consolidated balance sheet, and $6.9 million was due to the counterparty on September 30, 2017. The Company does not have the financial resources to repay this obligation.

The Company did not make the required monthly principal and interest payments due under the TCA Debenture for the period from October 2016 through March 2017. On February 2, 2017, the Company made a payment to TCA in the amount of $0.4 million which was applied to accrued and unpaid interest and fees, including default interest, as of the date of payment. On March 21, 2017, the Company made a payment to TCA in the amount of $0.75 million, of which approximately $0.1 million was applied to accrued and unpaid interest and fees in accordance with the terms of the TCA Debenture. Also on March 21, 2017, the Company entered into a letter agreement with TCA, which (i) waived any payment defaults through March 21, 2017; (ii) provided for the $0.75 million payment discussed above; (iii) set forth a revised repayment schedule whereby the remaining principal plus interest aggregating to approximately $2.6 million was to be repaid in various monthly installments from April of 2017 through September of 2017; and (iv) provided for payment of an additional service fee in the amount of $150,000, which was due on June 27, 2017, the day after effective date of the registration statement filed by the Company; which amount is reflected in accrued expenses in the accompanying condensed consolidated balance sheet at September 30, 2017. In addition, TCA entered into an intercreditor agreement with the purchasers of the convertible debentures (see Note 6) which sets forth rights, preferences and priorities with respect to the security interests in the Company’s assets. On September 19, 2017, the Company entered into a new agreement with TCA, which extended the repayment schedule through to December 31, 2017. The Company is current with its payments.

On September 15, 2016, the Company entered into an agreement with two investors whereby the Company sold to the investors convertible notes in the aggregate principal amount of $0.4 million (the “September 2016 Notes”). The September 2016 Notes were convertible into shares of the Company’s common stock at a conversion price of $112.50 per share. In conjunction with the sale of the September 2016 Notes, the Company issued warrants to purchase an aggregate of 4,444 shares of the Company’s common stock at an exercise price of $180.00 per share. Based on the allocation of the net proceeds from the September 2016 Notes to the fair value of the warrants, and the resulting beneficial conversion features, the Company recognized a discount for the entire face value of the September 2016 Notes, which was accreted through the notes’ maturity date of March 15, 2017. On March 13, 2017, the September 2016 Notes, along with the accompanying warrants, were exchanged for 26,667 shares of the Company’s common stock.

The Company did not make the principal payments under the Tegal Notes that were due on July 12, 2016. On November 3, 2016, the Company received a default notice from the holders of the Tegal Notes demanding immediate repayment of the outstanding principal and accrued interest aggregating to $0.4$2.1 million. ~~On December 7, 2016 the Company received a breach of contract complaint with a request for entry of a default judgment (see Note 11). To date, the Company has yet to repay this amount.~~

On February 3, 2015, the Company borrowed $3.0 million from Alcimede LLC (“Alcimede”). Seamus Lagan, the Company’s President and Chief Executive Officer, is the sole manager of Alcimede. The note has an interest rate of 6% and was originally due on February 2, 2016. Alcimede later agreed to extend the maturity date of the loan to August 2, 2017. On June 29, 2015, Alcimede exercised options granted in October 2012 to purchase 66,667 shares of the Company’s common stock at an exercise price of $37.50 per share, and the loan outstanding was reduced in satisfaction of the aggregate exercise price of $2.5 million. In August of 2016, $0.3 million was repaid by the Company through the issuance of shares of common stock. In March of 2017, the Company and Mr. Lagan agreed that a payment made to Alcimede in the amount of $50,000 would be deducted from the outstanding balance of the note. On August 2, 2017, the Company and Alcimede agreed to further extend the maturity date of the loan to February 2, 2018.

~~The remaining balance due on this loan as of September 30, 2017 was $0.2 million, including accrued interest.~~

During the nine months ended September 30, ~~2017,~~2023, the Company ~~repaid $0.1~~reduced its reserve amount by $1.2 million due to payments (recoupments) and various final and estimated cost report settlements leaving Medicare cost report settlement reserves of $0.9 million at September 30, 2023.

At September 30, 2023 (unaudited) and December 31, 2022, debt consisted of the following:

At September 30, 2023 (unaudited) and December 31, 2022, notes payable with third parties consisted of the following:

On December 7, 2016, the holders of the Tegal Notes filed suit against the Company seeking payment for the amounts due under the notes and accrued interest. On April 23, 2018, the holders of the Tegal Notes received a judgment against the Company in the amount of $384,384 plus post-judgment interest. On June 1, 2023, the Company and the holders of the Tegal Notes agreed to settle all amounts owed pursuant to the judgment for a total of $462,500 comprised of an initial payment of $200,000 followed by six monthly payments of $43,750. The Company has made all required payments to date, including the initial payment of $200,000, which was applied to accrued interest.

On September 27, 2019, the Company issued a promissory note payable to Anthony O’Killough in the principal amount of $1.9 million with payments due in November and December 2019. In February 2020, Mr. O’Killough sued the Company and Christopher Diamantis, as guarantor and in May 2020, the Company, Mr. Diamantis, as guarantor, and Mr. O’Killough entered into a Stipulation providing for payment of a total of $2.2 million (which included accrued “penalty” interest as of that date) in installments through November 1, 2020. The Company made payments totaling $450,000 in 2020. On January 18, 2022, Mr. Diamantis paid $750,000 and the remaining balance was ~~outstanding~~due 120 days thereafter. Mr. O’Killough agreed to forebear further enforcement action until then. On various dates during the remainder of 2022, Mr. Diamantis made additional payments to Mr. O’Killough totaling $300,000 and the Company gave Mr. Diamantis $350,000 for further payment to Mr. O’Killough. The Company is obligated to repay Mr. Diamantis for the payments, plus interest, that he made to Mr. O’Killough. As a ~~former~~result of these payments, the past due balance owed to Mr. O’Killough was $1.1 million on December 31, 2022. During the nine months ended September 30, 2023, the parties entered into a final settlement wherein the Company and Mr. Diamantis settled the obligation in full for $580,000. As a result of the settlement, the Company recorded a $0.6 million gain from legal settlement during the nine months ended September 30, 2023.

On August 10, 2021, the Company entered into two notes payable to Western Healthcare, LLC in the aggregate principal ~~stockholder,~~amount of $2.4 million. The notes were issued under the terms of a settlement agreement related to agreements that the Company had previously entered into for medical staffing services. The notes bear interest at a rate of 18% per annum and ~~borrowed an additional $75,000~~payments consisting of principal and interest were due no later than August 30, 2022. The Company paid $0.2 million to the note holders upon issuance of the notes. On May 12, 2023, the Company and Western Healthcare, LLC agreed to reduce the aggregate principal amount of the notes by $400,000 in exchange for a cash payment of $200,000. As a result of the reduction of the principal balance in excess of the amount paid, during the nine months ended September 30, 2023, the Company recorded a gain from ~~this same stockholder~~forgiveness of debt of $0.2 million. The Company has not made all of the monthly installments due under the notes and the notes are past due.

At September 30, 2023 (unaudited) and December 31, 2022, loan payable - related party consisted of the following:

Mr. Diamantis was a member of the Company’s Board of Directors until his resignation on February 26, 2020. During the nine months ended September 30, 2023 and 2022, Mr. Diamantis loaned the Company $0.6 million and $0.9 million, respectively, which ~~$50,000 has been repaid~~the Company used to pay amounts owed under the note payable to Mr. O’Killough. These payments and ~~$3.6 million~~the note payable to Mr. O’Killough are more fully discussed above under the heading Notes Payable –Third Parties. During the nine months ended September 30, 2023 and 2022, the Company made payments on the principal amount of the loans from Mr. Diamantis of $1.4 million and $0, respectively.

During the three months ended September 30, 2023 and 2022, the Company incurred interest expense of $0 and $15,000, respectively, on the loans from Mr. Diamantis. During the nine months ended September 30, 2023 and 2022, the Company incurred interest expense on the loans from Mr. Diamantis of $0.1 million and $0.1 million, respectively.

No accrued interest was owed to Mr. Diamantis at September 30, 2023 and December 31, 2022. Interest accrues on loans from Mr. Diamantis at a ~~director~~rate of 10% of the ~~Company, which has been fully repaid (see Note 7).~~amount loaned.

The carrying amount of all outstanding debentures as of September 30, ~~2017~~2023 (unaudited) isand December 31, 2022 was as follows:

~~There were no debentures outstanding as of December 31, 2016.~~March 2017 Debenture

~~On February 2,~~In March 2017, the Company issued ~~$1.6~~a debenture due in March 2019 (the “March 2017 Debenture”) with a principal balance of $2.6 million ~~aggregate principal amount~~at September 30, 2023 and December 31, 2022, including a 30% late-payment penalty of ~~Original Issue Discount Convertible Debentures~~$0.6 million. The March 2017 Debenture is past due by its original terms. The March 2017 Debenture bears default interest at the rate of 18% per annum and is secured by a first priority lien on all of the Company’s assets. The Company incurred default interest expense on this past due debenture of $0.1 million and $0.1 million, respectively, during the three months ~~from~~ended September 30, 2023 and 2022 and $0.3 million and $0.3 million, respectively, during the nine months ended September 30, 2023 and 2022. As of September 30, 2023, accrued default interest on the March 2017 Debenture totaled $2.1 million. Subsequent to September 30, 2023, the maturity date of ~~issuance (the “February Debentures”) and warrants~~the March 2017 Debenture was extended to purchase an aggregate of 6,667 shares of common stock, which can be exercised at any time after August 17, 2017 at an exercise price of $38.70 per share (the “February Warrants”), to an accredited investor for a purchase price of $1.5 million. On March 21, 2017, the February Debentures were exchanged for $2.5 million of exchange debenturesDecember 31, 2025 as more fully discussed ~~below.~~in Note 15.

On March 21, 2017, the Company issued $10.85 million aggregate principal amount of Senior Secured Original Issue Discount Convertible Debentures due March 21, 2019 (the “Convertible Debentures”). The Company received net proceeds from this transaction in the approximate amount of $8.4 million. The Company used $3.8 million of the net proceeds to repay the 2017 Diamantis Note (see Note 7) and $0.75 million of the net proceeds to make the partial repayment on the TCA Debenture (see Note 5). The remainder of the net proceeds were used for general corporate purposes. In conjunction with the issuance of the Convertible Debentures, the holder of the February Debentures exchanged these debentures for $2.5 million of new debentures (the “Exchange Debentures” and, collectively with the Convertible Debentures, the “March Debentures”) on the same terms as, and pari passu with, the Convertible Debentures and warrants. The Company recorded non-cash interest expense in the amount of $0.4 million as a result of this exchange. Additionally, the holders of an aggregate of $2.2 million stated value of the Company’s Series H Convertible Preferred Stock (the “Series H Preferred Stock”) exchanged such preferred stock into $2.7 million principal amount of Exchange Debentures and warrants. The March Debentures contain a 24% original issue discount, have no regularly scheduled interest payments except in the event of a default and have a maturity date of March 21, 2019.

~~In connection with~~September 30, 2023, the March Debentures the Company issued warrants to purchase an aggregate of 9,166,616 shares of the Company’s common stock to several accredited investors. The warrants were issued to the investors in three tranches, Series A Warrants, Series B Warrants and Series C Warrants (collectively, the “March Warrants”). The Series A Warrants are exercisable for 3,214,911 shares of the Company’s common stock. They are immediately exercisable and have a term of exercise equal to five years. The Series B Warrants are exercisable for 2,736,794 shares of the Company’s common stock and are exercisable for a period of 18 months commencing immediately. The Series C Warrants are exercisable for 3,214,911 shares of the Company’s common stock and have a term of five years provided such warrants shall only vest if, when and to the extent that the holders exercise the Series B Warrants. At September 30, 2017 the Series A, Series B and Series C Warrants each have an exercise price of $5.85 per share, which reflects an adjustment pursuant to their terms. The Series A, Series B and Series C Warrants are subject to “full ratchet” and other customary anti-dilution protections.

~~The March Debentures are~~Debenture is convertible into shares of the Company’s common stock, at a conversion price, which has been adjusted pursuant to ~~the~~its terms, of ~~the March Debentures to $5.85~~$0.00009 per share asor 28.7 billion shares of ~~September 30, 2017, due to prices at which~~ the ~~Company has subsequently issued shares of~~Company’s common stock. The Convertible Debentures began to amortize monthly commencing on the 90th day following the closing date. The Exchange Debentures began to amortize monthly on the closing date. On each monthly amortization date, the Company may elect to repay 5% of the original principal amount of the March Debentures in cash or, in lieu thereof, the conversion price of such debentures will thereafter be 85% of the volume weighted average price at the time of conversion. In the event the Company does not elect to pay such amortization amounts in cash, each investor, in their sole discretion, may increase the conversion amount subject to the alternative conversion price by up to four times the amortization amount. The March Debentures contain customary affirmative and negative covenants. The conversion prices areis subject to reset in the event of offerings or other issuances of common stock, or rights to purchase common stock, at a price below the then conversion price, as well as other customary anti-dilution ~~protections as more fully described in the debentures.~~protections.

The March ~~Debentures are secured by all of the Company’s assets and are guaranteed by substantially all of the Company’s subsidiaries. Between March 22,~~ 2017 ~~and September 30, 2017, holders of the March Debentures converted an aggregate of $4.1 million of these debentures into 548,932 shares of common stock.~~

~~The exercise prices of the March Warrants~~Debenture was issued ~~in connection~~ with the March Debentures are subject to reset in the event of offerings or other issuances of common stock, or rights to purchase common stock, at a price below the then exercise price, as well as other customary anti-dilution protections. As a result of these provisions, both the March Debentures and the March Warrants were deemed to be not indexed to the Company’s common stock, and the Company recognized derivative liabilities for the embedded conversion feature of the March Debentures and the March Warrants in the original amount of $15.3 million and $41.3 million, respectively. The Company recognized a discount for 100% of the principal value of the March Debentures and non-cash interest expense in the amount of $43.7 million in connection with the recognition of these derivative liabilities. As a result of the adoption of ASU 2017-11 in the second quarter of 2017, the interest expense and derivative liability originally recognized were adjusted and extinguished during the three months ended June 30, 2017. See Note 1 for the adoption of ASU 2017-11 for the retrospective adjustments made to the Company’s condensed consolidated financial statements with respect to the derivative liabilities associated with these debentures and warrants.

~~In June 2017, the Company issued debentures due three months from the date of issuance in two issuances (collectively, the “June Debentures”) and~~ warrants to purchase an aggregate of 100,000 shares of common stock (33,333 warrants in the June 2, 2017 transaction and 66,667 in the June 22, 2017 transaction), which can be exercised at any time after nine months at an exercise price of $5.85 per share for the June 2, 2017 warrants and $5.70 per share for the June 22, 2017 warrants (collectively the “June(the “March Warrants”), ~~to accredited investors for a purchase price of $1,902,700 and proceeds to the Company of $1.5 million. The Company recorded a discount on the debentures of $107,700~~ which ~~has been fully amortized~~.~~As more fully discussed below, on July 17, 2017, the June Debentures were exchanged~~.

On July 17, 2017, the Company closed an offering of $4,136,862 aggregate principal amount of Original Issue Discount Debentures due October 17, 2017 (the “July Debentures”) and warrants to purchase an aggregate of 141,333 shares of common stock (the “July Warrants”) for consideration of $2,000,000 in cash and the exchange of the full $1,902,700 aggregate principal amount of the June Debentures. Under the Purchase Agreement, the Company was required to hold a stockholders’ meeting to obtain stockholder approval for at least a 1-for-8 reverse split of the Company’s common stock on or before September 20, 2017. Accordingly, the Company’s stockholders approved a reverse stock split on September 20, 2017 and the Company effected a 1-for-15 reverse stock split of its common stock on October 5, 2017, as further discussed in Note 1. The July Debentures were guaranteed by substantially all of the subsidiaries of the Company pursuant to a Subsidiary Guarantee in favor of the holders of the July Debentures. As more fully discussed below, on September 19, 2017, the July Debentures were exchanged for $6.4 million of exchange debentures.

~~The July Warrants~~ are exercisable into shares of the Company’s common stock ~~at any time from and after six~~until March 21, 2024. During the nine months ~~from the closing date at an exercise price of $5.63 per common share (subject to adjustment). The July Warrants will terminate five years after they become exercisable.~~

~~On September 19, 2017,~~30, 2022, the Company ~~closed an offering~~recorded $330.5 million of $2,604,000 principal amount of Senior Secured Original Issue Discount Convertible Debentures due September 19, 2019 (the “New Debentures”) and three series of warrants to purchase an aggregate of 6,935,517 shares of the Company’s common stock (the “Series A Warrants,” the “Series B Warrants,” and the “Series C Warrants,” and collectively, the “September Warrants”). The offering was pursuant to the terms of a Securities Purchase Agreement, dated as of August 31, 2017 (the “Purchase Agreement”), between the Company and certain existing institutional investors of the Company. The Company received proceeds of $2,100,000 from the offering.

Also on September 19, 2017, the Company closed exchanges by which the holders of the Company’s July Debentures exchanged $4,136,862 principal amount of such debentures for $6,412,136 principal amount of new debentures on the same items as, and pari passu with, the New Debentures (the “September Exchange Debentures” and, together with the New Debentures, the “September Debentures”). The Company recorded non-cash interest expense in the amount of $1.0 milliondeemed dividends as a result of ~~this exchange. All issuance amounts~~the down round provisions of the March Warrants. No deemed dividends were recorded in the three months ended September ~~Debentures reflect a 24% original issue discount.~~30, 2023 and 2022 and the nine months ended September 30, 2023 as there was no change in the exercise prices of the March Warrants during the periods. Deemed dividends and outstanding warrants are more fully discussed in Notes 1, 9 and 10.

During 2018, the Company closed various offerings of debentures (the “2018 Debentures”) with principal balances aggregating $14.5 million, including late-payment penalties, due in September ~~Debentures contain customary affirmative and negative covenants.~~2019. The conversion ~~price is subject to “full ratchet” and other customary anti-dilution protections~~terms of the 2018 Debentures are the same as those of the March 2017 Debenture, as more fully described inabove, with the ~~debentures. The~~exception of the conversion price, which was $0.052 per share at September 30, 2023 and is subject to a floor of $0.052 per share. At September 30, 2023 and December 31, 2022, the outstanding principal balance of the 2018 Debentures, ~~may be converted at any time~~including 30% late-payment penalties of $1.3 million, was $5.6 million and the debentures were convertible into108.5 million shares of the Company’s common stock. The September Debentures begin to amortize monthly commencing on October 1, 2017. For the first three amortization dates, the amortization amount is $100,000. Thereafter, on each monthly amortization date, the Company may elect to repay 5% of the original principal amount of September Debentures in cash or, in lieu thereof, the conversion price of such September Debentures shall thereafter be 85% of the volume weighted average pricedebentures bear default interest at the ~~time~~rate of conversion. In the event the Company does not elect to pay such amortization amounts in cash, each investor, in their sole discretion, may increase the conversion amount subject to the alternative conversion price by up to four times the amortization amount.

~~The Series A Warrants are exercisable for an aggregate of 2,311,829 shares of the Company’s common stock. They are immediately exercisable~~18% per annum and have a term of exercise equal to five years. The Series B Warrants are exercisable for an aggregate of 2,311,859 shares of the Company’s common stock and are exercisable for a period of 18 months commencing immediately. The Series C Warrants are exercisable for an aggregate of 2,311,829 shares of the Company’s common stock, and have a term of five years provided such Series C Warrants shall only vest if, when and to the extent that the holders exercise the Series B Warrants. The September Warrants each have an exercise price of $3.90. All of the September Warrants are subject to “full ratchet” and other customary anti-dilution protections.

