UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

~~[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

~~For the quarterly period ended September 30, 2017~~

~~[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

~~For the transition period from _______________ to ______________~~

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended March 31, 2022

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from _______________ to ______________

Commission File Number: 0-18105

~~VASO CORPORATION~~

~~(Exact name of registrant as specified in its charter)~~

~~Delaware~~	~~11-2871434~~ VASO CORPORATION
(Exact name of registrant as specified in its charter)

Delaware

11-2871434

(State or other jurisdiction of

~~(IRS Employer Identification Number)~~

incorporation or organization)

(IRS Employer

Identification Number)

137 Commercial ~~Street,~~St., Suite 200, Plainview, New York 11803

(Address of principal executive offices)

~~Registrant’s Telephone Number~~

~~(516) 997-4600~~

Registrant’s Telephone Number (516) 997-4600

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

Indicate by check mark whether the registrant has submitted electronically ~~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 ☒ No ☐

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

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

Large Accelerated Filer ☐	☐	Accelerated Filer ☐	~~Non-Accelerated~~ ☐
Non-accelerated Filer ☐	☒	Smaller Reporting Company ☒	☒
		Emerging Growth Company	☐

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

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

Securities registered pursuant to Section 12 (b) of the Act: None

Number of Shares Outstanding of Common Stock, $.001 Par Value, at ~~November 9, 2017 – 175,390,196~~

~~Page 1~~

May 10, 2022– 175,127,878

Vaso Corporation and Subsidiaries

INDEX

PART I – FINANCIAL INFORMATION			3

ITEM 1 - FINANCIAL STATEMENTS			3

CONDENSED CONSOLIDATED BALANCE SHEETS as of ~~September 30, 2017~~March 31, 2022 (unaudited) and December 31, ~~2016~~ 2021			3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~(LOSS) INCOME~~ LOSS (unaudited) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~ 2021			4

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~STOCKHOLDERS’ EQUITY (unaudited) for the ~~Nine~~Three Months Ended ~~September 30, 2017 (unaudited)~~March 31, 2022 and ~~the Year Ended December 31, 2016~~ 2021			5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~ 2021	6		7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	7		8

ITEM 2 - ~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		18	19

ITEM 4 - CONTROLS AND PROCEDURES	26		24

PART II - OTHER INFORMATION	27		25

ITEM 6 – EXHIBITS			25


~~ITEM 6 - EXHIBITS~~	27Page 2

Table of Contents

~~Page 2~~

PART I – FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

Vaso Corporation and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

September 30, 2017 December 31, 2016
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,522 $ 7,087
Accounts and other receivables, net of an allowance for doubtful
accounts and commission adjustments of $4,710 at September 30,
2017 and $4,159 at December 31, 2016 10,944 12,741
Receivables due from related parties 19 18
Inventories, net 2,658 2,395
Deferred commission expense 2,899 1,917
Prepaid expenses and other current assets 1,138 925
Total current assets 23,180 25,083

PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$4,723 at September 30, 2017 and $3,835 at December 31, 2016
4,777 4,021
GOODWILL 17,407 17,280
INTANGIBLES, net 5,452 5,996
OTHER ASSETS, net 3,898 5,001
$ 54,714 $ 57,381

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,074 $ 5,219
Accrued commissions 1,399 2,139
Accrued expenses and other liabilities 4,617 5,275
Sales tax payable 773 718
Income taxes payable 42 30
Deferred revenue - current portion 12,651 7,628
Notes payable and capital lease obligations - current portion 4,142 4,245
Notes payable - related parties - current portion 127 -
Due to related party 311 396
Total current liabilities 29,136 25,650

LONG-TERM LIABILITIES
Notes payable and capital lease obligations 4,858 4,935
Notes payable - related parties 380 648
Deferred revenue 9,427 11,776
Deferred tax liability 292 112
Other long-term liabilities 1,114 1,349
Total long-term liabilities 16,071 18,820

COMMITMENTS AND CONTINGENCIES (NOTE M)

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,000,000 shares authorized; nil shares
issued and outstanding at September 30, 2017 and December 31, 2016 - -
Common stock, $.001 par value; 250,000,000 shares authorized;
175,387,306 and 173,811,533 shares issued at September 30, 2017 and
December 31, 2016, respectively; 165,079,219 and 163,503,446 shares
outstanding at September 30, 2017 and December 31, 2016, respectively 175 174
Additional paid-in capital 63,269 62,856
Accumulated deficit (51,724 ) (47,790 )
Accumulated other comprehensive loss (213 ) (329 )
Treasury stock, at cost, 10,308,087 shares at September 30, 2017 and December 31, 2016 (2,000 ) (2,000 )
Total stockholders' equity 9,507 12,911
$ 54,714 $ 57,381

	March 31, 2022			December 31, 2021
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	4,971		$	6,025
Short-term investments		788			629
Accounts and other receivables, net of an allowance for doubtful accounts and commission adjustments of $6,199 at March 31, 2022 and $5,804 at December 31, 2021		14,681			15,393
Receivables due from related parties		346			66
Inventories		1,713			1,147
Deferred commission expense		3,524			3,549
Prepaid expenses and other current assets		842			994
Total current assets		26,865			27,803

Property and equipment, net of accumulated depreciation of $9,855 at March 31, 2022 and $10,512 at December 31, 2021		2,058			2,172
Opearting lease right of use assets		987			915
Goodwill		15,726			15,722
Intangibles, net		1,899			2,041
Other assets, net		2,873			2,446
Investment in EECP Global		1,059			1,043
Deferred tax assets, net		219			219
Total assets	$	51,686		$	52,361

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	2,584		$	2,797
Accrued commissions		1,267			2,705
Accrued expenses and other liabilities		6,730			7,489
Finance lease liabilities - current		208			222
Operating lease liabilities - current		510			562
Sales tax payable		680			719
Deferred revenue - current portion		17,975			16,495
Notes payable - current portion		8			8
Due to related party		3			3
Total current liabilities		29,965			31,000