~~The Company’s obligations under the September Debentures~~ are secured by a ~~security interest in~~first priority lien on all of the Company’s assets. The Company incurred default interest expense on these past due debentures of $0.3 million and ~~its subsidiaries’ assets, pursuant to~~$0.3 million, respectively, during the ~~terms of the Security Agreement, dated as of March 20, 2017.~~

~~During the nine~~three months ended September 30, ~~2017, the Company realized approximately $15.7 million in proceeds from the issuances of these debentures~~2023 and ~~warrants. At September 30, 2017, the unamortized discounts were $16.4 million. These discounts represent original issue discounts, the relative fair value of the warrants issued with the debentures~~2022 and ~~the relative fair value of the beneficial conversion features of the debentures. During the three and nine months ended September 30, 2017, the Company recorded approximately $4.8~~$0.8 million and ~~approximately $14.7~~$0.8 million, ~~of non-cash interest and amortization of debt discount expense primarily in connection with the debentures and warrants.~~

~~See Note 9 for summarized information related to warrants issued and the activity~~respectively, during the nine months ended September 30, ~~2017.~~2023 and 2022. As of September 30, 2023, accrued default interest on the 2018 Debentures totaled $4.1 million. Subsequent to September 30, 2023, the maturity dates of the 2018 Debentures were extended to December 31, 2025 as more fully discussed in Note 15.

See Notes 3 and 10 for a discussion of the dilutive effect of the outstanding convertible debentures and warrants as of September 30, 2023.

On October 12, 2022, the Company issued non-convertible debentures in the amount of $550,000, including $50,000 of original issue discounts, for net proceeds of $500,000. These debentures were due by their initial terms on February 12, 2023 and were secured by a portion of the Company’s investment in InnovaQor Series B-1 Preferred Stock. On December 15, 2022, the Company and the institutional investors agreed to revise the repayment terms of these debentures as follows: (i) payment of $150,000 on December 15, 2022; and (ii) monthly payments of $100,000 due by the 12^th day of January, February, March and April 2023. The debentures were fully repaid in April 2023.

In addition to the transactions discussed in ~~Note 5,~~Notes 6 and 10, the Company had the following related party ~~transactions~~activity during the three and nine months ended September 30, ~~2017~~2023 and ~~2016:~~2022:

In January and February of 2017, the Company received advances aggregating $3.6 million from Christopher Diamantis, a director of the Company. The advances, along with $0.5 million of previously accrued but unpaid interest, were due on demand, bearing interest at 10% per annum. The Company used the advances to pay the purchase price for the Hospital Assets and for general corporate purposes. On March 7, 2017, the Company issued a promissory note to Mr. Diamantis in the amount of $3.8 million (the “2017 Diamantis Note”) in connection with these advances received in 2017, plus accrued and unpaid interest of $0.5 million. In conjunction with the issuance of the 2017 Diamantis Note, the Company also issued to Mr. Diamantis warrants to purchase 27,667 shares of the Company’s common stock, exercisable at $15.00. The 2017 Diamantis Note was repaid on March 21, 2017 with the proceeds received from the issuance of the Convertible Debentures (see Note 6). In May and June of 2017, the Company received advances from Mr. Diamantis, net of repayments totaling $0.2 million, at a 10% annum interest rate, which amount was paid in full on July 18, 2017.Alcimede Limited

~~Alcimede billed the Company $0.4 million and $0.3 million for consulting fees pursuant~~Pursuant to a consulting agreement, Alcimede Limited billed $0.1 million and $0.1 million for ~~each of~~services for the ~~nine~~three months ended September 30, ~~2017~~2023 and ~~2016, respectively.~~

~~Monarch Capital, LLC (“Monarch”) billed the Company for consulting fees pursuant to a consulting agreement in the amount of $0.1~~2022, respectively, and $0.3 million and $0.3 million for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively. ~~The agreement expired on August 31, 2017. Michael Goldberg, a director of~~Seamus Lagan, the ~~Company up until his resignation effective April 24, 2017,~~Company’s President and Chief Executive Officer, is the Managing Director of ~~Monarch.~~Alcimede Limited.

In addition to the investment in InnovaQor’s Series B-1 Preferred Stock (see Notes 1 and 9), at September 30, 2023 and December 31, 2022, the Company had a note receivable / related party receivable resulting from working capital advances to InnovaQor, Inc. (“InnovaQor”) of approximately $2.5 million and $1.5 million, respectively. From January 1, 2023 to September 30, 2023, the Company advanced $1.0 million to InnovaQor to finance its working capital requirements. The balance at September 30, 2023 and December 31, 2022 includes amounts due under a note receivable as discussed below.

As of July 1, 2022, the Company had an outstanding related party receivable from InnovaQor of $803,416. InnovaQor signed a promissory note, dated July 1, 2022, in favor of the Company that provided that InnovaQor repay the Company $883,757 on December 31, 2022 (inclusive of a 10% original issue discount). Effective December 31, 2022, the Company and InnovaQor agreed to restructure the promissory note receivable in favor of the Company in the amount of $883,757 and additional monies owed in the amount of $441,018 for a new promissory note receivable with a principal amount of $1,457,253 (inclusive of a 10% original issue discount, or $132,478) and an original maturity date of June 30, 2023 except that InnovaQor will pay 25% of any capital it receives from new capital secured prior to the maturity date. The note receivable, in the event of default, bears interest at 18% per annum. During the year ended December 31, 2022, the Company recognized original issue discounts totaling $0.2 million as interest income. On August 9, 2023, the Company and InnovaQor mutually agreed to modify the promissory note receivable to extend the maturity date from June 30, 2023 to December 31, 2023 and to provide for additional interest in the form of 5% of the principal amount. During the three and nine months ended September 30, 2023, the Company recognized one-half of the additional interest expense, or $36,455. The remaining one-half of the additional interest is included in the principal amount outstanding at September 30, 2023 and will be recognized as interest income in the fourth quarter of 2023.

During the three months ended September 30, 2023 and 2022, the Company contracted with InnovaQor to provide it with ongoing health information technology-related services totaling approximately $0.1 million and $53,555, respectively, and during the nine months ended September 30, 2023 and 2022, the Company contracted with InnovaQor to provide such services totaling approximately $0.3 million and $0.1 million, respectively. In addition, InnovaQor currently subleases office space from the Company at a cost of approximately $10,200 per month for rent and utilities.

The terms of the foregoing activities, and those discussed in Notes 6 and 10, are not necessarily indicative of those that would have been agreed to with unrelated parties for similar transactions.

We lease property and equipment under finance and operating leases. For operating leases with terms greater than 12 months, we record the related right-of-use assets and right-of-use obligations at the present value of lease payments over the term. We do not separate lease and non-lease components of contracts.

Generally, we use our most recent agreed-upon borrowing interest rate at lease commencement as our interest rate, as most of our operating leases do not provide a readily determinable implicit interest rate.

The ~~Company leases various~~following table presents our lease-related assets ~~under capital leases expiring through 2020 as follows. At~~and liabilities at September 30, ~~2017~~2023 (unaudited) and December 31, ~~2016, capital~~2022:

The following table presents certain information related to lease ~~obligations consisted~~expense for finance and operating leases for the three and nine months ended September 30, 2023 and 2022 (unaudited):

The following table presents supplemental cash flow information for the ~~following:~~nine months ended September 30, 2023 and 2022 (unaudited):

Aggregate future minimum ~~rentals~~lease payments under ~~capital~~right-of-use operating and finance leases are as follows:

Schedule of Future Minimum Rentals Under Right-of-use Operating and Finance Leases

Note 9 – ~~Stockholders’ Equity~~Fair Value, Derivative Financial Instruments and Deemed Dividends

The estimated fair value of financial instruments was determined by the Company ~~has 5,000,000 shares, par~~using available market information and valuation methodologies considered to be appropriate. The fair value ~~$0.01,~~measurements accounting guidance is more fully discussed in Note 1. At September 30, 2023 and December 31, 2022, the carrying value of ~~preferred stock authorized. As~~the Company’s accounts receivable, note receivable / receivable from related party, accounts payable and accrued expenses approximated their fair values due to their short-term nature.

The following table sets forth the financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, ~~2017,~~2023 (unaudited) and December 31, 2022:

During 2021, the Company ~~had outstanding 1,750,275~~sold several subsidiaries to InnovaQor. As consideration for the sale, the Company received 14,950 shares of InnovaQor’s Series B-1 Preferred Stock of which 100 shares were used in 2021 to settle an outstanding liability leaving a balance of 14,850 shares at September 30, 2023 and December 31, 2022. The fair value of the Company’s InnovaQor Series B-1 Preferred Stock investment was determined based on the Option Price Method (the “OPM”). The OPM treats common and preferred interests as call options on the equity value of the subject company, with exercise prices based on the liquidation preference of the preferred interests and participation thresholds for subordinated classes. The Black Scholes model was used to price the call options. The assumptions used were: risk free rate of 0.84%; volatility of 250.0%; and exit period of 5 years. Lastly, a discount rate of 35% was applied due to the lack of marketability of the InnovaQor Series B-1 Preferred Stock and the underlying liquidity of InnovaQor’s common stock.

In reviewing the fair value of the InnovaQor Series B-1 Preferred Stock, the Company believes that the value recorded at September 30, 2023 and December 31, 2022 of $9.0 million represents its fair value. In determining fair value, consideration was given to: (i) the variable rate conversion feature of the InnovaQor Series B-1 Preferred Stock in that changes in the price of the common stock ~~consisting~~do not affect conversion value; (ii) recent sales and offering prices by InnovaQor of ~~215~~ shares of its ~~Series G Preferred Stock, 60~~common stock; (iii) that InnovaQor is actively seeking additional capital; and (iv) other considerations that we believe will bolster the underlying liquidity of InnovaQor’s common stock.

The Company utilized the following method to value its derivative liability as of September 30, 2023 and December 31, 2022 for an embedded conversion option related to an outstanding convertible debenture valued at $455,336. The Company determined the fair value by comparing the conversion price per share, which based on the conversion terms is 85% of the market price of the Company’s common stock, multiplied by the number of shares issuable at the balance sheet dates to the actual price per share of ~~its Series H Preferred Stock~~the Company’s common stock multiplied by the number of shares issuable at that date with the difference in value recorded as a liability. There was no change in the value of the embedded conversion option in the three and ~~1,750,000 shares~~nine months ended September 30, 2023 and 2022 and the year ended December 31, 2022 as there was no change in the conversion price terms during the periods.

During the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023, there were no triggers of ~~its Series F Convertible Preferred Stock (the “Series F Preferred Stock”).~~

down round provisions of outstanding warrants and, therefore, no associated deemed dividends were recorded in the periods. During the nine months ended September 30, ~~2017, 7,785 shares~~2022, the conversions of ~~Series H Preferred Stock were converted into 370,446 shares~~preferred stock triggered a reduction in the exercise prices of ~~common stock in~~warrants containing down round provisions. In accordance with U.S. GAAP, the ~~terms~~incremental fair value of the ~~Series H Preferred Stock. Also~~warrants, as a result of the decreases in the exercise prices, was measured using Black Scholes. The following assumptions were utilized in the Black Scholes valuation models for the nine months ended September 30, 2022: risk free rates ranging from 0.0% to 2.73%, volatility ranging from 1.94% to 1,564% and terms ranging from 0.01 to 2.45 years. Based on the Black Scholes valuations, the incremental value of modifications to warrants as a result of the down round provisions of $330.5 million were recorded during the nine months ended September 30, ~~2017, 2,174~~2022.

In addition, deemed dividends of $0.3 million were recorded in the nine months ended September 30, 2022, as a result of the issuances of shares of our Series HP Preferred Stock, ~~with a stated value of $2.2 million were exchanged for Exchange Debentures with an aggregate principal amount of $2.7 million and warrants (see Note 6).~~

~~In connection with the acquisition of Genomas, Inc., on September 27, 2017, which is~~as more fully discussed in Note ~~14,~~10. Deemed dividends are also discussed in Notes 1 and 3.

The Company has 250,000,000,000 authorized shares of Common Stock at a par value of $0.0001 per share and 5,000,000 authorized shares of Preferred Stock at a par value of $0.01 per share.

As of September 30, 2023, the Company ~~issued 1,750,000~~had outstanding shares of preferred stock consisting of 10 shares of its Series FH Convertible Preferred Stock ~~valued at $174,097.~~(the “Series H Preferred Stock”), 250,000 shares of its Series L Convertible Preferred Stock (the “Series L Preferred Stock”), 20,810.35 shares of its Series M Convertible Redeemable Preferred Stock (the “Series M Preferred Stock”), 2,403.78 shares of its Series N Convertible Redeemable Preferred Stock (the “Series N Preferred Stock”), 8,464.59 shares of its Series O Convertible Redeemable Preferred Stock (the “Series O Preferred Stock”) and 10,194.87 shares of its Series P Preferred Stock. The ~~following~~Company’s outstanding shares of preferred stock do not contain mandatory redemption or other features that would require them to be presented on the balance sheet outside of equity and, therefore, they qualify for equity accounting treatment. As a result of the equity accounting treatment, fair value accounting is not required in connection with the issuances of the stock and no gains, losses or derivative liabilities have been recorded in connection with the preferred stock.

Each of the 10 shares of the Series H Preferred Stock has a ~~summary~~stated value of ~~certain terms~~$1,000 per share and ~~provisions~~is convertible into shares of the Company’s common stock at a conversion price of 85% of the volume weighted average price of the Company’s common stock at the time of conversion.

~~Rank~~. The Series FL Preferred Stock ~~ranks on parity~~is held by Alcimede LLC and has a stated value of $1.00 per share. Mr. Lagan is the sole manager of Alcimede LLC. The Series L Preferred Stock is not entitled to ~~our common stock.~~

~~Conversion~~.receive any dividends. Each share of the Series FL Preferred Stock is convertible into shares of ~~our~~the Company’s common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at any time after the first anniversary of the issuance date at the option of the holder at a conversion price equal to ~~the greater of $29.25 or~~ the average closing price of the Company’s common stock ~~for~~on the 10ten trading days immediately ~~preceding~~prior to the ~~conversion.~~ conversion date. On September 30, 2023, the Series L Preferred Stock was convertible into approximately 2.5 billion shares of the Company’s common stock at a conversion price of $0.0001 per share.

On June 30, 2020, the Company and Mr. Diamantis entered into an exchange agreement wherein Mr. Diamantis agreed to the extinguishment of the Company’s indebtedness to him totaling $18.8 million, including accrued interest, on that date in exchange for 22,000 shares of the Company’s Series M Preferred Stock with a par value of $0.01 per share and a stated value of $1,000 per share. See Note 6 for a discussion of the Company’s indebtedness to Mr. Diamantis as of September 30, 2023 and December 31, 2022.

The ~~maximum~~terms of the Series M Preferred Stock include: (i) each share of the Series M Preferred Stock is convertible into shares of the Company’s common stock at a conversion price equal to 90% of the average closing price of the Company’s common stock on the ten trading days immediately prior to the conversion date but in any event not less than the par value of the Company’s common stock; (ii) dividends at the rate per annum of 10% of the stated value per share shall accrue on each outstanding share of Series M Preferred Stock from and after the date of the original issuance of such share of Series M Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization). The dividends shall accrue from day to day, whether or not declared, and shall be cumulative and non-compounding; provided, however, that such dividend shall be payable only when, as, and if declared by the Board of Directors and the Company shall be under no obligation to pay such dividends. No cash dividends shall be paid on the Company’s common stock unless the dividends are paid on the Series M Preferred Stock; and (iii) each holder of the Series M Preferred Stock shall be entitled to vote on all matters submitted to a vote of the holders of the Company’s common stock. Regardless of the number of shares of Series M Preferred Stock outstanding and so long as at least one share of Series M Preferred Stock is outstanding, the outstanding shares of Series M Preferred Stock shall have the number of votes, in the aggregate, equal to 51% of all votes entitled to be voted at any meeting of stockholders or action by written consent. Each outstanding share of the Series M Preferred Stock shall represent its proportionate share of the 51% allocated to the outstanding shares of Series M Preferred Stock in the aggregate. The Series M Preferred Stock shall vote with the common stock and any other voting securities as if they were a single class of securities. On August 13, 2020, Mr. Diamantis entered into the Voting Agreement with Mr. Lagan and Alcimede LLC (of which Mr. Lagan is the sole manager) pursuant to which Mr. Diamantis granted an irrevocable proxy to Mr. Lagan to vote the Series M Preferred Stock held by Mr. Diamantis. Mr. Diamantis has retained all other rights under the Series M Preferred Stock.

During the year ended December 31, 2021, Mr. Diamantis converted a total of 610.65 shares of his Series M Preferred Stock with a stated value of $0.6 million into 45 shares of the Company’s common stock. On August 27, 2021, the Company entered into an exchange agreement with Mr. Diamantis. Pursuant to the exchange agreement, Mr. Diamantis exchanged 570 shares of his Series M Preferred Stock with a stated value of approximately $0.6 million for 9,500 shares of the Company’s common stock and warrants to purchase 4,750 shares of the Company’s common stock at an exercise price of $70.00 per share. The warrants have a three-year term and, as of September 30, 2023, are exercisable into 3.7 billion shares of the Company’s common stock at an exercise price of $0.00009 per share as a result of down-round provision features. On September 30, 2023, 20,810.35 shares of Series M Preferred Stock remained outstanding and were convertible into 208.1 billion shares of the Company’s common stock.

The Company’s Board of Directors has designated 50,000 shares of the 5,000,000 shares of authorized preferred stock as the Series N Preferred Stock. Each share of Series N Preferred Stock has a stated value of $1,000. On August 31, 2020, the Company and its debenture holders exchanged, under the terms of Exchange, Redemption and Forbearance Agreements, certain outstanding debentures and all of the then outstanding shares of the Company’s Series I-1 Convertible Preferred Stock and Series I-2 Convertible Preferred Stock for 30,435.52 shares of the Company’s Series N Preferred Stock.

The terms of the Series N Preferred Stock include: (i) each share of the Series N Preferred Stock is convertible into shares of the Company’s common stock, at any time and from time to time, at the option of the holder, into that number of shares of common stock ~~issuable upon~~determined by dividing the stated value of such share of Series N Preferred Stock, plus any accrued declared and unpaid dividends, by the conversion of the Series F Preferred Stock is 59,829. Any shares of Series F Preferred Stock outstanding on the fifth anniversary of the issuance date will be mandatorily converted into common stock at the applicable conversion price on such date.

~~Liquidation Preference~~. In the event of our liquidation, dissolution or winding-up, holders of Series F Preferred Stock will be entitled to receive the same amount that a holder of common stock would receive if the Series F Preferred Stock were fully converted into shares of our common stock atprice; (ii) the conversion price ~~(assuming for such purposes that~~is equal to 90% of the lowest VWAP during the 10 trading days immediately prior to the conversion date; (iii) dividends at the rate per annum of 10% of the stated value per share shall accrue on each outstanding share of Series FN Preferred Stock ~~is then convertible) which amounts~~from and after the date of the original issuance of such share of Series N Preferred Stock (the “Series N Preferred Accruing Dividends”). The Series N Preferred Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative and non-compounding; provided, however, that such Series N Preferred Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors. No cash dividends shall be paid ~~pari passu with all holders of~~on the common ~~stock.~~

~~Voting Rights~~~~. Each share of~~stock unless the Series FN Preferred Accruing Dividends are paid; and (iv) except as provided below or by law, the Series N Preferred Stock shall have ~~one vote, and the holders of the Series F Preferred Stock shall vote together with the holders of our common stock~~no voting rights. However, as ~~a single class.~~

~~Dividends~~~~. The holders of the Series F Preferred Stock will participate, on an as-if-converted-to-common stock basis, in any cash dividends to the holders of common stock.~~

~~Redemption~~. At any time, from time to time after the first anniversary of the issuance date, we have the right to redeem all or any portion of the outstanding Series F Preferred Stock at a price per share equal to $1.95 plus any accrued but unpaid dividends.

~~Negative Covenants~~~~. As~~ long as any shares of Series FN Preferred Stock are outstanding, the Company ~~may~~shall not, ~~amend,~~without the affirmative vote of the holders of a majority of the then outstanding shares of the Series N Preferred Stock, (a) alter or ~~repeal any provision of our certificate of incorporation, the certificate of designation or our bylaws in a manner that materially~~change adversely ~~affects~~ the powers, preferences or rights given to the Series N Preferred Stock or alter or amend the Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (c) increase the number of authorized shares of the Series FN Preferred ~~Stock.~~Stock, or (d) enter into any agreement with respect to any of the foregoing.