LONG-TERM LIABILITIES
Notes payable, net of current portion		21			23
Finance lease liabilities, net of current portion		172			218
Operating lease liabilities, net of current portion		477			352
Deferred revenue, net of current portion		8,979			8,470
Other long-term liabilities		1,100			988
Total long-term liabilities		10,749			10,051

COMMITMENTS AND CONTINGENCIES (NOTE M)

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,000,000 shares authorized; nil shares issued and outstanding at March 31, 2022 and December 31, 2021
Common stock, $.001 par value; 250,000,000 shares authorized; 185,435,965 shares issued at March 31, 2022 and December 31, 2021; 175,127,878 shares outstanding at March 31, 2022 and December 31, 2021		185			185
Additional paid-in capital		63,924			63,917
Accumulated deficit		(51,246	)		(50,902	)
Accumulated other comprehensive income		109			110
Treasury stock, at cost, 10,308,087 shares at March 31, 2022 and December 31, 2021		(2,000	)		(2,000	)
Total stockholders’ equity		10,972			11,310
	$	51,686		$	52,361

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

~~Page 3~~

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Vaso Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~(LOSS) INCOME~~

~~(Unaudited)~~

LOSS

(unaudited)

(in thousands, except per share data)

Three months ended Nine months ended

September 30,

September 30,

2017 2016 2017 2016
Revenues
Managed IT systems and services $ 10,827 $ 9,679 $ 31,438 $ 29,530
Professional sales services 6,305 6,583 18,181 20,289
Equipment sales and services 909 1,282 2,649 3,481
Total revenues 18,041 17,544 52,268 53,300

Cost of revenues
Cost of managed IT systems and services 6,311 5,550 18,526 17,436
Cost of professional sales services 1,386 1,325 3,946 4,318
Cost of equipment sales and services 316 519 900 1,271
Total cost of revenues 8,013 7,394 23,372 23,025
Gross profit 10,028 10,150 28,896 30,275

Operating expenses
Selling, general and administrative 10,412 9,531 31,349 28,981
Research and development 235 117 716 369
Total operating expenses 10,647 9,648 32,065 29,350
Operating (loss) income (619 ) 502 (3,169 ) 925

Other income (expense)
Interest and financing costs (166 ) (162 ) (506 ) (474 )
Interest and other income, net 63 91 55 140
Total other expense, net (103 ) (71 ) (451 ) (334 )

(Loss) income before income taxes (722 ) 431 (3,620 ) 591
Income tax expense (94 ) (103 ) (314 ) (154 )
Net (loss) income (816 ) 328 (3,934 ) 437

Other comprehensive (loss) income
Foreign currency translation gain (loss) 25 34 116 (58 )
Comprehensive (loss) income $ (791 ) $ 362 $ (3,818 ) $ 379

(Loss) income per common share
- basic and diluted $ (0.00 ) $ 0.00 $ (0.02 ) $ 0.00

Weighted average common shares outstanding
- basic 163,307 160,268 161,817 158,730
- diluted 163,307 161,675 161,817 159,479

	Three months ended March 31,
	2022			2021
Revenues
Managed IT systems and services	$	10,003		$	11,253
Professional sales services		6,607			4,655
Equipment sales and services		399			611
Total revenues		17,009			16,519

Cost of revenues
Cost of managed IT systems and services		5,869			6,847
Cost of professional sales services		1,301			990
Cost of equipment sales and services		72			123
Total cost of revenues		7,242			7,960
Gross profit		9,767			8,559

Operating expenses
Selling, general and administrative		9,999			8,954
Research and development		122			144
Total operating expenses		10,121			9,098
Operating loss		(354	)		(539	)

Other (expense) income
Interest and financing costs		(24	)		(135	)
Interest and other income, net		48			49
Loss on disposal of fixed assets		(2	)		0
Total other (expense) income, net		22			(86	)

Loss before income taxes		(332	)		(625	)
Income tax expense		(12	)		(18	)
Net loss		(344	)		(643	)

Other comprehensive loss
Foreign currency translation loss		(1	)		(21	)
Comprehensive loss	$	(345	)	$	(664	)

Loss per common share
- basic and diluted	$	(0.00	)	$	(0.00	)

Weighted average common shares outstanding
- basic and diluted		172,328			170,836

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

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Vaso Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

																Accumulated
											Additional					Other			Total
	Common Stock				Treasury Stock						Paid-in-		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Loss			Equity
Balance at January 1, 2021		185,244	$	185		(10,308	)		(2,000	)	$	63,886	$	(57,002	)	$	16		$	5,085
Share-based compensation		-		0		-			0			9		0			0			9
Foreign currency translation loss		-		0		-			0			0		0			(21	)		(21	)
Net loss		-		0		-			0			0		(643	)		0			(643	)
Balance at March 31, 2021 (unaudited)		185,244	$	185		(10,308	)	$	(2,000	)	$	63,895	$	(57,645	)	$	(5	)	$	4,430

Balance at January 1, 2022		185,436	$	185		(10,308	)		(2,000	)	$	63,917	$	(50,902	)	$	110		$	11,310
Share-based compensation		-		0		-			0			7		0			0			7
Foreign currency translation loss		-		0		-			0			0		0			(1	)		(1	)
Net loss		-		0		-			0			0		(344	)		0			(344	)
Balance at March 31, 2022 (unaudited)		185,436	$	185		(10,308	)	$	(2,000	)	$	63,924	$	(51,246	)	$	109		$	10,972

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

~~Page 4~~

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Vaso Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS' EQUITY~~

CASH FLOWS

(unaudited)

(in thousands)

Accumulated
Additional Other Total
Common Stock Treasury Stock Paid-in- Accumulated Comprehensive Stockholders'
Shares Amount Shares Amount Capital Deficit Income (Loss) Equity
Balance at December 31, 2015 168,750 $ 168 (10,308 ) $ (2,000 ) $ 62,263 $ (48,610 ) $ (80 ) $ 11,741
Share-based compensation 3,949 4 - - 424 - - 428
Shares issued to settle liability 1,113 2 - - 176 - - 178
Shares not issued for employee
tax liability
- - - - (7 ) - - (7 )
Foreign currency translation
loss
- - - - - - (249 ) (249 )
Net income - - - - - 820 - 820
Balance at December 31, 2016 173,812 $ 174 (10,308 ) $ (2,000 ) $ 62,856 $ (47,790 ) $ (329 ) $ 12,911
Share-based compensation 1,576 1 - - 416 - - 417
Shares not issued for employee
tax liability
- - - - (3 ) - - (3 )
Foreign currency translation
gain
- - - - - - 116 116
Net loss - - - - - (3,934 ) - (3,934 )
Balance at September 30, 2017 (unaudited) 175,388 $ 175 (10,308 ) $ (2,000 ) $ 63,269 $ (51,724 ) $ (213 ) $ 9,507
.

	Three months ended March 31,
	2022			2021
Cash flows from operating activities
Net loss	$	(344	)	$	(643	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization		453			596
Gain from investment in EECP Global		(16	)		(13	)
Provision for doubtful accounts and commission adjustments		151			263
Share-based compensation		7			9
Changes in operating assets and liabilities:
Accounts and other receivables		563			4,979
Inventories		(563	)		234
Deferred commission expense		25			(157	)
Prepaid expenses and other current assets		153			86
Other assets, net		(423	)		171
Accounts payable		(213	)		(171	)
Accrued commissions		(1,174	)		(1,124	)
Accrued expenses and other liabilities		(1,026	)		720
Sales tax payable		(40	)		(77	)
Deferred revenue		1,989			781
Due to related party		(279	)		(128	)
Other long-term liabilities		112			(51	)
Net cash (used in) provided by operating activities		(625	)		5,475

Cash flows from investing activities
Purchases of equipment and software		(195	)		(59	)
Purchases of short-term investments		(158	)		0
Net cash used in investing activities		(353	)		(59	)

Cash flows from financing activities
Repayment on revolving lines of credit		0			(1,525	)
Repayment of notes payable and finance lease obligations		(62	)		(1,276	)
Net cash used in financing activities		(62	)		(2,801	)
Effect of exchange rate differences on cash and cash equivalents		(14	)		(2	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(1,054	)		2,613
Cash and cash equivalents - beginning of period		6,025			6,819
Cash and cash equivalents - end of period	$	4,971		$	9,432

SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Interest paid	$	19		$	168
Income taxes paid	$	0		$	16

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Initial recognition of operating lease right of use asset and liability	$	238		$	131

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

~~Page 5~~

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Vaso Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~OF CASH FLOWS~~

~~(Unaudited)~~

~~(in thousands)~~

Nine months ended

September 30,

2017 2016
Cash flows from operating activities
Net (loss) income $ (3,934 ) $ 437
Adjustments to reconcile net (loss) income to
net cash provided by operating activities
Depreciation and amortization 1,781 1,584
Deferred income taxes 287 135
Loss from interest in joint venture 30 29
Provision for doubtful accounts and commission adjustments 145 96
Amortization of debt issue costs 24 24
Share-based compensation 417 342
Provision for allowance for loss on loan receivable - 412
Changes in operating assets and liabilities:
Accounts and other receivables 1,671 2,214
Receivables due from related parties (96 ) 396
Inventories, net (235 ) (374 )
Deferred commission expense (982 ) 448
Prepaid expenses and other current assets (211 ) (422 )
Other assets, net 861 (285 )
Accounts payable (153 ) 74
Accrued commissions (763 ) (613 )
Accrued expenses and other liabilities (658 ) (488 )
Sales tax payable 52 (27 )
Income taxes payable 11 (164 )
Deferred revenue 2,674 (100 )
Deferred tax liability 180 -
Other long-term liabilities (235 ) 38
Net cash provided by operating activities 866 3,756

Cash flows from investing activities
Purchases of equipment and software (1,981 ) (1,412 )
Redemption of short-term investments - 38
Investment in VSK - (422 )
Net cash used in investing activities (1,981 ) (1,796 )

Cash flows from financing activities
Net borrowings on revolving line of credit 78 2,124
Debt issuance costs - (130 )
Payroll taxes paid by withholding shares (3 ) (6 )
Repayment of notes payable and capital lease obligations (288 ) (211 )
Proceeds from note payable - related party - 300
Payments on notes payable - related parties (170 ) (566 )
Net cash (used in) provided by financing activities (383 ) 1,511
Effect of exchange rate differences on cash and cash equivalents (67 ) 64

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,565 ) 3,535
Cash and cash equivalents - beginning of period 7,087 2,160
Cash and cash equivalents - end of period $ 5,522 $ 5,695

SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Interest paid $ 483 $ 589
Income taxes paid $ 35 $ 474

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Inventories transferred to property and equipment, net $ - $ 149
Equipment acquired through capital lease $ - $ 387
Liability settled through issuance of common stock $ - $ 178

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

~~Page 6~~

~~Vaso Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~ (unaudited)

NOTE A - ORGANIZATION AND PLAN OF OPERATIONS

Vaso Corporation was incorporated in Delaware in July 1987. Unless the context requires otherwise, all references to ~~"we"~~“we”, ~~"our"~~“our”, ~~"us"~~“us”, ~~"Company"~~“Company”, ~~"registrant"~~“registrant”, ~~"Vaso"~~“Vaso” or ~~"management"~~“management” refer to Vaso Corporation and its subsidiaries. The Company changed its name from Vasomedical, Inc. to Vaso Corporation in November 2016 at its annual shareholders meeting. The name was changed because the Company in the several years prior to the name change had substantially diversified its business and the original name, Vasomedical, Inc., no longer portrayed the nature of its overall business. In addition, the Company retained the name of VasoMedical, Inc. and now uses it exclusively for its proprietary medical device business, as the name originally represented.

Overview

Vaso Corporation principally operates in three distinct business segments in the healthcare and information technology ~~("IT"~~(“IT”) industries. We manage and evaluate our operations, and report our financial results, through these three business segments.