~~In October 2017,~~During the ~~Company issued its Series I-1 Convertible Preferred Stock in connection with a financing as more fully discussed in Note 15.~~

The Company had 1,354,171 and 186,692 shares of common stock outstanding at September 30, 2017 and December 31, 2016, respectively. The Company issued 1,167,479 shares of its common stock during the ninethree months ended September 30, ~~2017 as follows:~~

~~The February 22, 2017 reverse stock split, which is more fully described in Note 1, resulted in~~2023, the ~~issuance of 526~~holders converted 460.53 shares of ~~common stock due to the rounding up~~their Series N Preferred Stock with a stated value of ~~fractional shares.~~

~~On March 13, 2017, the Company issued 26,667~~$0.5 million into 5.1 billion shares of ~~common stock in settlement of $0.4 million of outstanding notes and warrants (see Note 5).~~

~~On March 15, 2017, the Company agreed to issue 2,056 shares of common stock to the holders of a like number of warrants to purchase~~ the Company’s common ~~stock in exchange for~~stock. No shares of Series N Preferred Stock were converted during the ~~warrants valued at $57,868.~~

three months ended September 30, 2022. During the nine months ended September 30, ~~2017,~~2023 and 2022, the holders converted 496.53 shares and 2,352 shares, respectively, of their Series N Preferred Stock with a stated value of $0.5 million and $2.4 million, respectively, into 5.5 billion and 8.4 billion shares, respectively, of the Company’s common stock. On September 30, 2023, 2,403.78 shares of Series N Preferred Stock remained outstanding and were convertible into 26.7 billion shares of the Company’s common stock.

On May 10, 2021, the Company ~~issued 548,932~~closed an offering of shares of its ~~common stock upon conversion of $4.1 million of the principal amount of the March Debentures (See Note 6).~~

~~On July 25, 2017, the Company issued 8,333 shares of its common stock valued at $42,510 for severance owed~~newly-authorized Series O Preferred Stock. The offering was pursuant to ~~a former employee under~~ the terms of the ~~Company’s equity plan. The equity plan is more fully described below.~~

securities purchase agreement dated as of May 10, 2021. On ~~August 14, 2017,~~September 7, 2021, the Company entered into a second securities purchase agreement and on October 28, 2021, the Company entered into a third securities purchase agreement. These agreements were between the Company and certain existing institutional investors of the Company. Under these agreements, the Company issued ~~181,933 shares of restricted stock to employees and directors, and later returned 4,933 shares of this stock to treasury, as more fully discussed under the heading~~~~Restricted Stock~~ ~~below.~~

~~On August 23, 2017, the Company issued 33,334~~9,900 shares of its Series O Preferred Stock and it received $9.0 million in aggregate proceeds.

The terms of the Series O Preferred Stock include: (i) each share of the Series O Preferred Stock is convertible into shares of the Company’s common stock, ~~in payment~~at any time and from time to time, at the option of ~~professional service fees valued~~the holder, into that number of shares of common stock determined by dividing the stated value of such share of Series O Preferred Stock, plus any accrued declared and unpaid dividends, by the conversion price; (ii) the conversion price is equal to 90% of the lowest VWAP during the 10 trading days immediately prior to the conversion date; (iii) dividends at ~~$118,493.~~

~~Restricted~~the rate per annum of 10% of the stated value per share shall accrue on each outstanding share of Series O Preferred Stock

~~On August 14, 2017,~~ from and after the date of the original issuance of such share of Series O Preferred Stock (the “Series O Preferred Accruing Dividends”). The Series O Preferred Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative and non-compounding; provided, however, that such Series O Preferred Accruing Dividends shall be payable only when, as, and if declared by the Board of ~~Directors, based~~Directors. No cash dividends shall be paid on the ~~recommendation~~common stock unless the Series O Preferred Accruing Dividends are paid; and (iv) except as provided below or by law, the Series O Preferred Stock shall have no voting rights. However, as long as any shares of Series O Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the ~~Compensation Committee~~holders of a majority of the ~~Board and in accordance with the provisions~~then outstanding shares of the ~~2007 Equity Plan, approved grants~~Series O Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to ~~employees and directors~~the Series O Preferred Stock or alter or amend the Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the ~~Company~~holders, (c) increase the number of ~~an aggregate of 181,933~~authorized shares of ~~restricted common stock~~the Series O Preferred Stock, or (d) enter into any agreement with respect to any of the ~~Company. The grants fully vest on~~foregoing.

During the ~~first anniversary~~three months ended September 30, 2023, the holders converted 180 shares of their Series O Preferred Stock with a stated value of $0.2 million into 2.0 billion shares of the ~~date~~Company’s common stock. No shares of ~~grant, subject to~~Series O Preferred Stock were converted during the ~~grantee’s continued status as an employee or director, as the case may be, on the vesting date.~~three months ended September 30, 2022. During the nine months ended September 30, ~~2017, 4,933~~2023 and 2022, the holders converted 220.5 and 638 shares, respectively, of their Series O Preferred Stock with a stated value of $0.2 million and $0.6 million, respectively, into 2.5 billion and 6.7 billion shares of the ~~restricted~~Company’s common stock, respectively. On September 30, 2023, 8,464.59 shares of Series O Preferred Stock remained outstanding and were ~~forfeited~~convertible into 94.1billion shares of the Company’s common stock.

On November 7, 2021, the Company entered into Exchange and Amendment Agreements (the “November 2021 Exchange Agreements”) with certain institutional investors in the Company wherein the investors agreed to reduce their holdings of $1.1 million principal value of then outstanding warrant promissory notes payable and $4.5 million of then outstanding non-convertible debentures, plus accrued interest thereon of $1.5 million, by ~~their~~exchanging the indebtedness and accrued interest for 8,544.87 shares of the Company’s Series P Preferred Stock. Each share of the Series P Preferred Stock has a stated value of $1,000. In addition, pursuant to the November 2021 Exchange Agreements, the expiration dates of the March Warrants that were issued by the Company to the debenture holders in March 2017 were extended from March 21, 2022 to March 21, 2024.

On March 11, 2022, under the terms of a securities purchase agreement dated January 31, 2022, the Company issued to the institutional investors an additional 1,100 shares of its Series P Preferred Stock for aggregate proceeds of $1.0 million. On April 1, 2022, the Company issued an additional 550 shares of its Series P Preferred Stock and ~~returned to treasury and cancelled.~~

received proceeds of $0.5 million. During the nine months ended September 30, ~~2017,~~2022, the Company ~~recognized stock-based compensation~~recorded $0.3 million of deemed dividends as a result of the issuances of shares of its Series P Preferred Stock during the period. The deemed dividends resulted from the difference between the stated value of the shares issued and the proceeds received, as well as the 10% conversion price discount.

The terms of the Series P Preferred Stock include: (i) each share of the Series P Preferred Stock is convertible into shares of the Company’s common stock, at any time and from time to time, at the option of the holder, into that number of shares of common stock determined by dividing the stated value of such share of Series P Preferred Stock, plus any accrued declared and unpaid dividends, by the conversion price; (ii) the conversion price is equal to 90% of the lowest VWAP during the 10 trading days immediately prior to the conversion date; (iii) dividends at the rate per annum of 10% of the stated value per share shall accrue on each outstanding share of Series P Preferred Stock from and after the date of the original issuance of such share of Series P Preferred Stock (the “Series P Preferred Accruing Dividends”). The Series P Preferred Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative and non-compounding; provided, however, that such Series P Preferred Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors. No cash dividends shall be paid on the common stock unless the Series P Preferred Accruing Dividends are paid; and (iv) except as provided below or by law, the Series P Preferred Stock shall have no voting rights. However, as long as any shares of Series P Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series P Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series P Preferred Stock or alter or amend the Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (c) increase the number of authorized shares of the Series P Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

On September 30, 2023, 10,194.87 shares of the Company’s Series P Preferred Stock were outstanding and were convertible into 113.3 billion shares of the Company’s common stock.

The Company had 37.1 billion and 29.1 billion shares of its common stock issued and outstanding at September 30, 2023 and December 31, 2022, respectively. During the nine months ended September 30, 2023, the Company issued 5.5 billion shares of its common stock upon the conversions of 496.53 shares of its Series N Preferred Stock and 2.5 billion shares of its common stock upon conversions of 220.5 shares of its Series O Preferred Stock. During the nine months ended September 30, 2022, the Company issued 8.4 billion shares of its common stock upon the conversions of 2,352 shares of its Series N Preferred Stock and 6.7 billion shares of its common stock upon the conversions of 638 shares of its Series O Preferred Stock.

The Company has outstanding options, warrants, convertible preferred stock and convertible debentures. Exercise of the outstanding options and warrants, and conversions of the convertible preferred stock and debentures could result in substantial dilution of the Company’s common stock and a decline in the ~~amount of $82,974 for the grant~~market price of the ~~restricted~~common stock. In addition, the terms of certain of the warrants, convertible preferred stock ~~based on a valuation of $3.75 per share. At September 30, 2017,~~and convertible debentures issued by the Company ~~had approximately $580,750~~provide for reductions in the per share exercise prices of ~~unrecognized compensation cost related~~the warrants and the per share conversion prices of the debentures and preferred stock (if applicable and subject to a floor in certain cases), in the event that the Company issues common stock or common stock equivalents (as that term is defined in the agreements) at an effective exercise/conversion price that is less than the then exercise/conversion prices of the outstanding warrants, preferred stock or debentures, as the case may be. These provisions, as well as the issuances of debentures and preferred stock with conversion prices that vary based upon the price of our common stock on the date of conversion, have resulted in significant dilution of the Company’s common stock and have given rise to reverse splits of its common stock, including the Reverse Stock Split, which is more fully discussed in Note 1.

On August 13, 2020, Mr. Diamantis entered into the Voting Agreement with the Company, Mr. Lagan and Alcimede LLC (of which Mr. Lagan is the sole manager) pursuant to which Mr. Diamantis granted an irrevocable proxy to Mr. Lagan to vote the Series M Preferred Stock held by Mr. Diamantis. Mr. Diamantis has retained all other rights under the Series M Preferred Stock. Regardless of the number of shares of Series M Preferred Stock outstanding and so long as at least one share of Series M Preferred Stock is outstanding, the outstanding shares of Series M Preferred Stock shall have the number of votes, in the aggregate, equal to 51% of all votes entitled to be voted at any meeting of stockholders or action by written consent. This means that the holders of Series M Preferred Stock have sufficient votes, by themselves, to approve or defeat any proposal voted on by the Company’s stockholders, unless there is a supermajority required under applicable law or by agreement.

As a result of the Voting Agreement discussed above and the November 5, 2021 Amendment to the ~~restricted stock.~~Company’s Certificate of Incorporation, as amended, to provide that the number of authorized shares of the Company’s common stock or preferred stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Company, which is more fully discussed in Note 1, as of the date of filing this report, the Company believes that it has the ability to ensure that it has and or can obtain sufficient authorized shares of its common stock to cover all outstanding rights to acquire potentially dilutive common shares.

The Company maintained and sponsored the Tegal Corporation 2007 Incentive Award Equity Plan (the “2007 Equity Plan”). Tegal Corporation is the ~~predecessor entity to~~prior name of the Company. The 2007 Equity Plan, as amended, provided for the issuance of stock options and other equity awards to the Company’s officers, directors, employees and consultants. During the nine months ended September 30, 2017 and 2016, the Company recognized stock-based compensation in the amount of $34,081 and $0.7 million, respectively, for the vesting of outstanding stock options. The 2007 Equity Plan terminated pursuant to its terms in September 2017. ~~The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2017:~~

As of September 30, ~~2017,~~2023 and December 31, 2022, the Company had ~~approximately $155,582 of unrecognized compensation cost related to~~26 stock options ~~granted under~~outstanding and exercisable with a weighted average exercise price of $2.9 million per share. At September 30, 2023, the ~~Company’s 2007 Equity Plan, which is expected to be recognized over a weighted-average period~~weighted average remaining contractual life was 2.62 years for options outstanding and exercisable. The intrinsic value of ~~1.03 years.~~options exercisable at September 30, 2023 and December 31, 2022 was $0. As of September 30, 2023 and 2022, there was no remaining compensation expense associated with stock options as all of the outstanding options had fully vested as of December 31, 2019.

The Company, as part of ~~various debt and equity~~ financing transactions, has issued warrants to purchase shares of the Company’s common ~~stock.~~ stock exercisable into a total of 511.3 billion shares at September 30, 2023.

The following summarizes the information related to ~~warrants issued and the~~warrant activity during the nine months ended September 30, ~~2017:~~2023:

Included in the ~~nine-months ended~~warrants outstanding at September ~~31,~~30, 2023 were the March Warrants issued in March 2017 ~~the Company issued 16,350,132 warrants with a weighted average exercise price of $5.03 per share~~ in connection with the ~~issuances of debentures as~~March 2017 Debenture. (The March 2017 Debenture is more fully discussed in Note 6.

~~Basic~~) The Company issued these warrants to purchase shares of the Company’s common stock to several accredited investors. On September 30, 2023, the March Warrants were exercisable into an aggregate of approximately 507.6 billion shares of the Company’s common stock. The March Warrants were issued to the investors in three tranches, Series A Warrants, Series B Warrants and ~~Diluted Loss per Share~~

~~Basic loss~~Series C Warrants. At September 30, 2023, the Series A Warrants were exercisable for 190.0 billion shares of the Company’s common stock. They were exercisable upon issuance in March 2017 and had an initial term of exercise equal to five years. On September 30, 2023, the Series B Warrants were exercisable for 127.6 billion shares of the Company’s common stock. They were exercisable upon issuance in March 2017, and had an initial term of exercise of eighteen months, which was subsequently extended until March 21, 2022. On September 30, 2023, the Series C Warrants were exercisable for 190.0 billion shares of the Company’s common stock and had an initial term of five years provided such warrants shall only vest if, when and to the extent that the holders exercise the Series B Warrants. On November 7, 2021, the expiration dates of the March Warrants were extended to March 21, 2024. On September 30, 2023, the Series A, Series B and Series C Warrants each have an exercise price of $0.00009 per share, ~~excludes dilution~~which reflects down round provision adjustments pursuant to their terms. The March Warrants are subject to “full ratchet” and ~~is computed by dividing loss attributable to common stockholders by the weighted-average~~other customary anti-dilution protections.

The number of ~~common~~ shares ~~outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue~~of common stock ~~were exercised or converted into~~issuable under outstanding warrants and the exercise prices of the warrants as reflected in the table above have been adjusted to reflect the full ratchet and other dilutive and down round provisions pursuant to the warrant agreements. As a result of the down round provisions of the outstanding warrants, subsequent issuances of the Company’s common stock or resulted in the issuance of common stock that then shared in the income of the Company. For the three and nine months ended September 30, 2017 and 2016, basic loss per share is the same as diluted loss per share.

~~Diluted loss per share excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2017 and 2016, the following potential~~ common stock equivalents ~~were excluded from~~at prices below the ~~calculation~~then current exercise prices of ~~diluted loss per share~~the warrants have resulted in increases in the number of shares issuable pursuant to the warrants and decreases in the exercise prices of the warrants. See, also, Notes 1 and 3 for a discussion of the dilutive effect on the Company’s common stock as ~~their effect was anti-dilutive:~~a result of the outstanding warrants.

~~The supplemental cash flow information for~~During the nine months ended September 30, ~~2017~~2022, reductions in the exercise prices of the warrants gave rise to deemed dividends. See Note 9 for the assumptions used in the calculations of deemed dividends. Deemed dividends are also discussed under the heading “Preferred Stock” above and ~~2016 (unaudited) is as follows:~~in Notes 1 and 3.

Credit risk with respect to accounts receivable is generally diversified due to the large number of patients at its facilities. The Company does have significant receivable balances with government and other payers. Generally, the Company does not require collateral or other security to support accounts receivables. However, the Company continually monitors and evaluates its client acceptance and collection procedures to minimize potential credit risks associated with its accounts receivable and establishes an allowance for uncollectible accounts and as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is not material to the financial statements.

The Company maintains its cash balances in high credit quality financial institutions. The Company’s cash balances may, at times, exceed the deposit insurance limits provided by the Federal Deposit Insurance Corp.

From time to time, the Company may be involved in a variety of claims, lawsuits, investigations and proceedings related to contractual disputes, employment matters, regulatory and compliance matters, intellectual property rights and other litigation arising in the ordinary course of business. The Company operates in a highly regulated industry which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company’s financial position or results of operations. The Company’s policy is to expense legal fees and expenses incurred in connection with the legal proceedings in the period in which the expense is incurred. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims below.

Biohealth Medical Laboratory, ~~Inc,~~Inc. and PB Laboratories, LLC (the “Companies”) filed suit against CIGNA Health in 2015 alleging that CIGNA failed to pay claims for laboratory services the Companies provided to patients pursuant to CIGNA - issued and CIGNA - administered plans. In 2016, the U.S. District Court dismissed part of the Companies’ claims for lack of standing. The Companies appealed that decision to the Eleventh Circuit Court of Appeals, which ~~recently~~in late 2017 reversed the District Court’s decision and found that the Companies have standing to raise claims arising out of traditional insurance plans, as well as self-funded plans.

In July 2019, the Companies and EPIC filed suit against CIGNA Health for failure to pay claims for laboratory services provided. Cigna Health, in turn, sued for alleged improper billing practices. The Company’s Epinex Diagnostics Laboratories, Inc. subsidiary was sued in a California state court by two former employees who alleged that they were wrongfully terminated, as well as for a variety of unpaid wage claims. The parties entered into a settlement agreement of this matter on July 29, 2016 for approximately $0.2 million, and the settlement was consummated on August 25, 2016. In October of 2016, the plaintiffs in this matter filed a motion with the court seeking payment for attorneys’ fees in the approximate amount of $0.7 million. On March 24, 2017, the court granted plaintiffs’ motion for payment of attorneys’ fees in the amount of $0.3 million, andsuit remains ongoing but because the Company ~~has accrued this amount in its condensed consolidated~~did not have the financial ~~statements. Additionally,~~resources to see the ~~Company is seeking indemnification for these amounts from Epinex Diagnostics, Inc. (“EDI”),~~legal action to conclusion it assigned the ~~seller of Epinex Diagnostic Laboratories, Inc. (“EDL”), pursuant to a Stock Purchase Agreement entered into by and among the parties.~~

In February 2016, the Company received notice that the Internal Revenue Service (the “IRS”) placed a lien against Medytox Solutions, Inc. and its subsidiaries relating to unpaid 2014 taxes due, plus penalties and interest, in the amount of $5.0 million. The Company paid $0.1 million toward its 2014 tax liability on March 2016. The Company filed its 2015 Federal tax return on March 15, 2016 and the accompanying election to carryback the reported net operating losses was filed in April 2016. On August 24, 2016, the lien was released, and on September of 2016 the Company received a refundbenefit, if any, from the ~~IRS in the amount of $1.9 million. In November of 2016, the IRS commenced an audit of the Company’s 2015 Federal tax return. The Company is currently unable~~suit to ~~predict the outcome of the audit or any liability~~Mr. Diamantis for his financial support to the Company ~~that may result from~~and assumption of all costs to carry the ~~audit.~~case to conclusion. The suit is now expected to go to trial in the first quarter of 2024 if not previously settled.

On September 27, 2016, a tax warrant was issued against the Company by the Florida Department of Revenue (the “DOR”) for unpaid 2014 state income taxes in the approximate amount of ~~$0.9~~$0.9 million, including penalties and interest. ~~On January 25, 2017, the Company paid the DOR $250,000 as partial payment on this liability, and in February 2017 the~~The Company entered into a Stipulation Agreement with the DOR ~~which will allow~~allowing the Company to make monthly ~~installment~~installments until July 2019. The Company has made payments ~~of $35,000 until February 2018 and negotiate a new payment agreement then, if~~to reduce the ~~balance of $0.3 million cannot be satisfied~~amount owed but did not discharge the liability in ~~a lump sum. If at any time during~~full. In the ~~Stipulation period~~three months ended September 30, 2023, the Company ~~fails to timely file any required tax returns~~initiated contact with the DOR ~~or does not meet the~~to begin negotiating payment ~~obligations under the Stipulation Agreement, the entire amount due will be accelerated. The Company is current with the agreed payment plan.~~

~~In December of 2016, TCS-Florida, L.P. (“Tetra”), filed suit against the Company~~terms for failure to make the required payments under an equipment leasing contract that the Company had with Tetra (see Note 8). On January 3, 2017, Tetra received a Default Judgment against the Company in the amount of $2.6 million, representing the balance ~~owed on the leases, as well as additional interest, penalties and fees.~~owed. The Company has recognized this amount in its consolidated financial statements as of December 31, 2016. In January and February of 2017, the Company made payments to Tetra in connection with this judgment aggregating to $0.7 million, and on February 15, 2017 the Company entered into a forbearance agreement with Tetra whereby the remaining $1.9 million due will be paid in 24 equal monthly installments. Payments commenced on May 1, 2017. The Company is current with its payments.

In December of 2016, DeLage Landen Financial Services, Inc. (“DeLage”), filed suit against the Company for failure to make the required payments under an equipment leasing contract that the Company had with DeLage (see Note 8). On January 24, 2017, DeLage received a default judgment against the Company in the approximate amount of $1.0 million, representingincreased the balance ~~owed on the lease, as well as additional interest, penalties and fees. The Company has recognized~~accrued for this amount in its consolidated financial statements as of December 31, 2016. On February 8, 2017, a Stay of Execution was filed and under its terms the balance due will be paid in variable monthly installments through January of 2019, with an implicit interest rate of 4.97%. The Company is current in its payments.liability to $0.6 million at September 30, 2023.

On December 7, 2016, the holders of the Tegal Notes ~~(see Note 5)~~ filed suit against the Company seeking payment for the amounts due under the notes ~~in the aggregate of $0.4 million, including~~and accrued interest. ~~A request for entry of default judgment was filed on January 24, 2017. A Case Management Conference is scheduled for December 5, 2017. The Company has submitted a settlement agreement proposal to~~On April 23, 2018, the holders of the Tegal Notes received a judgment against the Company in the amount of $384,384 plus post-judgment interest. On June 1, 2023, the Company and ~~is awaiting~~the holders of the Tegal Notes agreed to settle all amounts owed pursuant to the judgment for a ~~response.~~

~~Operating segments are defined under U.S. GAAP as components~~total of $462,500 comprised of an ~~enterprise~~initial payment of $200,000 followed by six monthly payments of $43,750. The Company has made all required payments to date and, at the time of this filing, it has one monthly payment to make before year end to discharge this liability in full.

In July 2019, CHSPSC, the former owners of Jamestown Regional Medical Center, obtained judgments against the Company of $1.3 million. The Company has recorded these judgments as liabilities as of September 30, 2023. However, management believes that a number of insurance payments were made to CHSPSC for ~~which discrete financial information is available~~services provided after the change of ownership and ~~are evaluated regularly~~believes that these payments will offset portions of the judgments.

On June 30, 2021, the Company entered into a settlement agreement with the Tennessee Bureau of Workers’ Compensation. Per the terms of the settlement agreement, the Company was obligated to pay a total of $109,739, payable in a lump sum payment of $32,922 on or before August 15, 2021 and in 24 consecutive monthly payments of $3,201 each on or before the 15^thday of each month beginning September 15, 2021. The Company made the required payments to complete the terms of the settlement agreement and has no further liability as of September 30, 2023.

A sealed qui tam lawsuit in the US District Court for the Southern District of Florida against the Company was filed in July 2021. While the majority of the named defendants were dismissed from the lawsuit on June 28, 2023, the allegations against Rennova Health, Inc., Jellico Medical Center, Inc., and Jamestown TN Medical Center still remain. This lawsuit was unsealed in November 2022 and Clifford Barron disclosed as the Plaintiff-Relator (whistleblower) who asserted violations of the False Claims Act. Clifford Barron was an employee of CollabRx, Inc. (a San Francisco based, wholly owned subsidiary of the Company) until early 2018. Following his resignation on January 17, 2018, Clifford Barron sought and received a judgment against the Company for approximately $253,000 he claimed was owed to him by the ~~enterprise’s chief~~CollabRx subsidiary for severance and payment of COBRA. On receiving the judgment, he collected all monies owed to him under this judgment, including from the Company’s rural healthcare operations in Tennessee with which he was not involved. Payments included approximately $164,000 secured from hospital operating ~~decision maker~~and other bank accounts by garnishments initiated by Jonathan Swann Taylor of Taylor & Knight, GP, Knoxville Tennessee, on behalf of Clifford Barron in ~~determining how to allocate resources~~May 2022. Clifford Barron has not been an employee of any subsidiary of the Company since January 2018, is not involved with the Company and ~~assess performance.~~has no knowledge of the Company’s operations, financial status, or controls. On November 21, 2022, the Company was advised that the U.S. Department of Justice was intervening in the action filed by the Plaintiff-Relator, Clifford Barron and has requested repayment of HHS Provider Relief Funds that certain subsidiaries of the Company obtained and other relief. The Company ~~operates~~has retained the services of a specialist third-party accounting firm to complete a forensic review of the expenditure of all monies expended since the receipt of HHS Provider Relief Funds. It has been discovered that certain filing requirements of the Company’s operating subsidiaries were incomplete or contained errors that did not accurately reflect the expenditure of HHS Provider Relief Funds received. The Company disputes the allegations made in ~~four reportable business segments:~~the False Claims Act complaint and believes that the forensic review of funds expended will address the lawsuit and demonstrate adherence with the applicable rules for use of HHS Provider Relief Funds. There is no assurance that the Company will be able to retain all HHS Provider Relief Funds it has received nor avoid payment of other relief sought by the Department of Justice. Any requirement to repay a significant amount of HHS Provider Relief Funds could have a material adverse effect on the Company.

EPIC Reference Labs, Inc. and ~~Informatics segment is now~~Other Non-Operating Subsidiaries

During the third quarter of 2020, the Company made a decision to sell EPIC and it made a decision to discontinue other non-operating subsidiaries, and as a result, EPIC’s operations and the other non-operating subsidiaries’ liabilities have been included in discontinued operations asfor all periods presented. The Company was unable to find a buyer for EPIC and, therefore, it has been classified as held for sale as of September 30, 2017. The accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies, of the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016ceased all efforts to sell EPIC and ~~in Note 1 for the adoption to ASU 2017-11. Selected financial information for the Company’s operating segments is as follows:~~closed down its operations.

~~The following table provides a brief description of recently issued accounting standards:~~

On July 12, 2017, the Company announced plans to spin off AMSG as an independent publicly traded company by way of a tax-free distribution to the Company’s stockholders. Completion of the spinoff is expected to occur in the first quarter of 2018 and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission, and consents, including under various funding agreements previously entered into by the Company. A record date to determine those stockholders entitled to receive shares in the spin off should be approximately 30 to 60 days prior to the date of the spinoff. The strategic goal of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. In addition, after the spinoff, each company will provide a distinct and targeted investment opportunity.

In accordance with ASC 205-20 and having met the criteria for “held for sale”, as the Company reached this decision prior to September 30, 2017, the Company has reflected amounts relating to AMSG as a disposal group classified as held for sale and included as part of discontinued operations. AMSG had been included in the Decision Support and Informatics segment, except for the Company’s subsidiary, Alethea Laboratories, Inc., which had been included in the Clinical Laboratory Operations segment. Segment disclosures in Note 12 no longer include amounts relating to AMSG following the reclassification to discontinued operations.

Carrying amounts of major classes of ~~assets~~liabilities of EPIC and ~~liabilities classified as held for sale and~~the other non-operating subsidiaries included as part of discontinued operations in the condensed consolidated balance sheets as of September 30, 2023 (unaudited) and December 31, 2022 consisted of the following:

Schedule of Discontinued Operation of Unaudited Balance Sheet and Operation Statement

In August 2020, the FASB issued 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). The new guidance provides accounting for convertible instruments and contracts in an entity’s own equity. The FASB issued this Update to ~~Condensed Consolidated Financial Statements~~

~~Major line items constituting loss from discontinued operations in the consolidated statements of operations for the nine months ended September 30, 2017 and 2016 consisted~~address issues identified as a result of the ~~following:~~complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. The Board focused on amending the guidance on convertible instruments and the guidance on the derivatives scope exception for contracts in an entity’s own equity. This standard will be effective for us for annual periods beginning on January 1, 2024, including interim periods within those fiscal years. Early adoption of this standard is not permitted for us because we have already adopted ASU 2017-11 “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” We have not yet determined the impact of adopting this new accounting guidance on our consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The FASB issued this ASU to: (1) clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) amend a related illustrative example, and (3) introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments in this ASU do not change the principles of fair value measurement. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company will apply the amendments prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. We have not yet determined the impact of adopting this new accounting guidance on our consolidated financial statements.

Other recent accounting standards issued by the FASB, including its Emerging Issues Task Force, the American Institute of ~~Genomas, Inc.~~Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on ~~September 27, 2017~~the Company’s present or future consolidated financial statements.

On ~~September 29, 2016,~~October 25, 2023, the Company ~~announced that it had~~ entered into ~~a Stock Purchase~~an Amendment and Waiver Agreement (the ~~“Purchase~~“Amendment Agreement”) ~~to acquire~~with the ~~remaining outstanding equity securities~~holders of Genomas, Inc. (“Genomas”) that the Company did not already own, representing approximately 85% of the outstanding equity interests in Genomas, for 1,750,000 shares of the Company’s newly - designated Series F Preferred Stock. (The Series F Preferred Stock isits March Debenture and 2018 Debentures, which are more fully described in Note 96. As of September 30, 2023, there was $8.2 million principal amount of these debentures outstanding, including mandatory default amounts. Under the Amendment Agreement, all defaults under these debentures were waived and ~~below.) Genomas is a biomedical company that develops PhyzioType Systems for DNA-guided management and prescription~~the maturity dates of ~~drugs used~~these debentures were extended to treat mental illness, pain, heart disease, and diabetes. The Company had previously announced that on July 19, 2016 it acquired approximately 15% of the outstanding equity of Genomas from Hartford Healthcare Corporation (“Hartford”), along with approximately $1.5 million of notes payable to Hartford and certain rights to and license participationDecember 31, 2025. Certain other amendments were also made in ~~technology that is used by Genomas, for $250,000 in cash. Under~~ the terms of the Purchase Agreement, the Company also agreed to assume approximately $0.8 million of indebtedness and other obligations of Genomas. The closing of this acquisition, which was subject to, among other things, receipt of regulatory and licensure approvals as well as other customary closing conditions, did not occur until September 27, 2017.these debentures. As a result of ~~delays in~~ the ~~closing of the transaction,~~Amendment Agreement, the Company ~~expensed all amounts previously paid for the company during the fourth quarter of 2016, including outstanding advances~~does not expect to ~~Genomas~~recognize default interest in ~~the amount of $0.4 million. Genomas will be spun-off as part of AMSG, so it is presented here~~future periods, subject to remaining in ~~discontinued operations.~~

The Series F Preferred Stock issued effective September 27, 2017 has an aggregate stated value of $1,750,000, and is convertible into shares of the Company’s common stock at any time after the one-year anniversary of the closing date at a conversion price per common share equal to the greater of $29.25 or the average closing sales price of the Company’s common stock for the 10 trading days immediately preceding the conversion. The maximum number of common shares issuable upon the conversion of the Series F Preferred Stock is 59,829. The Company valued the Series F Preferred Stock based on the value of the common stock issuable upon conversion on the date of the acquisition, which was $174,097.

The following table summarizes the (preliminary) fair values of assets acquired and liabilities assumed at the acquisition date of Genomas. The Fair Market Value appears to equal cost. The Company has one year to revalue goodwillcompliance with covenants and other ~~intangible assets in accordance with GAAP per ASC 850-10-25-14.~~obligations.

~~The acquisition~~Opening of Genomas was accounted for under the purchase method of accounting and, accordingly, the unaudited condensed consolidated financial statements reflect the results of operations of Genomas from the date of acquisition. Unaudited pro forma results of operations for the three-months ended September 30, 2017 and 2016 and the nine-months ended September 30, 2017 and 2016 are included below. Such pro forma information assumes that the Genomas acquisition had occurred as of JanuaryMyrtle Nonresidential Office-Based Opiate Treatment Facility

On November 1, 2017 and 2016, respectively, and revenue is presented in accordance with our accounting policies. These unaudited pro forma statements have been prepared for comparative purposes only and are not intended to be indicative of what our results would have been had the acquisition occurred2023, Myrtle began accepting patients at ~~the beginning of the periods presented or the results which may occur in the future.~~

As previously announced, on April 18, 2017, the Company was notified by Nasdaq that the stockholders’ equity balance reported on the Company’s Form 10-K for the year ended December 31, 2016 fell below the $2.5 million minimum requirement for continued listing under the Nasdaq Capital Market’s Listing Rule 5550(b)(1) (the “Rule”). As of September 30, 2017, the Company reported a stockholders’ deficit of $18.8 million.

~~In accordance with the Rule, the Company submitted a plan to Nasdaq outlining how it intended to regain compliance. On August 17, 2017, Nasdaq notified the Company that~~ its plan to correct the stockholders’ equity deficiency did not contain sufficient evidence to support a correction being achieved in the required time frame. The Company appealed this decision to a Hearing Panel which, on October 23, 2017, maintained this position and denied the Company a continued listing. Effective October 25, 2017, the Company’s common stock (RNVA) and warrants to purchase common stock (RNVAW) were no longer listed on the Nasdaq Stock Market but began trading on the OTCQB instead.

~~Subsequent to September 30, 2017, the Company has issued an aggregate of 4.3 million shares of common stock upon the conversion of debentures and exercise of warrants.~~

~~On October 30, 2017, the Company closed an offering of $4,960,000 stated value of its newly-authorized Series I-1 Convertible Preferred Stock (the “Series I-1 Preferred Stock”~~recently opened Nonresidential Office-Based Opiate Treatment Facility (“OBOT”). The ~~offering was pursuant~~OBOT is located adjacent to Myrtle’s alcohol and drug treatment facility in Oneida, Tennessee and supplements the ~~terms of the Securities Purchase Agreement, dated as of October 30, 2017 (the “Purchase Agreement”), between the Company~~existing residential rehabilitation and ~~certain existing institutional investors of the Company. The Company received proceeds of $4,000,000 from the offering.~~

The Purchase Agreement gives the investors the right to participate in up to 50% of any offering of common stock or common stock equivalents by the Company. In the event of any such offering, the investors may also exchange all or some of their Series I-1 Preferred Stock for such new securities on an $0.80 stated value of Series I-1 Preferred Stock for $1.00 of new subscription amount basis.

~~The following~~detoxification services offered at Myrtle, which is ~~a summary of certain terms and provisions of the Series I-1 Preferred Stock:~~

~~General.~~The Company’s board of directors has designated up to 4,960 shares of the 5,000,000 authorized shares of preferred stock as the Series I-1 Preferred Stock. Each share of Series I-1 Preferred Stock has a stated value of $1,000.

~~Rank.~~~~The Series I-1 Preferred Stock is senior in right of payment, including dividend rights and liquidation preference, to the Company’s Series G Preferred Stock and Series H Preferred Stock.~~

~~Conversion.~~Each share of Series I-1 Preferred Stock is convertible into shares of the Company’s common stock at any time at the option of the holder at a conversion price equal to the lesser of (i) $1.00, subject to adjustment, and (ii) 85% of the lesser of the volume weighted average market price of the common stock on the day prior to conversion or on the day of conversion. The conversion price is subject to “full ratchet” and other customary anti-dilution protections as more fully described in the Certificate of Designation of the Series I-1 Preferred Stock.

~~Liquidation Preference.~~Upon any liquidation, dissolution or winding-up of the Company, the holders of Series I-1 Preferred Stock shall be entitled to receive an amount equal to the stated value of the Series I-1 Preferred Stock, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing for each share of Series I-1 Preferred Stock, before any distribution or payment shall be made on any junior securities.

~~Voting Rights.~~Shares of Series I-1 Preferred Stock generally have no voting rights, except as required by law and except that the affirmative vote of the holders of a majority of the then outstanding shares of Series I-1 Preferred Stock is required to (a) alter or change adversely the powers, preferences or rights given to the Series I-1 Preferred Stock or alter or amend the Certificate of Designation of the Series I-1 Preferred Stock, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon liquidation senior to, or otherwise pari passu with, the Series I-1 Preferred Stock, (c) amend the Company’s certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series I-1 Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.

~~Dividends.~~Holders of Series I-1 Preferred Stock shall be entitled to receive dividends on shares of Series I-1 Preferred Stock equal (on an as-converted to common stock basis) to and in the same form as dividends actually paid on shares of common stock when, as and if dividends are paid on shares of common stock. No other dividends shall be paid on shares of Series I-1 Preferred Stock.

~~Redemption.~~Upon the occurrence of certain Triggering Events (as defined in the Certificate of Designation of the Series I-1 Preferred Stock), the holder shall, in addition to any other right it may have, have the right, at its option, to require the Company to either redeem the Series I-1 Preferred Stock in cash or in certain circumstance in shares of common stock at the redemption prices set forth in the Certificate of Designation.

~~Negative Covenants.~~As long as at least a specified number of shares of Series I-1 Preferred Stock are outstanding, unless the holders of 67% of the then outstanding shares of Series I-1 Preferred Stock shall have given prior written consent, the Company and its subsidiaries are, with certain exceptions, limited from (a) incurring indebtedness, (b) creating liens, (c) amending its charter documents, (d) repurchasing or acquiring shares of common stock or common stock equivalents, (e) paying cash dividends on junior securities, (f) entering into transactions with affiliates, or (g) entering into any agreement with respect to the foregoing.

On October 30, 2017, the Company entered into exchange agreements with the holders of the September Debentures to provide that the holders may, from time to time, exchange their September Debentures for shares of a newly-authorized Series I-2 Convertible Preferred Stock of the Company (the “Series I-2 Preferred Stock”). The exchange agreements permit the holders of the September Debentures to exchange specified principal amounts of the September Debentures on various closing dates from December 2, 2017 through March 1, 2018. Any exchange is at the option of the holders. Each holder may reduce the principal amount of September Debentures exchanged on any particular closing date, or elect not to exchange any September Debentures at all on a closing date. If a holder does choose to exchange less principal amount of September Debentures, or no September Debentures at all, it can carry forward such lesser amount to a future closing date and then exchange more than the originally specified principal amount for that later closing date. For each $0.80 of principal amount of September Debenture surrendered to the Company at any closing date, the Company will issue the holder a share of Series I-2 Preferred Stock with a stated value of $1.00. Each share of Series I-2 Preferred Stock is convertible into shares of the Company’s common stock at any time at the option of the holder at a conversion price equal to the lesser of (i) $1.00, subject to adjustment, and (ii) 85% of the lesser of the volume weighted average market price of the common stock on the day prior to conversion or on the day of conversion. The conversion price is subject to “full ratchet” and other customary anti-dilution protections as more fully described in the Certificate of Designation of the Series I-2 Preferred Stock.

~~The following is a summary of certain terms and provisions of the Series I-2 Preferred Stock.~~

~~General.~~The Company’s board of directors has designated up to 12,000 shares of the 5,000,000 authorized shares of preferred stock as the Series I-2 Preferred Stock. Each share of Series I-2 Preferred Stock has a stated value of $1,000.

~~Rank.~~~~The Series I-2 Preferred Stock is senior in right of payment, including dividend rights and liquidation preference, to the Company’s Series G Preferred Stock and Series H Preferred Stock.~~

~~Liquidation Preference.~~ Upon any liquidation, dissolution or winding-up of the Company, the holders of Series I-2 Preferred Stock shall be entitled to receive an amount equal to the stated value of the Series I-2 Preferred Stock, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing for each share of Series I-2 Preferred Stock, before any distribution or payment shall be made on any junior securities.