	·	IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc., primarily focuses on healthcare IT and managed network technology services;

	·	Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for General Electric Healthcare (“GEHC”) into the healthcare provider middle market; and

	·	Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., primarily focuses on the design, manufacture, sale and service of proprietary medical devices and software.

VasoTechnology

VasoTechnology, Inc.~~, primarily focuses on healthcare IT and managed network technology services;~~

Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for General Electric Healthcare ("GEHC") into the healthcare provider middle market; and

~~Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., primarily focuses on the design, manufacture, sale and service of proprietary medical devices.~~

~~VasoTechnology~~

~~VasoTechnology, Inc.~~ was formed in May 2015, at the time the Company acquired all of the assets of NetWolves, LLC and its affiliates, including the membership interests in NetWolves Network Services, LLC (collectively, ~~"NetWolves"~~“NetWolves”). It currently consists of a managed network and security service division and a healthcare IT application VAR (value added reseller) division. Its current offerings include:

~~Managed diagnostic imaging applications (national channel partner of GEHC IT).~~

~~Managed network infrastructure (routers, switches and other core equipment).~~

~~Managed network transport (FCC licensed carrier reselling 175+ facility partners).~~

~~Managed security services.~~

	·	Managed radiology and imaging applications (channel partner of select vendors of healthcare IT products).
	·	Managed network infrastructure (routers, switches and other core equipment).
	·	Managed network transport (FCC licensed carrier reselling over 175 facility partners).
	·	Managed security services.

VasoTechnology uses a combination of proprietary technology, methodology and third-party applications to deliver its value proposition.

VasoHealthcare

VasoHealthcare commenced operations in 2010, in conjunction with the ~~Company's~~Company’s execution of its exclusive sales representation agreement ("(“GEHC ~~Agreement"~~Agreement”) with GEHC, which is the healthcare business division of the General Electric Company (“GE”), to further the sale of certain healthcare capital equipment in the healthcare provider middle market. Sales of GEHC equipment by the Company have grown significantly since then.

~~VasoHealthcare's~~

VasoHealthcare’s current offerings consist of:

~~GEHC diagnostic imaging capital equipment.~~

~~GEHC service agreements.~~

~~GEHC and third party financial services.~~

~~Page 7~~

	·	GEHC diagnostic imaging capital equipment.
	·	GEHC service agreements for the above equipment.
	·	GEHC training services for use of the above equipment.
	·	GEHC and third party financial services.

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

VasoMedical

VasoMedical is the ~~Company's~~Company’s business division for its proprietary medical device operations, including the design, development, manufacturing, sales and service of various medical devices in the domestic and international markets and includes the Vasomedical Global and Vasomedical Solutions business units. These devices are primarily for cardiovascular monitoring ~~diagnostic~~ and ~~therapeutic~~diagnostic systems. Its current offerings consist of:

~~Biox™ series Holter monitors and ambulatory blood pressure recorders.~~

•	·	Biox™ series Holter monitors and ambulatory blood pressure recorders.
	·	ARCS^® series analysis, reporting and communication software for ~~physiological signals such as~~ ECG and blood ~~pressure.~~pressure signals.

~~MobiCare™ multi-parameter wireless vital-sign monitoring system.~~

•	·	MobiCare™ multi-parameter wireless vital-sign monitoring system.
	·	EECP^® therapy ~~system~~systems for non-invasive, outpatient treatment of ischemic heart disease.

This segment uses its extensive cardiovascular device knowledge coupled with its significant engineering resources to cost-effectively create and market its proprietary technology. It works with a global distribution network of channel partners ~~as well as a global joint venture arrangement,~~ to sell its products. It also provides engineering and OEM services to other medical device companies.

NOTE B ~~- BASIS OF~~– INTERIM STATEMENT PRESENTATION ~~AND CRITICAL ACCOUNTING POLICIES~~

Basis of Presentation and Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("(“U.S. ~~GAAP"~~GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (the ~~"SEC"~~“SEC”). for interim financial information. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in ~~connection~~conjunction with the audited consolidated financial statements and related notes thereto included in the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2021, as filed with the SEC on March ~~30, 2017.~~

31, 2022.

These unaudited condensed consolidated financial statements include the accounts of the companies over which we exercise control. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim results for the Company. The results of operations for any interim period are not necessarily indicative of results to be expected for any other interim period or the full year.

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 as of the date of the condensed consolidated financial statements, the disclosure of contingent assets and liabilities in the unaudited condensed consolidated financial statements and the accompanying notes, and the reported amounts of revenues, expenses and cash flows during the periods presented. Actual amounts and results could differ from those estimates. The estimates and assumptions the Company makes are based on historical factors, current circumstances and the experience and judgment of the ~~Company's~~Company’s management. The Company evaluates its estimates and assumptions on an ongoing basis.

~~Page 8~~

Significant Accounting Policies and Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which provides new guidance regarding the measurement and recognition of credit impairment for certain financial assets. Such guidance will impact how we determine our allowance for estimated uncollectible receivables. In November 2019, the FASB issued ASU 2019-10, which changed the effective date of ASU 2016-13 for smaller reporting companies as defined by the SEC from first quarter of 2020 to the first quarter of 2023, with early adoption permitted. We are currently evaluating the effect that ASU 2016-13 will have on our consolidated financial statements and related disclosures.

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

~~Significant Accounting Policies~~

We are currently evaluating the effect that ASU 2016-13 will have on our consolidated financial statements and ~~Recent Accounting Pronouncements~~

~~In May 2014,~~related disclosures.