~~Voting Rights.~~ Shares of Series I-2 Preferred Stock generally have no voting rights, except as required by law and except that the affirmative vote of the holders of a majority of the then outstanding shares of Series I-2 Preferred Stock is required to (a) alter or change adversely the powers, preferences or rights given to the Series I-2 Preferred Stock or alter or amend the Certificate of Designation of the Series I-2 Preferred Stock, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon liquidation senior to, or otherwise pari passu with, the Series I-2 Preferred Stock, (c) amend the Company’s certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series I-2 Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.

~~Dividends~~. Holders of Series I-2 Preferred Stock shall be entitled to receive dividends on shares of Series I-2 Preferred Stock equal (on an as-converted to common stock basis) to and in the same form as dividends actually paid on shares of common stock when, as and if dividends are paid on shares of common stock. No other dividends shall be paid on shares of Series I-2 Preferred Stock.

~~Redemption.~~Upon the occurrence of certain Triggering Events (as defined in the Certificate of Designation of the Series I-2 Preferred Stock), the holder shall, in addition to any other right it may have, have the right, at its option, to require the Company to either redeem the Series I-2 Preferred Stock in cash or in certain circumstance in shares of common stock at the redemption prices set forth in the Certificate of Designation.

~~Negative Covenants.~~As long as at least a specified number of shares of Series I-2 Preferred Stock are outstanding, unless the holders of 67% of the then outstanding shares of Series I-2 Preferred Stock shall have given prior written consent, the Company and its subsidiaries are, with certain exceptions, limited from (a) incurring indebtedness, (b) creating liens, (c) amending its charter documents, (d) repurchasing or acquiring shares of common stock or common stock equivalents, (e) paying cash dividends on junior securities, (f) entering into transactions with affiliates, or (g) entering into any agreement with respect to the foregoing.

~~Modification of Anti-Dilution Provisions of the March Debentures and March Warrants~~

~~On October 30, 2017, the Company agreed to amend the March Debentures and March Warrants, which are~~ more fully discussed in Note ~~6, to remove the floor in the anti-dilution provisions therein.~~1.

During the month of October 2017, $2,185,464.02 aggregate principal amount of March Debentures were exercised for 1,924,037 shares of common stock and the Company received $633,000 upon the exercise of Class B Warrants issued in March 2017 for the issuance of 600,000 shares of common stock.

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

Certain statements made in this Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving its continued business operations. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “believe,” “anticipate,” “future,” “potential,” “estimate,” “expect,” “intend,” “plan,” or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-Q are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements, except as required by law. Our actual results could differ materially from the forward-looking statements.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2022 (the ~~“2016~~“2022 Form 10-K”) and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read in conjunction with the audited financial statements contained within the ~~2016~~2022 Form 10-K and with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this report.

We are a ~~healthcare enterprise that delivers products and~~provider of health care services ~~to healthcare providers, their patients and individuals.~~for our patients. We currently operate in three synergistic divisions: 1) Clinical diagnostics through our clinical laboratories; 2) supportive software solutions to healthcare providers including Electronic Health Records (“EHR”), Laboratory Information Systems and Medical Billing services; and 3) the recent addition of a rural critical accessown one operating hospital in ~~Tennessee. We aspire~~Oneida, Tennessee, a hospital located in Jamestown, Tennessee that we plan to ~~create~~reopen, and operate and an operating rural clinic in Kentucky. In addition, the Company owns a ~~more sustainable relationship with our customers by offering needed and interoperable solutions to capture multiple revenue streams from medical providers.~~

~~Our principal line of business to date is laboratory blood and urine testing~~subsidiary providing services ~~performed by our Clinical Laboratory Operations business segment, with a particular emphasis~~in the behavioral health sector on the ~~provision~~campus of ~~urine drug toxicology testing to physicians, clinics and rehabilitation facilities~~its hospital in ~~the United States. Testing services to rehabilitation facilities represented approximately 60% and 85%~~Oneida, Tennessee. The Company’s operations consist of ~~our revenues for the nine months ended September 30, 2017 and 2016, respectively.~~only one segment.

~~Our Supportive Software Solutions segment provides~~ Scott County Community Hospital (d/b/a customizable EHR and revenue cycle management services providing a full suite of billing services to substance abuse and behavioral health providers, as well as a dictation-based ambulatory EHR for physician practices and advanced transcription services.Big South Fork Medical Center)

On January 13, 2017, we ~~closed on an asset purchase agreement to acquire~~acquired certain assets related to Scott County Community Hospital, based in Oneida, Tennessee (the ~~“Hospital~~“Oneida Assets”). The ~~Hospital~~Oneida Assets include a ~~52,000 square~~52,000-square foot hospital building and ~~6,300 square~~6,300-square foot professional building on approximately 4.3 acres. Scott County Community Hospital ~~is classified as a Critical Access Hospital (rural) with~~has 25 beds, a 24/7 emergency department ~~operating rooms~~ and a laboratory that provides a range of diagnostic services. Scott County Community Hospital closed in July 2016 in connection with the bankruptcy filing of its parent company, Pioneer Health Services, Inc. We acquired the ~~Hospital~~Oneida Assets out of bankruptcy for a purchase price of $1.0 million. The hospital, which has since been renamed Big South Fork Medical Center, became operational on August 8, 2017. ~~We believe that the~~The hospital will provide us with a stable revenue base, as well as the potential for significant synergistic opportunities with our Clinical Laboratory Operations business segment. The Company is also actively seeking opportunities regarding other similar rural hospitals.

Our Decision Support and Informatics business segment develops and markets medical information and clinical decision support products and services intended to set a standard for the clinical interpretation of genomics-based, precision medicine. CollabRx offers interpretation and decision support solutions that enhance cancer diagnoses and treatment through actionable data analytics and reporting for oncologists and their patients. This segment is now considered part of our discontinued operations.

Our discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make a number of 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. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

We have identified the policies and significant estimation processes discussed below as critical to our business and to the understanding of our results of operations. For a detailed application of these and other accounting policies, see Note 2 to the audited consolidated financial statements as of and for the year ended December 31, 2016 included in the 2016 Form 10-K.

Service revenues are principally generated from laboratory testing services, including chemical diagnostic tests such as blood analysis and urine analysis. Laboratory service revenues are recognized at the time the testing services are performed and billed and are reported at their estimated net realizable amounts.

Net service revenues are determined utilizing gross service revenues net of contractual adjustments and discounts. Even though it is the responsibility of the patient to pay for laboratory service bills, most individuals in the United States have an agreement with a third-party payer suchbecame certified as a ~~commercial insurance provider, Medicaid or Medicare~~Critical Access Hospital (rural) hospital in December 2021, retroactive to pay all or a portion of their healthcare expenses; the majority of services provided by us are to patients covered under a third-party payer contract. In most cases, the Company is provided the third-party billing information and seeks payment from the third party in accordance with the terms and conditions of the third party payer for health service providers like us. Each of these third-party payers may differ not only in terms of rates, but also with respect to terms and conditions of payment and providing coverage (reimbursement) for specific tests. Estimated revenues are established based on a series of procedures and judgments that require industry specific healthcare experience and an understanding of payer methods and trends. Despite follow up billing efforts, the Company does not currently anticipate collection of a significant portion of self-pay billings, including the patient responsibility portion of the billing for patients covered by third party payers. The Company currently does not have any capitated agreements.June 30, 2021.

We review our calculations for the realizability of gross service revenues on a monthly basis in order to make certain that we are properly allowing for the uncollectable portion of our gross billings and that our estimates remain sensitive to variances and changes within our payer groups. The contractual allowance calculation is made on the basis of historical allowance rates for the various specific payer groups on a monthly basis with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions and shifts in the testing being performed. This calculation is routinely analyzed by us on the basis of actual allowances issued by payers and the actual payments made to determine what adjustments, if any, are needed. Based on the calculations at September 30, 2017 and 2016, we determined that the collectible portion of our gross billings that should be reflected in net revenues was approximately 13% and 15%, respectively, of the outgoing gross billings.

Accounts receivable are reported at realizable value, net of allowances for credits and doubtful accounts, which are estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimating and reviewing the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for contractual credits and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectability of these receivables or reserve estimates. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to provision for bad debts.

~~Impairment~~On March 5, 2019, we acquired certain assets related to an outpatient clinic located in Williamsburg, Kentucky known as CarePlus Clinic. The clinic, which was acquired from CarePlus Rural Health Clinic, LLC, offers compassionate care in a modern, patient-friendly facility. The CarePlus Clinic is located 32 miles northeast of our Big South Fork Medical Center.

In the second quarter of 2022, we formed a subsidiary, Myrtle Recovery Centers, Inc. (“Myrtle”), to pursue opportunities in the behavioral health sector, initially in our core, rural markets. We are leveraging our existing physical locations and corporate and regional infrastructure to offer behavioral health services, including substance abuse treatment. Services are provided on either an inpatient, residential basis or ~~Disposal~~an outpatient basis.

On August 10, 2023, Myrtle was granted a license by the Department of ~~Long-Lived Assets~~Mental Health and Substance Abuse Services of Tennessee to operate an alcohol and drug treatment facility in Oneida Tennessee. The facility, which is located at Rennova’s Big South Fork Medical Center campus, commenced operations and began accepting patients on August 14, 2023. The facility offers alcohol and drug residential detoxification and residential rehabilitation treatment services for up to 30 patients. On November 1, 2023, Myrtle began offering outpatient opiate treatment services at its Oneida facility as more fully discussed below under “Recent Events”.

On April 11, 2023, Myrtle sold shares of its common stock equivalent to a 1.961% ownership stake in the subsidiary for de minimis value to an unaffiliated individual licensed as a physician in Tennessee. The shares have certain transfer restrictions, including the right of the subsidiary to transfer the shares to another physician licensed in Tennessee for de minimis value. The shares were sold to the individual for Tennessee healthcare regulatory reasons.

On June 1, 2018, we acquired from Community Health Systems, Inc. certain assets related to an acute care hospital located in Jamestown, Tennessee, referred to as Jamestown Regional Medical Center, for a purchase price of $0.7 million. The hospital is an 85-bed facility of approximately 90,000-square feet on over eight acres of land, which offered a 24-hour emergency department with two trauma bays and seven private exam rooms, inpatient and outpatient medical services and a progressive care unit which provided telemetry services. The acquisition also included a separate physician practice known as Mountain View Physician Practice, Inc.

The Company ~~accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 360,~~~~Property, Plant and Equipment~~(“ASC 360”). ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. We did not record any impairment charges during the nine months ended September 30, 2017 and 2016.

~~We account for warrants issued in conjunction with the issuance of common stock and certain convertible debt instruments in accordance with the guidance contained in ASC Topic 815,~~~~Derivatives and Hedging~~ ~~(“ASC 815”) and ASC Topic 480,~~~~Distinguishing Liabilities from Equity~~ (“ASC 480”). For warrant instruments and conversion options embedded in promissory notes that are not deemed to be indexed to the Company’s own stock, we classified such instruments as liabilities at their fair valuessuspended operations at the ~~time of issuance~~hospital and adjusted the instruments to fair value at each reporting period. These liabilities were subject to re-measurement at each balance sheet date until extinguished either through conversion or exercise, and any changephysician practice in fair value was recognized in our statement of operations. The fair values of these derivative and other financial instruments had been estimated using a Black-Scholes model and other valuation techniques.

In July 2017, the FASB issued ASU 2017-11“Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair valueJune 2019, as a result of the ~~existence~~termination of the hospital’s Medicare agreement and other factors. The Company is evaluating whether to reopen the facility as an acute care hospital or as another type of healthcare facility. Jamestown is located 38 miles west of Big South Fork Medical Center.

On October 25, 2023, the Company entered into an Amendment and Waiver Agreement (the “Amendment Agreement”) with the holders of its debentures, which are more fully described in Note 6 to the accompanying unaudited condensed consolidated financial statements. As of September 30, 2023, there was $8.2 million principal amount of these debentures outstanding, including mandatory default amounts, and $6.2 million in accrued interest. Under the Amendment Agreement, all defaults under these debentures were waived and the maturity dates of these debentures were extended to December 31, 2025. Certain other amendments were also made in the terms of these debentures. As a ~~down round feature. For freestanding equity classified financial instruments,~~result of the ~~amendments require entities that present earnings per share (EPS) in accordance with Topic 260~~Amendment Agreement, the Company does not expect to recognize ~~the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders~~default interest in ~~basic EPS. Convertible instruments with embedded conversion options that have down round features are now~~future periods, subject to ~~the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt~~remaining in compliance with ~~Conversion~~covenants and ~~Other Options), including related EPS guidance (in Topic 260)~~other obligations.

On November 1, 2023, Myrtle began accepting patients at its recently opened Nonresidential Office-Based Opiate Treatment Facility (“OBOT”). The ~~amendments~~OBOT is located adjacent to Myrtle’s alcohol and drug treatment facility in ~~Part II of this Update recharacterize~~Oneida, Tennessee and supplements the ~~indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect.~~

Under current GAAP, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, Derivativesexisting residential rehabilitation and Hedging, to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting. Generally, for warrants and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measuredetoxification services offered at ~~fair value initially and at each subsequent reporting date.~~

~~The amendments in this Update revise the guidance for instruments with down round features in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity,~~Myrtle, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated.more fully discussed above.

~~For entities that present EPS in accordance with Topic 260,~~We currently operate one hospital, a rural health clinic and ~~when the down round feature is included in~~ an ~~equity-classified freestanding financial instrument, the value~~alcohol and drug treatment and OBOT facility. We also own another hospital at which operations are currently suspended. Owning a number of ~~the effect of the down round feature is treated as a dividend when it is triggered and as a numerator adjustment~~facilities in the ~~basic EPS calculation. This reflects~~same geographic location will create numerous efficiencies in management, purchasing and staffing and will enable the ~~occurrence~~provision of ~~an economic transfer of value~~additional, specialized and more valuable services that are needed by rural communities but cannot be sustained by a standalone facility. We remain confident that this is a sustainable model we can continue to grow through acquisition and development.

Three Months Ended September 30, 2023 Compared to the holder of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on an ongoing basis. Convertible instruments are unaffected by the Topic 260 amendments in this Update.

The amendments in Part 1 of this Update are a cost savings relative to current GAAP. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period.

~~We have early adopted this amendment as it has a material impact on our condensed consolidated financial statements.~~

~~We account for Stock-Based Compensation under ASC 718 “~~~~Compensation – Stock Compensation~~”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Under ASC 505-50, the Company determines the fair value of the options, warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in stockholders’ equity (deficit) over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period.

Three ~~months ended~~Months Ended September 30, ~~2017 compared to three months ended September 30, 2016~~2022

The following table summarizes the results of our consolidated continuing operations for the three months ended September 30, ~~2017~~2023 and ~~2016 (unaudited):~~2022:

~~Consolidated net~~Net revenues were ~~$1.4~~$3.5 million for the three months ended September 30, ~~2017,~~2023, as compared to ~~$41 thousand~~net revenues of $2.8 million for the three months ended September 30, ~~2016,~~2022, an increase of ~~$1.4~~$0.7 million. ~~The~~We attribute the increase ~~is mainly the result of two factors; (1) the opening of the Hospital which resulted~~ in net revenues to greater inpatient admissions, increased outpatient and emergency room services and higher reimbursement rates.

Direct costs of revenues remained constant at $1.8 million for each of the three months ended September 30, 2023 and 2022. As a result of the increase in net revenues, direct costs decreased to 51.1% of net revenues for the three months ended September 30, 2023 compared to 64.5% for the three months ended September 30, 2022.

General and administrative expenses increased by $0.5 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Myrtle and our hospital operations contributed approximately $0.4 million and $0.2 million of the increase, respectively, partially offset by a reduction of approximately $0.1 million of corporate related expenses. Myrtle began accepting patients on August 14, 2023. The increase in our hospital operations expenses was primarily due to an increase in employee related expenses and other professional fees.

Depreciation and amortization expense was $56,796 and $0.1 million in the three months ended September 30, 2023 and 2022, respectively. The decrease was due to fully depreciating certain fixed assets.

Loss from Continuing Operations Before Other Income (Expense), Income Taxes and Net Loss Attributable to Noncontrolling Interest

Loss from continuing operations before other income (expense), income taxes and net loss attributable to noncontrolling interest for the three months ended September 30, 2023 was $0.6 million compared to a loss of $0.9 million for the three months ended September 30, 2022. We attribute the decrease in the loss in the 2023 period primarily to the $0.7 million increase in net revenues in the three months ended September 30, 2023 compared to the comparable 2022 period, partially offset by the increase in general and administrative expenses of $0.5 million in the three months ended September 30, 2023 versus the 2022 period.

Other income, net of $0.3 million for the three months ended September 30, 2023 consisted primarily of approximately $0.3 million from HHS Provider Relief Funds and $0.1 million of non-cash interest income and other miscellaneous income, partially offset by $0.1 million of accrued penalties and interest on past due payroll taxes. Other income, net of $0.1 million for the three months ended September 30, 2022 consisted primarily of adjustments totaling approximately $0.2 million for certain previously accrued payroll related expenses, $0.1 million of non-cash interest income and $0.1 million of other income, net from various items, partially offset by $0.3 million of HHS Provider Relief Funds liabilities.

Interest expense was $0.4 million and $0.6 million for the three months ended September 30, ~~2017~~2023 and (2) the increase in the Clinical Laboratory Operations business segment revenue of $0.6 million compared to last year, even though there was a 75% decline in insured test volumes. The net revenue decline2022, respectively. Interest expense for the three months ended September 30, ~~2016 was due to the determination that the collectible portion~~2023 and 2022 consisted of ~~gross billings should be reflected at 15%, as compared to 20% from earlier in 2016. This change in estimate resulted in a reduction in net revenues in the amount~~interest expense on debentures and notes payable.

The benefit for income taxes of ~~$1.7 million. Net revenues in our Supportive Software Solutions increased by~~ $0.2 million for the three months ended September 30, ~~2017 compared to the same period a year ago.~~

~~Direct costs of revenue is essentially unchanged in the three months ended September 30, 2017, as compared to the three months ended September 30, 2016.~~

General and administrative expenses decreased by $1.3 million, or 20%, in the third quarter of 2017 as compared to the same period a year ago. The decrease is mainly the result of a $1.1 million reduction in employee compensation and related costs, as we significantly reduced our headcount throughout the latter half of 2016 and 2017 in response to the decline in revenues, and a $0.2 million reduction in maintenance costs for our laboratory equipment.

~~The decline in sales and marketing expenses of $0.2 million, or 59%, for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016~~2023 was ~~primarily~~ due to a ~~reduction in sales employee and contractor compensation expenses~~revision to the estimated taxable income for the year ended December 31, 2023, partly offset by an increase in the amount ~~of $0.2 million, as well as reduced travel, advertising and commissionable collections related to the decline in net revenues.~~due for state income taxes.

~~Bad debt expense for the three months ended September 30, 2017 was $0.5 million, as compared to $3.7 million for the three months ended September 30, 2016.~~

During the three months ended September 30, 2016, we recorded a charge of $3.5 million related to receivables in our Clinical Laboratory Operations segment that were deemed uncollectible. The primary factors in rendering these receivables uncollectible were our failure to obtain preauthorization from the third party prior to rendering services and the lack of an existing preferred provider contract with the third-party payer. We also increased the allowance for doubtful accounts for our Supportive Software Solutions segment by $0.2 million.

During the three months ended September 30, 2017, the Hospital business segment deemed uncollectible $0.4 million related to the August and September receivables since their Medicare & Medicaid certification was not approved until October 11, 2017. The Company will submit all claims for services rendered for payment since the opening of the hospital. We also increased the allowance for doubtful accounts for our Supportive Software Solutions segment by $0.1 million.

Depreciation and amortization expense was $0.5 million for the three months ended September 30, 2017 as compared to $0.7 million for the same period a year ago, as some of our property and equipment became fully depreciated during 2016 and our capital expenditures have been minimal due to the reduced sample volume at our laboratories.