NOTE C – REVENUE RECOGNITION

Disaggregation of Revenue

The following tables present revenues disaggregated by our business operations and timing of revenue recognition:

	(in thousands)
	Three Months Ended March 31, 2022 (unaudited)								Three Months Ended March 31, 2021 (unaudited)
			Professional sales		Equipment						Professional sales		Equipment
	IT segment		service segment		segment		Total		IT segment		service segment		segment		Total
Network services	$	9,028	$	-	$	-	$	9,028	$	10,118	$	-	$	-	$	10,118
Software sales and support		975		-		-		975		1,135		-		-		1,135
Commissions		-		6,607		-		6,607		-		4,655		-		4,655
Medical equipment sales		-		-		368		368		-		-		577		577
Medical equipment service		-		-		31		31		-		-		34		34
	$	10,003	$	6,607	$	399	$	17,009	$	11,253	$	4,655	$	611	$	16,519

	Three Months Ended March 31, 2022 (unaudited)								Three Months Ended March 31, 2021 (unaudited)
			Professional sales		Equipment						Professional sales		Equipment
	IT segment		service segment		segment		Total		IT segment		service segment		segment		Total
Revenue recognized over time	$	9,234	$	-	$	64	$	9,298	$	10,025	$	-	$	30	$	10,055
Revenue recognized at a point in time		769		6,607		335		7,711		1,228		4,655		581		6,464
	$	10,003	$	6,607	$	399	$	17,009	$	11,253	$	4,655	$	611	$	16,519

Transaction Price Allocated to Remaining Performance Obligations

As of March 31, 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 "Revenue from Contracts with Customers", a comprehensive new revenue recognition standard which will supersede previous existing revenue recognition guidance. The standard creates a five-step model for revenue recognition that requires companiesaggregate amount of transaction price allocated to ~~exercise judgment when considering contract terms and relevant facts and circumstances. The five-step model includes (1) identifying the contract, (2) identifying the separate~~ performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations and (5) recognizing revenue when each performance obligation has been satisfied. The standard also requires expanded disclosures surrounding revenue recognition. The standard allowsthat are unsatisfied (or partially unsatisfied) for either full retrospective or modified retrospective adoption. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. In 2016, the FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), on narrow-scope improvements and practical expedients (ASU 2016-12), and on the revenue recognition criteria and other technical corrections (ASU 2016-20). The Company plans to adopt the ASU using the modified retrospective method. Such method provides that the cumulative effect from prior periods upon applying the new guidance is recognized in our consolidated balance sheets asexecuted contracts approximates $87 million, of the date of adoption, including an adjustment to retained earnings. Prior periods will not be retrospectively adjusted. We have determined the only significant incremental costs incurred to obtain contracts with customers within the scope of ASC 606 are certain sales commissions paid to associates. Under current U.S. GAAP, we recognize sales commissions as incurred. Under the new guidance,which we expect to ~~record sales commissions~~recognize revenue as ~~an asset, and amortize to expense over the related contract performance period. At the date of adoption of this new guidance, we expect to record an asset~~follows:

	(in thousands)
	Fiscal years of revenue recognition (unaudited)
	2022		2023		2024		Thereafter
Unfulfilled performance obligations	$	42,620	$	24,352	$	7,020	$	13,053

Contract Liabilities

Contract liabilities arise in our IT VAR, VasoHealthcare, and VasoMedical businesses. In our IT VAR business, payment arrangements with clients typically include an initial payment due upon contract signing and milestone-based payments based upon product delivery and go-live, as well as post go-live monthly payments for subscription and support fees. Customer payments received, or receivables recorded, in advance of go-live and customer acceptance, where applicable, are deferred as contract liabilities. Such amounts aggregated approximately $544,000 and $407,000 at March 31, 2022 and December 31, 2021, respectively, and are included in accrued expenses and other liabilities in our condensed consolidated balance sheets for the amount of unamortized sales commissions for prior periods, as calculated under the new guidance. Such amount will subsequently be amortized to expense over the remaining performance periods of the related contracts with remaining performance obligations. Our analysis and evaluation of the new standard will continue through the effective date on January 1, 2018.

In February 2016, The FASB issued ASU 2016-02 (Topic 842), "Leases". ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This new standard would be effective for the Company beginning January 1, 2019 with early adoption permitted. The Company does not expect the adoption of this standard to have a material effect on its Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The standard is effective for fiscal periods beginning after December 15, 2019. Early adoption is permitted for interim and annual goodwill impairment testing dates after January 1, 2017. The Company does not expect the adoption of this standard to have a material effect on its Consolidated Financial Statements.

~~Variable Interest Entities~~

The Company follows the guidance of accounting for variable interest entities, which requires certain variable interest entities to be consolidated by the primary beneficiary of the entities. Biox is a Variable Interest Entity ("VIE").

Liabilities recognized as a result of consolidating this VIE do not represent additional claims on the Company's general assets. The financial information of Biox, which is included in the accompanying condensed consolidated financial statements, is presented as follows:

~~Page 9~~

sheets.

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands)

As of
September 30, 2017

As of
December 31, 2016

(unaudited)
Cash and cash equivalents $ 35 $ 13
Total assets $ 1,443 $ 1,451
Total liabilities $ 1,700 $ 1,133

(in thousands)

Three months ended September 30,

Nine months ended September 30,

2017 2016 2017 2016
(unaudited) (unaudited) (unaudited) (unaudited)
Total net revenue $ 318 $ 399 $ 1,049 $ 1,314

Net (loss) income $ (90 ) $ 84 $ (626 ) $ 244

~~Reclassifications~~

~~Certain reclassifications have been made~~

In our VasoHealthcare business, we bill amounts for certain milestones in advance of customer acceptance of the underlying equipment. Such amounts aggregated approximately $26,945,000 and $24,955,000 at March 31, 2022 and December 31, 2021, respectively, and are classified in our condensed consolidated balance sheets as either current or long-term deferred revenue. In addition, we record a contract liability for amounts expected to ~~prior period~~be repaid to GEHC due to customer order reductions. Such amounts ~~to conform with~~aggregated approximately $2,197,000 and $1,518,000 at March 31, 2022 and December 31, 2021, respectively, and are included in accrued expenses and other liabilities in our condensed consolidated balance sheets.

In our VasoMedical business, we bill amounts for post-delivery services and varying duration service contracts in advance of performance. Such amounts aggregated approximately $8,000 and $9,000 at March 31, 2022 and December 31, 2021, respectively, and are classified in our condensed consolidated balance sheets as either current or long-term deferred revenue.