Our operating loss decreased by $6.4 million, to $5.2 million for the three months ended September 30, 2017, as compared to $11.5 million for the three months ended September 30, 2016. The decrease is due to the $5.0 million decrease in total operating expenses and the $1.4 million increase in net revenues.

Interest expense for the three months ended September 30, 2017 was $5.3 million, as compared to $1.7 million for the three months ended September 30, 2016. Interest expense in the three months ended September 30, 2017 includes a $4.8 million non-cash interest charge related to the issuance of convertible debentures and warrants during the period. Interest expense in the three months ended September 30, 2016 mainly consists of an interest charge of $0.5 million related to the $5 million prepaid forward purchase contract and $0.4 million of non-cash interest expense related to the accretion of debt discounts.

Other income decreased by $1.9 million for three months ended September 30, 2017 as compared to same period a year ago. The decrease consists primarily of $2.1 million in non-cash gains on the change in fair value of derivative financial instruments related to convertible notes and warrants recorded in 2016.

~~Our net~~ loss from continuing operations for the three months ended September 30, ~~2017~~2023 was ~~$10.5~~$0.5 million, as compared to ~~$11.2~~a net loss from continuing operations of $1.3 million for the ~~same~~three months ended September 30, 2022. The improvement in the 2023 period ~~of a year ago, a decrease of $0.8 million. The change is~~as compared to the 2022 period was primarily due to a $0.3 million reduction in the ~~decrease~~loss from continuing operations before other income (expense), income taxes and net loss attributable to noncontrolling interest in ~~operating expenses~~the three months ended September 30, 2023 compared to the 2022 period, $0.3 million of ~~$5.0~~other income, net in the 2023 period compared to other income, net of $0.1 million ~~an increase of $3.6 million~~in the 2022 period and a decrease in interest expense ~~and a decrease~~ of ~~$2.0~~$0.2 million in ~~other income (expense),~~the three months ended September 30, 2023 versus the comparable 2022 period, partially offset by a gain from legal settlement, net of $0.1 million in the ~~increase in revenue of $1.4 million.~~2022 period.

~~The following table presents key financial and operating metrics for our Clinical Laboratory Operations segment:~~

~~The following table presents key financial metrics for our Supportive Software Solutions segment:~~

~~The following table presents key financial metrics for our Hospital segment:~~

Nine months ended September 30, ~~2017~~2023 compared to ~~Nine~~the nine months ended September 30, ~~2016~~2022

The following table summarizes the results of our consolidated continuing operations for the nine months ended September 30, ~~2017~~2023 and ~~2016:~~2022:

~~Consolidated net~~Net revenues were ~~$3.3~~$14.8 million for the nine months ended September 30, ~~2017,~~2023, as compared to ~~$4.1~~$7.6 million for the nine months ended September 30, ~~2016,~~2022, an increase of $7.3 million. We attribute the increase in net revenues to greater inpatient admissions, increased outpatient and emergency room services, higher reimbursement rates and certain collections from prior periods related to Critical Access Hospital designation at our Big South Fork Medical Center. We began billing as a ~~decrease of $0.8 million, or 19%. The decrease is mainly the result of a 72% decline in insured test volumes in our Clinical Laboratory Operations business segment, offset by the net revenue of the~~Critical Access Hospital in the ~~amount~~three months ended June 30, 2022 retroactive to June 30, 2021.

Direct Costs of ~~$0.6 million. Net revenues in our Supportive Software Solutions~~Revenues

Direct costs of revenue increased by ~~$0.1~~$0.7 million ~~or 15%~~ for the nine months ended September 30, ~~2017 as~~2023 compared to the ~~same period~~nine months ended September 30, 2022. We attribute the increase primarily to higher salaries and wages and supply costs. Salaries and wages increased primarily due to greater inpatient admissions and increased non-clinical staffing, partially offset by reduced contract labor. Central supplies increased as a ~~year ago.~~result of the increase in patient admissions.

~~Direct costs of revenue decreased~~General and administrative expenses increased by ~~25%, from $1.1~~$1.6 million in the nine months ended September 30, ~~2016~~2023 compared to ~~$0.8~~the 2022 period. Myrtle and our hospital operations contributed approximately $0.6 million and $1.2 million of the increase, respectively, partially offset by a reduction of approximately $0.2 million of corporate related expenses. Myrtle began accepting patients on August 14, 2023. Our hospital operations general and administrative expenses increased primarily due to increased employee related expenses, professional and purchased services and property taxes.

Depreciation and amortization expense decreased by approximately $0.1 million in the nine months ended September 30, ~~2017. The decrease is~~2023 compared to the 2022 period as a result of ~~reduced expenses for transcription, data storage~~fully depreciating certain fixed assets.

Income (Loss) from Continuing Operations Before Other Income (Expense), Income Taxes and ~~software license related~~Net Loss Attributable to ~~our Supportive Software Solutions segment as well as a decrease in reagents~~Noncontrolling Interest

Our income from continuing operations before other income (expense), income taxes and ~~supplies at our laboratories offset by an increase of $0.1 million related~~net loss attributable to ~~the Hospital.~~

~~General and administrative expenses decreased by $4.2 million, or 24%,~~noncontrolling interest for the nine months ended September 30, ~~2017,~~2023 was $2.2 million compared to ~~the same period~~ a ~~year ago. The decrease is mainly the result~~loss of a $3.0 million reduction in employee compensation and related costs, net of Hospital employee compensation of $1.6 million, as we significantly reduced our headcount throughout the latter half of 2016 and 2017 in response to the decline in revenues in our Clinical and Supportive Software, and a $0.2 million reduction in maintenance costs for our laboratory equipment and a $0.8 million decrease in stock compensation expense.

The decline in sales and marketing expenses of $0.8 million, or 57%, for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 was primarily due to a reduction in sales employee and contractor compensation expenses in the amount of $0.8 million, as well as reduced travel, advertising and commissionable collections related to the decline in net revenues.

Bad debt expense for the nine months ended September 30, 2017 was $1.1 million, as compared to $3.7 million for the same period of a year ago. The decrease is mainly due to the $3.5 million bad debt charge in 2016 related to receivables in our Clinical Laboratory Operations segment.

~~Depreciation and amortization expense was $1.5~~$2.8 million for the nine months ended September 30, ~~2017 as~~2022. We attribute the $5.0 million improvement in the nine months ended September 30, 2023 to the $7.3 million increase in net revenues in the nine months ended September 30, 2023 compared to ~~$2.0 million~~the comparable 2022 period, partially offset by higher direct costs of revenues and general and administrative expenses in the nine months ended September 30, 2023 versus the 2022 period.

Other income, net for the ~~same period a year ago,~~nine months ended September 30, 2023 of $0.5 million consisted primarily of $0.3 million from HHS Provider Relief Funds as ~~some~~well as approximately $0.5 million from various other miscellaneous income items, including $36,455 of ~~our property~~non-cash interest income, partially offset by $0.3 million of penalties and ~~equipment became fully depreciated during 2016 and our capital expenditures have been minimal~~interest associated with past due ~~to the reduced sample volume at our laboratories. Most~~payroll taxes. Other income, net of ~~the capital expenditures for the Hospital in the amount of $1.5 million, started depreciating at the time the Hospital was opened in August 2017.~~

~~Our operating loss decreased by $7.7 million, to $13.7~~$0.1 million for the nine months ended September 30, ~~2017,~~2022 consisted primarily of adjustments totaling approximately $0.3 million for certain previously accrued payroll related expenses and $0.1 million of non-cash interest income, as ~~compared to $21.3~~well as approximately $0.3 million of other income, net from various other items, partially offset by $0.3 million of HHS Provider Relief Funds liabilities and $0.3 million of penalties and interest associated with past due payroll taxes.

Gain from forgiveness of debt of $0.2 million for the nine months ended September 30, ~~2016.~~ 2023 resulted from the forgiveness of a portion of outstanding notes payable. Gain from forgiveness of debt for the nine months ended September 30, 2022 resulted from the forgiveness of PPP Notes.

The ~~decrease is due to~~gain (loss) from legal settlements, net was $0.3 million and ($15,410) for the ~~$8.4~~nine months ended September 30, 2023 and 2022, respectively. The gain from legal settlements, net in the 2023 period resulted primarily from a gain of $0.6 million ~~decrease in total operating expenses~~from the settlement of an obligation under a note payable, partially offset by $0.3 million associated with the ~~$0.8 million decrease in net revenues.~~adjustment of reserves related to judgments with the former owners of Jamestown Regional Medical Center.

Interest expense for the nine months ended September 30, ~~2017~~2023 was ~~$16.5~~$1.4 million as compared to ~~$4.7~~$1.7 million for the nine months ended September 30, ~~2016.~~2022. Interest expense infor the nine months ended September 30, ~~2017 includes a $8.5~~2023 included approximately $1.3 million ~~non-cash~~for interest ~~charge related to the issuance of convertible~~on debentures and ~~warrants during~~notes payable and $58,000 for interest on loans from Mr. Diamantis, a former member of our Board of Directors. Interest expense for the ~~period, and $6.2 million for amortization of debt discount.~~

~~Other income (expense) decreased by $6.8 million for~~ nine months ended September 30, ~~2017 as~~2022 included $1.6 million for interest on debentures and notes payable and $0.1 million for interest on loans from Mr. Diamantis.

The provision for income taxes of $0.3 million for the nine months ended September 30, 2023 compared to no provision for the ~~same~~nine months ended September 30, 2022 was due to the taxable income in the 2023 period versus a ~~year ago. The decrease consists of~~loss for the ~~$6.8 million in non-cash gains on the change in fair value of derivative financial instruments related to convertible notes and warrants recorded in 2016.~~2022 period.

~~Our net loss~~Net income from continuing operations for the nine months ended September 30, ~~2017~~2023 was ~~$30.1~~$1.5 million compared to a net loss from continuing operations of $4.1 million for the nine months ended September 30, 2022. The improvement in the results from continuing operations in the 2023 period as compared to ~~$19.3~~the 2022 period of approximately $5.6 million ~~for the same period a year ago, an increase of $10.8 million. The change is~~was primarily due to the income from continuing operations before other income (expense), income taxes and net loss attributable to noncontrolling interest of $2.2 million in the 2023 period versus a loss of $2.8 in the comparable 2022 period, an increase of ~~$12.2~~other income, net of $0.4 million in ~~non-cash~~the 2023 period compared to the 2022 period, a gain from legal settlements, net of $0.3 million in the 2023 period compared to a loss from legal settlements, net of ($15,410) in the 2022 period and a reduction in interest ~~and amortization~~expense of ~~debt discount charge, and~~$0.3 million in the 2023 period compared to the 2022 period. Partially offsetting the improvement was a decrease of ~~$6.8~~$0.1 million in ~~other income (expense), offset by a decrease~~the gain from forgiveness of debt in ~~loss from operations of $7.7 million.~~

~~The following table presents key financial and operating metrics for our Clinical Laboratory Operations segment:~~

~~The following table presents key financial metrics for our Supportive Software Solutions segment:~~

~~The decrease in general and administrative expenses relates primarily to~~ the ~~reduction in employee compensation and related costs, as we significantly reduced our headcount.~~

~~The following table presents key financial metrics for our Hospital segment:~~

~~The decrease in general and administrative expenses is mainly due to reductions in stock-based compensation in 2017 as~~2023 period compared to the ~~prior year~~2022 period and $0.3 million of income tax expense in the ~~amount of $0.8 million, $0.7 million of interest~~2023 period versus no income tax expense in the 2022 period.

Liquidity and ~~penalties that were recognized in 2016 in connection with unpaid taxes, and a $0.3 million decrease in salaries due to headcount reduction.~~Capital Resources

For the ~~year~~nine months ended ~~December 31, 2016 and through~~ September 30, ~~2017,~~2023, we ~~have~~ financed our operations ~~primarily~~with the $3.1 million of cash that we generated from ~~the sale~~operations and $0.6 million of loans from Mr. Diamantis, a former member of our ~~equity securities, short-term advances~~Board of Directors. During the nine months ended September 30, 2022, we financed our operations with $1.5 million from ~~related parties,~~issuances of our Series P Convertible Redeemable Preferred Stock and $0.9 million of loans from Mr. Diamantis. Also, during the ~~issuance of debentures and the proceeds~~nine months ended September 30, 2022, we received $0.3 million from ~~pledging certain~~HHS Provider Relief Funds. During the nine months ended September 30, 2023, the Company repaid $1.4 million of loans from Mr. Diamantis and $0.4 million of debentures. During the nine months ended September 30, 2023 and 2022, we repaid $0.9 million and $1.2 million of notes payable, respectively. Each of these financing transactions is more fully discussed in Notes 6 and 10 to our ~~accounts receivable as discussed below.~~ accompanying unaudited condensed consolidated financial statements.

Future cash needs for working capital, capital expenditures, pursuit of opportunities in the behavioral health sector, debt service obligations and potential acquisitions will require management to seek additional ~~equity or obtain additional credit facilities.~~capital. The ~~sale~~sale/issuance of additional equity will result in additional dilution to our stockholders. ~~A portion~~

Under Accounting Standards Codification (“ASC”), Presentation of ~~our cash may be used~~Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to ~~acquire~~ evaluate whether conditions and/or ~~invest~~events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. Management has assessed the Company’s ability to continue as a going concern in ~~complementary businesses or products or to obtain~~accordance with the ~~right to use complementary technologies. From time to time, in the ordinary course~~requirement of ~~business, we evaluate potential acquisitions of such businesses, products or technologies.~~ASC 205-40.

At September 30, ~~2017, we~~2023, the Company had ~~cash on hand from continuing operations of approximately $41,019,~~ a working capital deficit ~~of $18.0 million~~ and a stockholders’ deficit of ~~$18.8 million. In addition, we incurred a loss from continuing operations~~$41.5 million and $27.6 million, respectively. While the Company had net income of ~~$30.1~~$1.5 million ~~for~~during the nine months ended September 30, ~~2017.~~2023, it incurred a net loss of $0.5 million and $3.3 million for the three months ended September 30, 2023 and the year ended December 31, 2022, respectively. As of the date of this report, ~~our~~the Company’s cash ~~position~~ is ~~critically~~ deficient and payments ~~critical to our ability to operate~~for its operations in the ordinary course are not being ~~made in the ordinary course. Our fixed operating expenses, including payroll, rent, capital lease payments~~made. The losses and other ~~fixed expenses,~~related factors, including past due accounts payable and payroll taxes, as well as payment defaults under the ~~costs required to operate Big South Fork Medical Center, are approximately $1.5-$2.0 million per month.~~

~~On October 30, 2017, we raised $4.0 million from the issuance~~terms of ~~our Series I-1 Convertible Preferred Stock (the “Series I-1 Preferred Stock”)~~certain outstanding notes payable and debentures, as more fully discussed ~~below. However, our failure~~in Notes 5 and 6 to ~~raise additional capital in~~ the ~~coming months will have a material adverse effect on our ability to operate our business. In addition, we will be required to~~accompanying unaudited condensed consolidated financial statements, raise additional capital in order to fund our operations for the next twelve months. There can be no assurances that we will be able to raise the necessary capital on terms that are acceptable to us, or at all. If we are unable to secure the necessary funding as and when required, it will have a material adverse effect on our business and we may be required to downsize, further reduce our workforce, sell some of our assets or possibly curtail or even cease operations, raising substantial doubt about ~~our~~the Company’s ability to continue as a going ~~concern.~~concern for 12 months from the filing date of this report.

The Company’s accompanying unaudited condensed consolidated financial statements are prepared assuming the ~~Advanced Molecular Services Group (“AMSG”)~~Company can continue as ~~an independent publicly traded company by way~~a going concern, which contemplates continuity of ~~a tax-free distribution to our shareholders. Completion~~operations through realization of assets, and the ~~spinoff is expected to occur during the first quarter~~settling of 2018, and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission and consents, including under various funding agreements previously entered into by the Company. The intent of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. We also announced on July 24, 2017 that the Big South Fork Medical Center received CMS regional office licensure approval. The hospital opened in August 2017. We expect that the hospital will provide us additional revenue and cash flow sources.

~~In 2017, we received short-term advances from Christopher Diamantis, a member of our Board of Directors,~~liabilities in the ~~amount~~normal course of ~~$3.3 million. On March 7, 2017 we issued a promissory note~~business. In 2021, the Company sold subsidiaries to ~~Mr. Diamantis in~~InnovaQor, Inc. and the ~~amount of $3.8 million (the “2017 Diamantis Note”) in connection with the advances we~~Company received ~~in 2017, plus accrued and unpaid interest reflecting the advances we received in both fiscal 2016 and 2017, in the amount of $0.5 million.~~

~~On February 2, 2017, we issued $1.59 million of convertible debentures (the “February Debentures”) and warrants to purchase 6,667~~14,950 shares of ~~our common stock and received cash proceeds of $1.5 million.~~

On March 21, 2017, we issued $10.85 million aggregate principal amount of Senior Secured Original Issue Discount Convertible Debentures due two years from the date of issuance (the “Convertible Debentures”) and three series of warrants to purchase shares of our common stock to several accredited investors. We received net proceeds from this transaction in the approximate amount of $8.4 million. We used $3.8 million of the net proceeds to repay the 2017 Diamantis Note and $0.75 million of the net proceeds to make a partial repayment on the TCA Debenture (as defined below). The remainder of the net proceeds were used for general corporate purposes. In conjunction with the issuance of the Convertible Debentures, the holder of the February Debentures exchanged these debentures for $2.7 million of new debentures (the “Exchange Debentures” and, collectively with the Convertible Debentures, the “March Debentures”) on the same terms as, and pari passu with, the Convertible Debentures and warrants. Additionally, the holders of an aggregate of $2.2 million stated value of ourInnovaQor, Inc.’s Series HB-1 Non-Voting Convertible Preferred Stock (the ~~“Series H~~“InnovaQor Series B-I Preferred Stock”) ~~exchanged such preferred stock into $2.5~~valued at $9.1 million ~~principal amount of Exchange Debentures and warrants. All of the March Debentures contain a 24% original issue discount.~~

On June 2, 2017 and June 22, 2017, we issued $1.9 million aggregate principal amount of Original Issue Discount Debentures due three months from the date of issuance of these two issuances (collectively, the “June Debentures”) and warrants to purchase an aggregate of 100,000 shares of common stock to accredited investors for a purchase price of $1.8 million and cash proceeds of $1.5 million.

On July 17, 2017, we closed an offering of $4,136,862 aggregate principal amount of Original Issue Discount Debentures due October 17, 2017 and warrants to purchase an aggregate of 141,333 shares of common stock foras consideration ~~of $2,000,000 in cash and the exchange of the $1,902,700 aggregate principal amount of Original Issue Discount Debentures due September 22, 2017 issued by us on June 22, 2017.~~

On September 19, 2017, we closed an offering of $2,604,000 principal amount of Senior Secured Original Issue Discount Convertible Debentures due September 19, 2019 (the “New Debentures”) and three series of warrants to purchase shares of our common stock. The offering was pursuant to the terms of a Securities Purchase Agreement, dated as of August 31, 2017, between us and certain of our existing institutional investors. We received proceeds of $2,100,000 from the offering.

Also on September 19, 2017, we closed exchanges by which the holders of our July Debentures exchanged $4,136,862 principal amount of such debentures for $6,412,136 principal amount of new debentures and warrants on the same items as, and pari passu with, the New Debentures (the “September Exchange Debentures” and, together with the New Debentures, the “September Debentures”). All issuance amounts of the September Debentures reflect a 24% original issue discount.

On October 30, 2017, we closed an offering of $4,960,000 stated value of our newly-authorized Series I-1 Preferred Stock. The offering was pursuant to the terms of the Securities Purchase Agreement, dated as of October 30, 2017, between us and certain of our existing institutional investors. We received proceeds of $4,000,000 from the offering.

In September of 2016, we received $0.4 million from the sale of convertible notes and warrants with a maturity date of March 15, 2017. On March 13, 2017, these securities were exchanged for 26,666 shares of our common stock.

On March 31, 2016, we entered into an agreement to pledge certain of our accounts receivable as collateral against a prepaid forward purchase contract. The receivables had an estimated collectable value of $8.7 million which had been adjusted down to approximately $1.5 million and $0 on our balance sheet as of December 31, 2016 and September 30, 2017, respectively. The consideration received was $5.0 million. In exchange for the consideration received, the counterparty received the right to: (i) a 20% per annum investment return from us on the consideration, with a minimum repayment term of six months and minimum return of $0.5 million, (ii) all payments recovered from the accounts receivable up to $5.25 million, if paid in full within six months, or $5.5 million, if not paid in full within six months, and (iii) 20% of all payments of the accounts receivable in excess of amounts received in (i) and (ii). On March 31, 2017, to the extent that the counterparty has not been paid $6.0 million, we were required to pay the difference, plus 30% interest per annum on the total balance.sale. As of September 30, ~~2017, and~~2023, the ~~date~~Company held 14,850 shares of ~~this report, we had not collected any amounts due on these receivables, and $6.9~~InnovaQor’s Series B-1 Preferred Stock valued at $9.0 million ~~including accrued interest, is currently due to the counterparty. We currently~~as an investment.

The accompanying unaudited condensed consolidated financial statements do not ~~have the financial resources~~include any adjustments that might be necessary if we are unable to ~~satisfy this obligation. Mr. Diamantis has guaranteed our payment obligation under this agreement.~~continue as a going concern.

On November 3, 2016, we received a Notice of Default from TCA Global Credit Master Fund, LP (“TCA”), the holder of a secured convertible debenture with an original outstanding principal amount of $3.0 million (the “TCA Debenture”), related to our failure to pay the monthly principal and interest payments required under the TCA Debenture. Prior to our issuance of the March Debentures on March 21, 2017, we had not made the last nine required payments under the TCA Debenture, other than a $0.4 million payment we made in February of 2017. In conjunction with the issuance of the March Debentures on March 21, 2017, we entered into a letter agreement with TCA, which (i) waived any non-payment default through March 21, 2017; (ii) provided for the $0.75 million payment discussed above; (iii) set forth a revised repayment schedule whereby the remaining principal plus interest aggregating to approximately $2.6 million was to be repaid in various monthly installments from April of 2017 through September of 2017; and (iv) provided for payment of an additional service fee in the amount of $150,000, which was due on June 27, 2017, the day after the effective date of the registration statement filed by us; which amount is reflected in accrued expenses in the accompanying consolidated balance sheet at September 30, 2017. In addition, TCA entered into an intercreditor agreement with the purchasers of the March Debentures which sets forth rights, preferences and priorities with respect to the security interests in our assets. On September 19, 2017, the Company entered into a new agreement with TCA, which extended the repayment schedule through to December 31, 2017. The Company is current with its payments.

As of September 30, ~~2017,~~2023, we were party to ~~the following~~ legal ~~matters:~~

~~Biohealth Medical Laboratory, Inc, and PB Laboratories, LLC (the “Companies”) filed suit against CIGNA Health~~proceedings, which are presented in 2015 alleging that CIGNA failed to pay claims for laboratory services the Companies provided to patients pursuant to CIGNA - issued and CIGNA - administered plans. In 2016, the U.S. District Court dismissed part of the Companies’ claims for lack of standing. The Companies appealed that decisionNote 12 to the Eleventh Circuit Court of Appeals, which recently reversed the District Court’s decision and found that the Companies have standing to raise claims arising out of traditional insurance plans as well as self-funded plans.

Our Epinex Diagnostics Laboratories, Inc. subsidiary had been sued in a California state court by two former employees who alleged that they were wrongfully terminated, as well as for a variety of unpaid wage claims. The parties entered into a settlement agreement of this matter on July 29, 2016 for approximately $0.2 million, and the settlement was consummated on August 25, 2016. In October of 2016, the plaintiffs in this matter filed a motion with the court seeking payment for attorneys’ fees in the approximate amount of $0.7 million. On March 24, 2017, the court granted plaintiffs’ motion for payment of attorneys’ fees in the amount of $0.3 million, and we have accrued this amount in itsaccompanying unaudited condensed consolidated financial statements. Additionally, we are seeking indemnification for these amounts from Epinex Diagnostics, Inc. (“EDI”), the seller of Epinex Diagnostic Laboratories, Inc. (“EDL”), pursuant to a Stock Purchase Agreement entered into by and among the parties.

InFebruary 2016, we received notice that the Internal Revenue Service (the “IRS”) had placed a lien against Medytox Solutions, Inc. and its subsidiaries relating to unpaid 2014 taxes due, plus penalties and interest, in the amount of $5.0 million. We paid $0.1 million toward the 2014 tax liability on March 2016. We filed our 2015 Federal tax return on March 15, 2016 and the accompanying election to carryback the reported net operating losses was filed in April 2016. On August 24, 2016, the lien was released, and in September of 2016, we received a refund from the IRS in the amount of $1.9 million. In November of 2016, the IRS commenced an audit of our 2015 Federal tax return. We are currently unable to predict the outcome of the audit or any liability to us that may result from the audit.

On September 27, 2016, a tax warrant was issued against us by the Florida Department of Revenue (the “DOR”) for unpaid 2014 state income taxes in the approximate amount of $0.9 million, including penalties and interest. On January 25, 2017, we paid the DOR $250,000 as partial payment on this liability, and in February 2017, we entered into a Stipulation Agreement with the DOR which will allow us to make monthly installment payments of $35,000 until February 2018 and negotiate a new payment agreement then, if the balance of $0.3 million cannot be satisfied in a lump sum. If at any time during the Stipulation period we fail to timely file any required tax returns with the DOR or do not meet the payment obligations under the Stipulation Agreement, the entire amount due will be accelerated. The Company is current with the agreed payment plan.

InDecember of 2016, TCS-Florida, L.P. (“Tetra”), filed suit against us for failure to make the required payments under an equipment leasing contract that we had with Tetra. On January 3, 2017, Tetra received a Default Judgment against us in the amount of $2.6 million, representing the balance owed on the leases, as well as additional interest, penalties and fees. We have recognized this amount in our consolidated financial statements as of December 31, 2016. In January and February of 2017, we made payments to Tetra in connection with this judgment aggregating to $0.7 million, and on February 15, 2017, we entered into a forbearance agreement with Tetra whereby the remaining $1.9 million due will be paid in 24 equal monthly installments. Payments commenced on May 1, 2017. The Company is current with its payments.

InDecember of 2016, DeLage Landen Financial Services, Inc. (“DeLage”), filed suit against us for failure to make the required payments under an equipment leasing contract that we had with DeLage. On January 24, 2017, DeLage received a default judgment against us in the approximate amount of $1.0 million, representing the balance owed on the lease, as well as additional interest, penalties and fees. We have recognized this amount in our consolidated financial statements as of December 31, 2016. On February 8, 2017, a Stay of Execution was filed and under its terms the balance due will be paid in variable monthly installments through January of 2019, with an implicit interest rate of 4.97%. The Company is current with its payments.

On December 7, 2016, the holders of the notes payable to CommerceNet and Jay Tannenbaum (the “Tegal Notes”) filed suit against us seeking payment for the amounts due under the notes in the aggregate of $0.4 million, including accrued interest. A request for entry of default judgment was filed on January 24, 2017. A Case Management Conference is scheduled for December 5, 2017.

The following table presents our capital resources as of September 30, ~~2017~~2023 and December 31, ~~2016:~~2022:

The following table presents the major sources and uses of cash for the nine months ended September 30, ~~2017~~2023 and ~~2016:~~2022:

	Nine Months Ended September 30,									Nine Months Ended September 30,
	2017			2016			Change			2023			2022			Change

Cash used in operations	$	(11,783,441	)	$	(17,040,274	)	$	5,256,833
Cash provided by (used in) operations										$	3,102,439		$	(1,166,596	)	$	4,269,035
Cash used in investing activities		(1,552,563	)		63,273			(1,615,836	)		(1,332,278	)		(541,334	)		(790,944	)
Cash provided by financing activities		13,302,006			8,658,115			4,643,891
Cash provided by (used in) financing activities											(2,145,733	)		994,364			(3,140,097	)

Net change in cash	$	(33,998	)	$	(8,318,886	)	$	8,284,888			(375,572	)		(713,566	)		337,994
Cash and cash equivalents, beginning of the year											499,470			724,524			(225,054	)
Cash and cash equivalents, end of the period										$	123,898		$	10,958		$	112,940

The ~~decrease in~~components of cash ~~used in~~provided by (used in) operations for the nine months ended September 30, ~~2017~~2023 and ~~2016 is~~2022 are presented in the following table:

The ~~increase in cash used in investing activities is due to the acquisition~~Company had 37,051,322,257 and 29,084,322,257 shares of ~~the Hospital Assets in January of 2017. Cash provided by investing activities for~~its common stock issued and outstanding at September 30, 2023 and December 31, 2022, respectively. During the nine months ended September 30, ~~2017 consists~~2023, the Company issued an aggregate of ~~$1.6 million.~~

~~Cash provided by financing activities for~~8.0 billion shares of its common stock upon conversions of 496.53 shares of its Series N Convertible Redeemable Preferred Stock (the “Series N Preferred Stock”) and 220.50 shares of its Series O Convertible Redeemable Preferred Stock (the “Series O Preferred Stock”). During the nine months ended September 30, ~~2017 consists~~2022, the Company issued 8.4 billion shares of its common stock upon conversions of 2,352 shares of its Series N Preferred Stock and it issued 6.7 billion shares of its common stock upon conversions of 638 shares of its Series O Preferred Stock.

The terms of certain of the ~~$15.7 million~~outstanding warrants, convertible preferred stock and convertible debentures issued by the Company provide for reductions in the per share exercise prices of ~~net proceeds received~~the warrants and the per share conversion prices of the debentures and preferred stock (if applicable and subject to a floor in ~~connection~~certain cases), in the event that the Company issues common stock or common stock equivalents (as that term is defined in the agreements) at an effective exercise/conversion price that is less than the then exercise/conversion price of the outstanding warrants, preferred stock or debentures, as the case may be. In addition, the majority of these equity-based securities contain exercise/conversion prices that vary based upon the price of the Company’s common stock on the date of exercise/conversion (see Notes 6, 9 and 10 to the accompanying unaudited condensed consolidated financial statements). These provisions have resulted in significant dilution of the Company’s common stock and have given rise to reverse splits of the Company’s common stock, including a 1-for-10,000 reverse stock split effected on March 15, 2022. As a result of these down round provisions, the potential common stock equivalents, including outstanding common stock, are 1.0 trillion at September 30, 2023 and November 6, 2023.

On August 13, 2020, Mr. Diamantis entered into the Voting Agreement and Irrevocable Proxy (the “Voting Agreement”) with the ~~issuance~~Company, Mr. Seamus Lagan and Alcimede LLC (of which Mr. Lagan, the Company’s Chief Executive Officer, is the sole manager) pursuant to which Mr. Diamantis granted an irrevocable proxy to Mr. Lagan to vote the Series M Preferred Stock held by Mr. Diamantis. Mr. Diamantis has retained all other rights under the Series M Preferred Stock. Regardless of ~~debentures~~the number of shares of Series M Preferred Stock outstanding and ~~warrants and $1.1 million~~so long as at least one share of ~~related party payments net~~Series M Preferred Stock is outstanding, the outstanding shares of ~~advances, partially offset by payments on capital lease obligations~~Series M Preferred Stock shall have the number of votes, in the ~~amount~~aggregate, equal to 51% of ~~$1.3 million.~~all votes entitled to be voted at any meeting of stockholders or action by written consent. This means that the holders of Series M Preferred Stock have sufficient votes, by themselves, to approve or defeat any proposal voted on by the Company’s stockholders, unless there is a supermajority required under applicable law or by agreement.

Also, on November 5, 2021, the Company amended its Certificate of Incorporation, as amended, to provide that the number of authorized shares of its common stock or preferred stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Company entitled to vote generally in the election of directors, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware (or any successor provision thereto), voting together as a single class, without a separate vote of the holders of the class or classes the number of authorized shares of which are being increased or decreased unless a vote by any holders of one or more series of preferred stock is required by the express terms of any series of preferred stock pursuant to the terms thereof.

As a result of the Voting Agreement and the November 5, 2021 amendment to the Company’s Certificate of Incorporation discussed above, as of the date of filing of this report, the Company believes that it has the ability to ensure that it has and or can obtain sufficient authorized shares of its common stock to cover all potentially dilutive shares of common stock outstanding.

The healthcare industry is very labor intensive, and salaries and benefits are subject to inflationary pressures, as are supply and other costs. The nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. Like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel. This staffing shortage may require us to further enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel or require us to hire expensive temporary personnel. Our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws which have been enacted that, in certain cases, limit our ability to increase prices.

~~Cash provided~~Demand for services at our hospitals was substantially impacted by ~~financing activities for~~ the ~~nine months ended September 30, 2016 consists of~~COVID-19 pandemic. Moreover, the ~~$5.0 million received from~~pandemic affected the ~~prepaid forward purchase contract~~hospitals’ ability to maintain adequate staffing levels which put pressure on salaries and wages and the ~~$7.5 million~~need for higher cost, contract labor. The availability of supplies was limited, and supplies costs increased as well. Reduced demand and higher costs negatively affected our overall profitability and liquidity. Although the effects of COVID-19 have not been as significant in ~~proceeds from~~2022 and 2023 as compared to prior years, a ~~public offering, partially offset by the $3.4 million~~resurgence of ~~related party payments, net of advances,~~COVID-19 in our markets could affect demand for services and ~~repayment of capital lease obligations~~increase our costs. In addition, government assistance programs may not be available as have been in the ~~amount of $0.8 million.~~past to address such near-term profitability and liquidity pressures.

~~We do not believe inflation has a significant effect on the Company’s operations at this time.~~

Under SEC regulations, we are required to disclose the Company’s off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that are material to investors. Off-balance sheet arrangements consist of transactions, agreements or contractual arrangements to which any entity that is not consolidated with us is a party, under which we have:

As of September 30, ~~2017,~~2023, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of our chief executive officer and interim chief financial officer, of the effectiveness of the Company’sWe maintain disclosure controls and procedures ~~(as defined~~that are designed to ensure that material information required to be disclosed in ~~Rules 13a-15(e) and 15d-15(e)~~our periodic reports filed under the Securities Exchange Act of 1934, ~~(“Exchange~~as amended (the “Exchange Act”)~~) as of September 30, 2017. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act~~, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including ~~the chief executive officer,~~our Chief Executive Officer and Interim Chief Financial Officer as appropriate, to allow timely decisions regarding required ~~disclosures.~~

disclosure. Under the supervision and with the participation of our management, including our Chief Executive Officer, who also serves as our Interim Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures. Based on ~~that~~the foregoing evaluation, our management concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective to provide reasonable assurance that the ~~end of~~information required to be disclosed by us in reports that we file or submit under the ~~period covered by this report,~~Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer (Principal Executive Officer), who also serves as our Interim Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures ~~(as defined in Rules 13a-15(e)~~will prevent all errors and ~~15d-15(e) under the Exchange Act) were~~all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not ~~effective. In connection with such evaluation, management concluded~~absolute, assurance that the ~~material weakness~~objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in ~~internal~~all control ~~over financial reporting identified~~systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

In our Annual Report on Form 10-K for the year ended December 31, ~~2016 continued to exist, and as such~~2022, we identified material weaknesses in our ~~disclosure controls and procedures were not effective as of September 30, 2017.~~internal control over financial reporting. Insufficient staffing, accounting processes and procedures led to a lack of contemporaneous documentation supporting the accounting for certain transactions and the approval of certain cash disbursements. There are risks related to the timing and accuracy of the integration of information from various accounting systems whereby the Company has experienced delays in receiving information in a timely manner from its subsidiaries. Based on these material weaknesses in internal control over financial reporting, management concluded the Company did not maintain effective internal control over financial reporting as of December 31, 2022. As of September 30, 2023, we concluded that these material weaknesses continued to exist.

The Company expects improvements to be made on the integration of information issues during the remainder of 2023 and 2024 as we plan to move towards securing a more timely and accurate reporting system. The Company is continuing to further remediate the material weaknesses identified above. The Company has taken or is in the process of taking the following steps to remediate these material weaknesses: (i) increasing the staffing of its internal accounting ~~department, including the addition of a full time Chief Financial Officer;~~department; and (ii) ~~beginning the process of converting to a new integrated accounting system to enhance controls and procedures for recording accounting transactions; and (iii)~~ implementing enhanced documentation procedures to be followed by the internal accounting ~~department, including independent review of material cash disbursements.~~department.

Notwithstanding such material ~~weakness,~~weaknesses, management believes that the unaudited condensed consolidated financial statements included in this Form 10-Q fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods and dates presented.

During the ~~nine~~three months ended September 30, ~~2017,~~2023, there ~~were~~have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

From ~~time to time,~~time-to-time, the Company may be involved in a variety of claims, lawsuits, investigations and proceedings related to contractual disputes, employment matters, regulatory and compliance matters, intellectual property rights and other litigation arising in the ordinary course of business. The Company operates in a highly regulated industry which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company’s financial position or results of operations. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims, which are presented in Note 1112 to the accompanying unaudited condensed consolidated financial statements.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A of ~~the 2016~~our 2022 Form 10-K, which could materially affect our business, financial condition, or future results. There have been no material changes to the risk factors previously disclosed in our ~~2016~~2022 Form 10-K.

~~During the three-months ended September 30, 2017, the Company had the following issuance of unregistered sales of equity securities that was not previously disclosed on a Current Report on Form 8-K:~~None.

On August 15, 2017, the Company issued 33,334 shares of its common stock in payment of professional service fees valued at $118,493. These securities were issued without registration in reliance upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering.