During the ~~current period presentation.~~

three months ended March 31, 2022, we recognized approximately $2.6 million of revenues that were included in our contract liability balance at January 1, 2022.

NOTE CD – SEGMENT REPORTING AND CONCENTRATIONS

Vaso Corporation principally operates in three distinct business segments in the healthcare and information technology industries. We manage and evaluate our operations, and report our financial results, through these three reportable segments.

	·	IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc., primarily focuses on healthcare IT and managed network technology services;

	·	Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for GEHC into the healthcare provider middle market; and

	·	Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., primarily focuses on the design, manufacture, sale and service of proprietary medical devices.

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Vaso Corporation and ~~managed network technology services;~~

Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for GEHC into the healthcare provider middle market; and

~~Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., primarily focuses on the design, manufacture, sale and service of proprietary medical devices.~~

Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

The chief operating decision maker is the ~~Company's~~Company’s Chief Executive Officer, who, in conjunction with upper management, evaluates segment performance based on operating income and adjusted EBITDA (net income (loss), plus interest expense (income), net; tax expense; depreciation and amortization; and non-cash stock-based compensation). Administrative functions such as finance, human resources, and information technology are centralized and related expenses allocated to each segment. Other costs not directly attributable to operating segments, such as audit, legal, director fees, investor relations, and others, as well as certain assets – primarily cash balances – are reported in the Corporate entity below. There are no intersegment revenues. Summary financial information for the segments is set forth below:

~~Page 10~~

	(in thousands)
	Three Months Ended March 31,
	2022			2021
	(unaudited)			(unaudited)
Revenues from external customers
IT	$	10,003		$	11,253
Professional sales service		6,607			4,655
Equipment		399			611
Total revenues	$	17,009		$	16,519

Gross Profit
IT	$	4,134		$	4,406
Professional sales service		5,306			3,665
Equipment		327			488
Total gross profit	$	9,767		$	8,559

Operating income (loss)
IT	$	(139	)	$	69
Professional sales service		237			(336	)
Equipment		(79	)		13
Corporate		(373	)		(285	)
Total operating income (loss)	$	(354	)	$	(539	)

Depreciation and amortization
IT	$	375		$	486
Professional sales service		11			38
Equipment		67			72
Corporate		-			-
Total depreciation and amortization	$	453		$	596

Capital expenditures
IT	$	151		$	24
Professional sales service		33			-
Equipment		10			35
Corporate		1			-
Total cash capital expenditures	$	195		$	59

	(in thousands)
	March 31, 2022		December 31, 2021
	(unaudited)
Identifiable Assets
IT	$	23,325	$	23,144
Professional sales service		19,094		18,718
Equipment		7,357		7,144
Corporate		1,910		3,355
Total assets	$	51,686	$	52,361

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands)
Three months ended Nine months ended

September 30,

September 30,

2017 2016 2017 2016
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues from external customers
IT $ 10,827 $ 9,679 $ 31,438 $ 29,530
Professional sales service 6,305 6,583 18,181 20,289
Equipment 909 1,282 2,649 3,481
Total revenues $ 18,041 $ 17,544 $ 52,268 $ 53,300

Gross Profit
IT $ 4,516 $ 4,129 $ 12,912 $ 12,094
Professional sales service 4,919 5,258 14,235 15,971
Equipment 593 763 1,749 2,210
Total gross profit $ 10,028 $ 10,150 $ 28,896 $ 30,275

Operating (loss) income
IT $ (555 ) $ (785 ) $ (2,186 ) $ (2,379 )
Professional sales service 488 1,606 806 5,015
Equipment (273 ) 10 (805 ) (700 )
Corporate (279 ) (329 ) (984 ) (1,011 )
Total operating (loss) income $ (619 ) $ 502 $ (3,169 ) $ 925

Capital expenditures
IT $ 641 $ 446 $ 1,830 $ 1,187
Professional sales service 3 57 117 168
Equipment - 2 21 57
Corporate 13 - 13 -
Total cash capital expenditures $ 657 $ 505 $ 1,981 $ 1,412

(in thousands)
September 30, 2017 December 31, 2016
(unaudited)
Identifiable Assets
IT $ 28,512 $ 27,724
Professional sales service 12,572 14,611
Equipment 7,728 7,446
Corporate 5,902 7,600
Total assets $ 54,714 $ 57,381

~~In the fourth quarter~~

GE Healthcare accounted for 39% and 28% of 2016, the Company revised its method for allocating certain corporate expenses to its reportable segments resulting in lower amounts allocated to the IT segment and higher amounts allocated to the professional sales service and equipment segments. Consequently, due primarily to the change in allocation method, as well as to a $102,000 decrease in total corporate costs allocated, the IT segment received $177,000 lower allocations, and the professional sales service segment received $75,000 higher allocations, respectively,revenue for the three months ended September 30, 2017 as compared to the corresponding period of the prior year. Similarly, for the nine months ended September 30, 2017, total corporate costs allocated decreased $85,000, the IT segment received $430,000 lower allocations,March 31, 2022 and ~~the professional sales service segment and equipment segment received $334,000 and $11,000 higher allocations, respectively, as compared to the corresponding period of the prior year.~~

~~Page 11~~

~~Vaso Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~GE Healthcare accounted for 35% and 38% of revenue for both the three months ended September 30, 2017 and 2016, respectively, and the nine months ended September 30, 2017 and 2016,~~2021, respectively. GE Healthcare also accounted for ~~$6.4~~$12.5 million or ~~59%~~85%, and ~~$7.9~~$12.3 million or ~~62%~~80%, of accounts and other receivables at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively.

NOTE ~~D – (LOSS) EARNINGS~~E –LOSS PER COMMON SHARE

Basic ~~(loss) earnings~~loss per common share is computed as ~~(loss) earnings~~loss applicable to common stockholders divided by the weighted-average number of common shares outstanding for the period. Diluted ~~(loss) earnings~~loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted to common stock.