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

Delaware		68-0370244
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

400 ~~South~~S. Australian ~~Ave.~~Avenue, ~~8th Floor~~ Suite 800 West Palm Beach, FL		33401
(Address of principal executive offices)		(Zip Code)

Large accelerated filer ~~[ ]~~☐	Accelerated filer ~~[ ]~~☐
Non-accelerated filer ~~[ ](Do not check if a smaller reporting company)~~ ☒	Smaller reporting company ~~[X]~~☒

		Page No.
PART I – FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2023 (unaudited) and December 31, ~~2016~~2022	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 (unaudited)	4
	Condensed Consolidated ~~Statement~~Statements of Changes in Stockholders’ Deficit for each of the ~~nine months~~quarters in the nine-month periods ended September 30, ~~2017~~2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 (unaudited)	67
	Notes to Condensed Consolidated Financial Statements (unaudited)	78
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2930
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4339
Item 4.	Controls and Procedures	4339

PART II – OTHER INFORMATION		40

Item 1.	Legal Proceedings	4440
Item 1A.	Risk Factors	4440
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4441
Item 3.	Defaults Upon Senior Securities	4441
Item 4.	Mine Safety Disclosures	4441
Item 5.	Other Information	4441
Item 6.	Exhibits	4441

SIGNATURES		4642

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

Net revenues	$	1,414,211		$	41,362		$	3,312,476		$	4,067,562

Operating expenses:
Direct costs of revenue		309,347			305,157			849,632			1,128,060
General and administrative		5,169,478			6,497,718			12,978,349			17,142,263
Sales and marketing expenses		170,028			415,976			620,560			1,441,322
Bad debt		477,249			3,666,707			1,051,590			3,667,992
Depreciation and amortization		451,597			680,579			1,508,042			2,037,910
Total operating expenses		6,577,699			11,566,137			17,008,173			25,417,547

Loss from continuing operations before other income (expense) and income taxes		(5,163,488	)		(11,524,775	)		(13,695,697	)		(21,349,985	)

Other income (expense):
Other income		40,455			127,008			91,212			227,020
Change in fair value of derivative instruments		-			1,827,112			(42,702,815	)		6,553,772
Gain (loss) on extinguishment of debt		-			-			42,702,815			-
Loss on legal settlement		-			-			-			(17,654	)
Interest expense		(5,331,681	)		(1,651,629	)		(16,510,525	)		(4,700,664	)
Total other income (expense), net		(5,291,226	)		302,491			(16,419,313	)		2,062,474

Net loss from continuing operations before income taxes		(10,454,714	)		(11,222,284	)		(30,115,010	)		(19,287,511	)

Provision for income taxes		372			-			3,622			-

Net loss from continuing operations		(10,455,086	)		(11,222,284	)		(30,118,632	)		(19,287,511	)

Net loss from discontinued operations		(370,151	)		(787,155	)		(1,053,471	)		(2,828,030	)

Net loss		(10,825,237	)		(12,009,439	)		(31,172,103	)		(22,115,541	)
Deemed dividend from trigger of down round provision feature		(2,280,280	)		-			(53,341,619	)		-
Net loss to common shareholders	$	(13,105,157	)	$	(12,009,439	)	$	(84,513,722	)	$	(22,115,541	)

Net loss per common share:
Basic and diluted: continuing operations	$	(10.59	)	$	(122.24	)	$	(122.12	)	$	(368.16	)

Basic and diluted: discontinued operations		(0.31	)		(8.57	)		(1.54	)		(53.98	)

Total Basic and diluted	$	(10.90	)	$	(130.81	)	$	(123.66	)	$	(422.14	)

Weighted average number of common shares outstanding during the period:
Basic and diluted		1,202,299			91,808			683,411			52,389

	2023			2022			2023			2022
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022

Net revenues	$	3,538,095		$	2,825,937		$	14,843,210		$	7,576,693

Operating expenses:
Direct costs of revenues		1,806,517			1,823,473			5,493,670			4,769,789
General and administrative expenses		2,275,755			1,809,835			6,851,183			5,262,338
Depreciation and amortization		56,796			117,441			250,288			351,481
Total operating expenses		4,139,068			3,750,749			12,595,141			10,383,608
Income (loss) from continuing operations before other income (expense), income taxes and net loss attributable to noncontrolling interest		(600,973	)		(924,812	)		2,248,069			(2,806,915	)
Other income (expense):
Other income, net		281,963			129,451			537,077			87,170
Gain from forgiveness of debt		-			-			200,000			334,819
Gain (loss) from legal settlements, net		-			60,808			286,719			(15,410	)
Interest expense		(420,551	)		(605,312	)		(1,404,298	)		(1,705,502	)
Total other income (expense), net		(138,588	)		(415,053	)		(380,502	)		(1,298,923	)
Income (loss) from continuing operations before income taxes, including noncontrolling interest		(739,561	)		(1,339,865	)		1,867,567			(4,105,838	)
Benefit (provision) for income taxes		184,524			-			(332,476	)		-
Net income (loss) from continuing operations, including noncontrolling interest		(555,037	)		(1,339,865	)		1,535,091			(4,105,838	)
Net loss from discontinued operations		(1,116	)		(1,696	)		(9,213	)		(7,075	)
Net income (loss), including noncontrolling interest		(556,153	)		(1,341,561	)		1,525,878			(4,112,913	)
Net loss attributable to noncontrolling interest		7,924			-			9,286			-
Net income (loss) attributable to Rennova		(548,229	)		(1,341,561	)		1,535,164			(4,112,913	)
Deemed dividends		-			-			-			(330,876,369	)
Net income (loss) available to common stockholders	$	(548,229	)	$	(1,341,561	)	$	1,535,164		$	(334,989,282	)

Net income (loss) per share of common stock available to common stockholders - basic:
Continuing operations	$	(0.00	)	$	(0.00	)	$	0.00		$	(0.08	)
Discontinued operations		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total basic	$	(0.00	)	$	(0.00	)	$	0.00		$	(0.08	)
Net income (loss) per share of common stock available to common stockholders - diluted:
Continuing operations	$	(0.00	)	$	(0.00	)	$	0.00		$	(0.08	)
Discontinued operations		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Total diluted	$	(0.00	)	$	(0.00	)	$	0.00		$	(0.08	)
Weighted average number of shares of common stock outstanding during the period
Basic:		31,401,420,083			10,569,572,256			30,369,571,341			4,130,876,898
Diluted:		31,401,420,083			10,569,572,256			503,057,511,874			4,130,876,898

Title of Each Class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

	Preferred Stock																										Additional						Total
	Series G				Series H						Series F				Total						Common Stock						paid-in			Accumulated			Stockholders'
	Shares		Amount		Shares			Amount			Shares		Amount		Shares			Amount			Shares			Amount			capital			Deficit			Deficit
Balance at December 31, 2016		215	$	2		10,019		$	100			-	$	-		10,234		$	102			186,692		$	1,867		$	45,752,999		$	(60,640,864	)	$	(14,885,896	)
Conversion of preferred stock into common stock		-		-		(7,785	)		(78	)		-		-		(7,785	)	$	(78	)		370,446			3,704			(3,627	)		-			-
Preferred stock issued for business acquisition		-		-		-			-			1,750,000		17,500		1,750,000		$	17,500			-			-			156,597			-			174,097
Common stock issued in exchange for warrants		-		-		-			-			-		-		-			-			2,056			21			57,848			-			57,869
Shares issued in settlement of notes payable and warrants		-		-		-			-			-		-		-			-			26,667			267			439,733			-			440,000
Exchange of preferred stock for convertible debentures		-		-		(2,174	)		(22	)		-		-		(2,174	)		(22	)		-			-			(2,173,978	)		-			(2,174,000	)
Conversion of debentures into common stock		-		-		-			-			-		-		-			-			548,932			5,489			4,058,672			-			4,064,161
Rounding up of common shares in connection with reverse stock split		-		-		-			-			-		-		-			-			526			5			(5	)		-			-
Common stock granted to employees		-		-		-			-			-		-		-			-			185			2			(2	)		-			-
Discount on convertible debentures		-		-		-			-			-		-		-			-			-			-			252,143			-			252,143
Warrants and benefical conversion features related to the issuance of convertible notes		-		-		-			-			-		-		-			-			-			-			24,177,258			-			24,177,258
Stock-based compensation		-		-		-			-			-		-		-			-			-			-			34,081						34,081
Deemed dividend from trigger of down round provision feature		-		-		-			-			-		-		-			-			-			-			53,341,619			(53,341,619	)		-
Restricted stock issued to employees		-		-		-			-			-		-		-			-			181,933			1,819			81,145			-			82,964
Common stock issued for services and severance		-		-		-			-			-		-		-			-			41,667			417			160,586			-			161,003
Shares returned to treasury		-		-		-			-			-		-		-			-			(4,933	)		(49	)		49						-
Net loss		-		-		-			-			-		-		-			-			-			-			-			(31,172,103	)		(31,172,103	)
Balance at September 30, 2017		215	$	2		60		$	0			1,750,000	$	17,500		1,750,275		$	17,502			1,354,171		$	13,542		$	126,335,119		$	(145,154,586	)	$	(18,788,423	)

	●	Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

	●	Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).

	●	Level 3 applies to assets or liabilities for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including our own assumptions.

	2023		2022
	Three Months September 30,
	2023		2022
Warrants		511,333,351,089		511,333,351,092
Convertible preferred stock		444,750,633,333		466,707,633,333
Convertible debentures		28,777,833,333		28,777,833,333
Stock options		26		26
Anti-dilutive shares		984,861,817,781		1,006,818,817,784

	2023		2022
	Nine Months September 30,
	2023		2022
Warrants		490,355,572,583		511,333,351,092
Convertible preferred stock		-		466,707,633,333
Convertible debentures		28,777,833,333		28,777,833,333
Stock options		26		26
Anti-dilutive shares		519,133,405,942		1,006,818,817,784

	September 30, 2017			December 31, 2016
Accounts receivable - laboratory services	$	4,118,407		$	12,715,835
Accounts receivable - hospital		2,982,771			-
Accounts receivable - all others		528,196			499,508
Total accounts receivable		7,629,374			13,215,343
Less:
Allowance for discounts		(3,583,014	)		(11,664,490	)
Allowance for discounts - hospital		(2,368,565	)		-
Allowance for bad debts		(1,276,769	)		(350,954	)
Accounts receivable, net	$	401,026		$	1,199,899

	September 30, 2017			December 31, 2016
Medical equipment	$	713,799		$	696,195
Building		1,359,484			-
Equipment		461,912			461,912
Equipment under capital leases		4,497,025			4,497,025
Furniture		408,101			377,630
Leasehold improvements		1,333,385			1,329,387
Vehicles		196,534			196,534
Computer equipment		587,742			564,742
Software		1,859,289			1,739,348
		11,417,271			9,862,773
Less accumulated depreciation		(8,327,224	)		(6,819,183	)
Property and equipment, net	$	3,090,047		$	3,043,590

	September 30, 2017			December 31, 2016
Loan payable under prepaid forward purchase contract	$	5,000,000		$	5,000,000

Loan payable to TCA Global Master Fund, LP ("TCA") in the original principal amount of $3 million at 16% interest (the "TCA Debenture"). Principal and interest payments due in various installments through December 31, 2017.		1,957,476			3,000,000

Notes payable to CommerceNet and Jay Tenenbaum in the original principal amount of $500,000, bearing interest at 6% per annum (the "Tegal Notes"). Prinicpal and interest payments are due annually from July 12, 2015 through July 12, 2017		341,612			341,612

Other convertible notes payable		-			440,000

Unamortized discount on other convertible notes		-			(179,889	)
Derivative liability associated with the TCA Debenture, at fair value		-			409,524
		7,299,088			9,011,247
Less current portion		(7,299,088	)		(9,011,247	)
Notes payable - third parties, net of current portion	$	-		$	-

	September 30, 2017			December 31, 2016
Loan payable to Alcimede LLC, bearing interest at 6% per annum, with all principal and interest due on February 2, 2018	$	168,500		$	218,500

Other advances from related parties		55,000			110,000
		223,500			328,500
Less current portion		(223,500	)		(328,500	)
Total notes payable - related parties, net of current portion	$	-		$	-

	September 30, 2023			December 31, 2022

Notes payable- third parties	$	1,194,451		$	2,917,390
Loan payable – related party		2,198,000			2,995,000
Debentures		8,222,240			8,622,240
Total debt		11,614,691			14,534,630
Less current portion of debt		(11,614,691	)		(14,534,630	)
Total debt, net of current portion	$	-		$	-

	September 30, 2023			December 31, 2022

Loan payable to Christopher Diamantis	$	2,198,000		$	2,995,000
Less current portion of loan payable, related party		(2,198,000	)		(2,995,000	)
Total loan payable, related party, net of current portion	$	-		$	-

	September 30, 2017
Debentures	$	20,962,234
Discount on Debentures		(16,398,666	)
Deferred financing fees		(324,563	)
		4,239,005
Less current portion		-
Debentures	$	4,239,005

	September 30, 2023			December 31, 2022

March 2017 Debenture	$	2,580,240		$	2,580,240
2018 Debentures		5,642,000			5,642,000
October 2022 Debentures		-			400,000
Debentures, Gross		8,222,240			8,622,240
Less current portion		(8,222,240	)		(8,622,240	)
Debentures, net of current portion	$	-		$	-

	Balance Sheet Classification	September 30, 2023			December 31, 2022

Assets:
Operating leases	Right-of-use operating lease assets	$	400,937		$	574,256
Finance lease	Property and equipment, net		-			-

Total lease assets		$	400,937		$	574,256

Liabilities:
Current:
Operating leases	Right-of-use operating lease obligations	$	175,923		$	215,063
Finance lease	Finance lease obligation		220,461			220,461

Long-term	Right-of-use operating lease obligations		225,014			359,193

Total lease liabilities		$	621,398		$	794,717

Weighted average remaining term:
Operating leases			2.1 years			2.6 years
Finance lease (1)			N/a			N/a
Weighted average discount rate:
Operating leases			13.0	%		13.0	%
Finance lease			4.9	%		4.9	%

	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022
Finance lease expense:
Depreciation/amortization of leased assets	$	-	$	-	$	-	$	-
Interest on lease liabilities		-		-		-		-
Operating leases:
Short-term lease expense (2)		82,347		83,211		257,262		248,250

Total lease expense	$	82,347	$	83,211	$	257,262	$	248,250

	Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	220,365	$	218,846
Operating cash flows for finance lease	$	-	$	-
Financing cash flows for finance lease payments	$	-	$	-

(1)	As of September 30, 2023 and December 31, 2022, the Company was in default under its finance lease obligation, therefore, the aggregate future minimum lease payments and accrued interest under this finance lease in the amount of $0.2 million are deemed to be immediately due.

(2)	Expenses are included in general and administrative expenses in the unaudited condensed consolidated statements of operations.

Year ended December 31,
2017 (October through December)	$	493,282
2018		1,427,375
2019		377,919
2020		32,611
Total		2,331,187

Less interest		103,983
Present value of minimum lease payments		2,227,204

Less current portion of capital lease obligations		1,491,666
Capital lease obligations, net of current portion	$	735,538

	Right-of-Use Operating Leases			Finance Lease

Twelve months ending September 30:
2024	$	217,839		$	224,252
2025		223,795			-
2026		18,650			-
2027		-			-
2028		-			-
Thereafter		-			-
Total		460,284			224,252

Less interest		(59,347	)		(3,791	)
Present value of minimum lease payments		400,937			220,461

Less current portion of lease obligations		(175,923	)		(220,461	)
Lease obligations, net of current portion	$	225,014		$	-

	Level 1		Level 2		Level 3		Total

As of September 30, 2023:
Asset - InnovaQor Series B-1 Preferred Stock	$	-	$	-	$	9,016,072	$	9,016,072
Liability - Embedded conversion option of debenture		-		-		455,336		455,336

As of December 31, 2022:
Asset - InnovaQor Series B-1 Preferred Stock	$	-	$	-	$	9,016,072	$	9,016,072
Liability - Embedded conversion option of debenture		-		-		455,336		455,336

	Number of options			Weighted- average exercise price		Weighted- average contractual term (Yrs.)
Outstanding at December 31, 2016		47,268		$	1,941.45		8.93
Granted		-			-
Expired		-			-
Forfeit		(8,790	)		-
Exercised		-			-
Outstanding at September 30, 2017		38,478		$	2,072.75		8.68
Exercisable at September 30, 2017		31,811		$	2,445.84

	Number of warrants			Weighted average exercise price
Balance at December 31, 2016		93,843		$	175.50
Warrants issued during the period		17,900,999		$	4.58
Warrants exchanged/exercised during period		(6,500	)
Warrants expired during the period		-
Balance at September 30, 2017		17,988,342		$	5.40

	Number of Shares of Common Stock Issuable for Warrants			Weighted average exercise price
Balance at December 31, 2022		511,333,351,090		$	0.00009
Issuance of warrants		-			-
Expiration of warrants		(1	)		(794,998.13	)
Balance at September 30, 2023		511,333,351,089		$	0.00009

	As of September 30,
	2017		2016
Warrants		17,988,342		78,102
Convertible preferred stock		71,147		47,463
Convertible debt		4,353,898		3,911
Stock options		38,478		49,331
		22,451,865		178,807

	●	~~Clinical Laboratory Operations~~~~, which specializes in providing urine and blood toxicology and pain medication testing to physicians, clinics and rehabilitation facilities in the United States.~~

	●	~~Supportive Software Solutions~~~~, including EHR and medical billing and laboratory information management systems.~~

	●	~~Hospital Operations~~~~, which reflects the purchase of the Hospital Assets (see Note 3) and the operations of Scott County Community Hospital, which has since been renamed as Big South Fork Medical Center.~~

	●	~~Corporate,~~~~which reflects consolidated company wide support services such as finance, legal counsel, human resources, and payroll.~~

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net revenues - External
Clinical Laboratory Operations	$	586,663		$	(9,085	)	$	1,994,639		$	3,461,987
Supportive Software Solutions		208,070			50,447			698,359			605,575
Hospital Operations		619,478			-			619,478			-
	$	1,414,211		$	41,362		$	3,312,476		$	4,067,562
Net revenues - Intersegment (***)
Supportive Software Solutions		217,431			502,055			501,924			1,036,396
	$	217,431		$	502,055		$	501,924		$	1,036,396
(Loss) income from operations
Clinical Laboratory Operations	$	(1,039,118	)	$	(7,364,096	)	$	(3,809,146	)	$	(10,590,435	)
Supportive Software Solutions		(660,800	)		(1,253,386	)		(1,721,694	)		(3,800,893	)
Hospital Operations		(2,093,805	)		-			(3,114,473	)		-
Corporate		(1,369,765	)		(2,940,956	)		(5,058,565	)		(7,059,644	)
Eliminations		-			33,663			8,181			100,987
	$	(5,163,488	)	$	(11,524,775	)	$	(13,695,697	)	$	(21,349,985	)
Depreciation and amortization
Clinical Laboratory Operations	$	410,801		$	549,748		$	1,265,174		$	1,646,167
Supportive Software Solutions		25,015			163,749			227,999			490,236
Hospital Operations		15,436			-			22,045			-
Corporate		345			745			1,005			2,494
Eliminations		-			(33,663	)		(8,181	)		(100,987	)
	$	451,597		$	680,579		$	1,508,042		$	2,037,910
Capital expenditures
Clinical Laboratory Operations	$	-		$	-		$	-		$	6,000
Supportive Software Solutions		-			-			-			9,998
Hospital Operations		160,413			-			1,554,499			-
	$	160,413		$	-		$	1,554,499		$	15,998

~~Title and reference~~	~~Prescribed~~	~~Commentary~~
~~Title and reference~~	~~Effective Date~~	~~Commentary~~
~~ASU No. 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory.~~	~~Fiscal years beginning after December 15, 2016 and for interim periods therein.~~	In July 2015, the FASB issued ASU No. 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 simplifies the measurement of inventory by requiring certain inventory to be subsequently measured at the lower of cost and net realizable value. The amendments in this guidance are effective for fiscal years beginning after December 15, 2016 and for interim periods therein and did not have a significant impact on the Company’s consolidated financial statements upon adoption.
~~ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”~~	~~Fiscal years beginning after December 15, 2017 and for interim periods therein.~~	In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting for certain incremental costs of obtaining a contract and costs to fulfill a contract with a customer. Entities have the option of applying either a full retrospective approach to all periods presented or a modified approach that reflects differences prior to the date of adoption as an adjustment to equity. In April 2015, FASB deferred the effective date of this guidance until January 1, 2018 and the Company is currently assessing the impact of this guidance on its consolidated financial statements.
~~ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40): Disclosure of Uncertainty about an Entity’s Ability to Continue as a Going Concern.~~	~~Fiscal years, and interim periods within those years, beginning on or after December 15, 2016, with early adoption permitted.~~	In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40): Disclosure of Uncertainty about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance that establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and setting rules for how this information should be disclosed in the financial statements. Adoption of this new standard did not have a significant impact on the Company’s consolidated financial statements. See Note 1 regarding management’s current disclosures regarding the Company’s ability to continue as a going concern.
~~ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”~~	~~Fiscal years beginning on or after December 15, 2016, with early adoption permitted.~~	In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). Topic 740, Income Taxes, requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred income taxes, the amendments in ASU 2015-17 require that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. For public business entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements.

~~Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)”~~		~~Annual and interim periods within the annual period beginning after December 15, 2018.~~		In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. The Company has not yet determined the impact that adoption of ASU 2016-02 will have on its consolidated financial statements.
~~ASU No. 2017-11, “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815)” (“ASU 2017-11”)~~		~~Fiscal years beginning on or after December 15, 2018, with early adoption permitted.~~		~~The Company adopted this amendment as of its period ended June 30, 2017 (see Note 1)~~.

	September 30, 2023		December 31, 2022

Accounts payable	$	1,115,066	$	1,115,066
Accrued expenses		350,259		341,046
Current liabilities of discontinued operations	$	1,465,325	$	1,456,112

	Three Months Ended September 30, 2023 (unaudited)			Three Months Ended September 30, 2022 (unaudited)			Nine Months Ended September 30, 2023 (unaudited)			Nine Months Ended September 30, 2022 (unaudited)
Operating expenses	$	-		$	1,696		$	-		$	5,941
Other expense		(1,116	)		-			(9,213	)		(1,134	)
Provision for income taxes		-			-			-			-
Loss from discontinued operations	$	(1,116	)	$	(1,696	)	$	(9,213	)	$	(7,075	)