Diluted (loss) earnings per common share were computed based on the weighted average shares outstanding plus all potentially dilutive common shares. A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows:

(in thousands)
For the three months ended For the nine months ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
(unaudited) (unaudited) (unaudited) (unaudited)
Basic weighted average shares outstanding 163,307 160,268 161,817 158,730
Dilutive effect of options and unvested restricted shares - 1,407 - 749
Diluted weighted average shares outstanding 163,307 161,675 161,817 159,479

The following table represents common stock equivalents that were excluded from the computation of diluted ~~earnings~~loss per share for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, because the effect of their inclusion would be anti-dilutive.

~~Page 12~~

~~Vaso Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

	(in thousands)
	Three months ended March 31,
	2022		2021
	(unaudited)		(unaudited)
Restricted common stock grants		2,247		3,691

NOTE EF – ACCOUNTS AND OTHER RECEIVABLES, NET

The following table presents information regarding the ~~Company's~~Company’s accounts and other receivables as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016:~~

(in thousands)
September 30, 2017 December 31, 2016
(unaudited)
Trade receivables $ 15,549 $ 16,470
Due from employees 105 430
Allowance for doubtful accounts and
commission adjustments (4,710 ) (4,159 )
Accounts and other receivables, net $ 10,944 $ 12,741

2021:

	(in thousands)
	March 31, 2022			December 31, 2021
	(unaudited)
Trade receivables	$	19,890		$	21,197
Unbilled receivables		990			-
Allowance for doubtful accounts and commission adjustments		(6,199	)		(5,804	)
Accounts and other receivables, net	$	14,681		$	15,393

Contract receivables under Topic 606 consist of trade receivables and unbilled receivables. Trade receivables include amounts due for shipped products and services rendered. Unbilled receivables represent variable consideration recognized in accordance with Topic 606 but not yet billable. Amounts ~~currently due~~recorded – billed and unbilled - under the GEHC Agreement are subject to adjustment in subsequent periods should the underlying sales order amount, upon which the receivable is based, change.

Allowance for doubtful accounts and commission adjustments include estimated losses resulting from the inability of our customers to make required payments, and adjustments arising from subsequent changes in sales order amounts that may reduce the amount the Company will ultimately receive under the GEHC Agreement. Due from employees is primarily commission advances made to sales personnel.

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE FG – INVENTORIES, NET

Inventories, net of reserves, consist of the following:

(in thousands)
September 30, 2017 December 31, 2016
(unaudited)
Raw materials $ 553 $ 501
Work in process 536 727
Finished goods 1,569 1,167
$ 2,658 $ 2,395

~~At September 30, 2017 and December 31, 2016, the~~

	(in thousands)
	March 31, 2022		December 31, 2021
	(unaudited)
Raw materials	$	763	$	744
Work in process		37		4
Finished goods		913		399
	$	1,713	$	1,147

The Company maintained reserves for slow moving inventories of ~~$810,000~~$164,000 and ~~$827,000,~~$165,000 at March 31, 2022 and December 31, 2021, respectively.

NOTE GH – GOODWILL AND OTHER INTANGIBLES

Goodwill ~~aggregating $17,407,000 and $17,280,000 was recorded on the Company's condensed consolidated balance sheets at September 30, 2017 and December 31, 2016, respectively,~~ of ~~which~~ $14,375,000 is allocated to the IT ~~segment, resulted from the acquisition of NetWolves in May 2015.~~segment. The remaining ~~$3,032,000~~$1,351,000 of goodwill is ~~allocated~~attributable to the ~~Company's equipment~~FGE reporting unit within the Equipment segment. The NetWolves and FGE reporting units had negative net asset carrying amounts at March 31, 2022 and December 31, 2021. The components of the change in goodwill are as follows:

~~Page 13~~

	(in thousands)
	Three months ended		Year ended
	March 31, 2022		December 31, 2021
	(unaudited)
Beginning of period	$	15,722	$	15,688
Foreign currency translation adjustment		4		34
End of period	$	15,726	$	15,722

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands)
Carrying Amount

Balance at December 31, 2016 $ 17,280
Foreign currency translation adjustment 127
Balance at September 30, 2017 (unaudited) $ 17,407

The ~~Company's~~Company’s other intangible assets consist of capitalized customer-related intangibles, patent and technology costs, and software costs, as set forth in the following:

(in thousands)
September 30, 2017 December 31, 2016
(unaudited)
Customer-related
Costs $ 5,831 $ 5,831
Accumulated amortization (2,318 ) (1,768 )
3,513 4,063

Patents and Technology
Costs 2,363 2,363
Accumulated amortization (1,238 ) (1,061 )
1,125 1,302

Software
Costs 1,720 1,394
Accumulated amortization (906 ) (763 )
814 631

$ 5,452 $ 5,996

	(in thousands)
	March 31, 2022			December 31, 2021
	(unaudited)
Customer-related
Costs	$	5,831		$	5,831
Accumulated amortization		(4,347	)		(4,279	)
		1,484			1,552

Patents and Technology
Costs		1,894			1,894
Accumulated amortization		(1,807	)		(1,754	)
		87			140

Software
Costs		2,351			3,459
Accumulated amortization		(2,023	)		(3,110	)
		328			349

	$	1,899		$	2,041

Patents and technology are amortized on a straight-line basis over their estimated useful lives of ten and eight years, respectively. The cost of significant customer-related intangibles is amortized in proportion to estimated total related revenue; cost of other customer-related intangible assets is amortized on a straight-line basis over the ~~asset's~~asset’s estimated economic life of seven years. Software costs are amortized on a straight-line basis over its expected useful life of five years.

Amortization expense amounted to ~~$279,000~~$151,000 and ~~$284,000~~$214,000 for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016, respectively, and $870,000 and $847,000 for the nine months ended September 30, 2017 and 2016,~~2021, respectively.

Amortization of intangibles for the next five years is:

(in thousands)
Years ending December 31, (unaudited)
Remainder of 2017 $ 292
2018 1,015
2019 893
2020 809
2021 737
Total $ 3,746

~~Page 14~~

	(in thousands)
Years ending December 31,	(unaudited)
Remainder of 2022	$	412
2023		341
2024		272
2025		188
2026		144
	$	1,357

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE HI – OTHER ASSETS, NET

Other assets, net consist of the following at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016:~~

(in thousands)
September 30, 2017 December 31, 2016
(unaudited)
Deferred commission expense - noncurrent $ 2,118 $ 2,967
Trade receivables - noncurrent 900 1,064
Other, net of allowance for loss on loan receivable of
$412 at September 30, 2017 and December 31, 2016 880 970
$ 3,898 $ 5,001

2021:

	(in thousands)
	March 31, 2022		December 31, 2021
	(unaudited)
Deferred commission expense - noncurrent	$	2,253	$	2,018
Trade receivables - noncurrent		559		368
Other, net of allowance for loss on loan receivable of $412 at March 31, 2022 and December 31, 2021		61		60
	$	2,873	$	2,446

NOTE IJ – ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016:~~

(in thousands)
September 30, 2017 December 31, 2016
(unaudited)
Accrued compensation $ 840 $ 1,133
Accrued expenses - other 1,234 1,140
Other liabilities 2,543 3,002
$ 4,617 $ 5,275

~~Page 15~~

2021:

	(in thousands)
	March 31, 2022		December 31, 2021
	(unaudited)
Accrued compensation	$	1,252	$	2,397
Accrued expenses - other		1,265		1,799
Other liabilities		4,213		3,293
	$	6,730	$	7,489

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Vaso Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE JK - DEFERRED REVENUE

The changes in the ~~Company's~~Company’s deferred revenues are as follows:

(in thousands)
For the three months ended For the nine months ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
(unaudited) (unaudited) (unaudited) (unaudited)
Deferred revenue at beginning of period $ 20,692 $ 17,783 $ 19,404 $ 18,516
Additions:
Deferred extended service contracts 118 159 553 488
Deferred in-service and training 5 10 13 18
Deferred service arrangements 8 20 28 40
Deferred commission revenues 4,036 3,411 10,286 8,492
Recognized as revenue:
Deferred extended service contracts (159 ) (186 ) (501 ) (584 )
Deferred in-service and training (3 ) (3 ) (13 ) (15 )
Deferred service arrangements (11 ) (13 ) (34 ) (33 )
Deferred commission revenues (2,608 ) (2,765 ) (7,658 ) (8,506 )
Deferred revenue at end of period 22,078 18,416 22,078 18,416
Less: current portion 12,651 7,830 12,651 7,830
Long-term deferred revenue at end of period $ 9,427 $ 10,586 $ 9,427 $ 10,586

~~NOTE K – LINE OF CREDIT~~

In August 2016, NetWolves' lending institution extended its $3.0 million line of credit and, in September 2016, increased the maximum borrowings to $4.0 million. Advances under the line, which expired on August 26, 2017 and was extended through March 31, 2018, bear interest at a rate of LIBOR plus 2.25% and are secured by substantially all of the assets of NetWolves Network Services, LLC and guaranteed by Vaso Corporation. At September 30, 2017, the Company had drawn approximately $3.9 million against the line. The draw is included in notes payable and capital lease obligations – current portion in the Company's condensed consolidated balance sheet.

In August 2016, the Company executed a $2.0 million line of credit agreement with a lending institution. Advances under the line, which expired on August 23, 2017 and was extended through March 31, 2018, bear interest at a rate of LIBOR plus 2.25% and are secured by substantially all of the assets of the Company. No advances under the line had been drawn as of September 30, 2017. The line of credit agreement includes certain financial covenants. At September 30, 2017, the Company was not in compliance with one of the covenants.

	(in thousands)
	Three months ended March 31,
	2022			2021
	(unaudited)			(unaudited)
Deferred revenue at beginning of period	$	24,965		$	17,704
Net additions:
Deferred extended service contracts		-			(1	)
Deferred commission revenues		4,692			2,614
Recognized as revenue:
Deferred extended service contracts		(1	)		(1	)
Deferred commission revenues		(2,702	)		(1,832	)
Deferred revenue at end of period		26,954			18,484
Less: current portion		17,975			12,387
Long-term deferred revenue at end of period	$	8,979		$	6,097

NOTE L – RELATED-PARTY TRANSACTIONS

~~On May 29, 2015,~~

The Company recorded interest charges aggregating approximately $0 and $54,000 for the ~~Company entered into a Note Purchase Agreement with~~three-month periods ended March 31, 2022 and 2021, respectively, payable to MedTechnology Investments, LLC ~~("MedTech"~~(“MedTech”) pursuant to ~~which it issued~~its promissory notes (“Notes”). The MedTech ~~a secured subordinated promissory note ("Note") for $3,800,000 for~~Notes were used in 2015 to partially fund the purchase of ~~NetWolves. MedTech was formed to acquire the Note,~~NetWolves, and, $1,950,000 of the aggregate funds used to acquire the Note was provided by six of our directors. In September 2015, a second Note for $750,000 was issued to MedTech for working capital purposes, of which $250,000 was provided by a directorthrough several principal payments made in 2020 and a director's relative. In July 2015, an additional $250,000 was borrowed under the Note Purchase Agreement. The Notes bear interest, payable quarterly, at an annual rate of 9%, mature on May 29, 2019, may be prepaid without penalty, and are subordinated to any current or future Senior Debt as defined2021, were repaid in the Subordinated Security Agreement. The Subordinated Security Agreement secures payment and performance of the Company's obligations under the Notes and as a result, MedTech was granted a subordinated security interestfull in ~~the Company's assets.~~

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~~Vaso Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

December 2021.

David Lieberman, the Vice Chairman of the ~~Company's~~Company’s Board of Directors, is a practicing attorney in the State of New York and a senior partner at the law firm of Beckman Lieberman & ~~Barandes,~~Associates LLP, which performs certain legal services for the Company. Fees of approximately ~~$85,000~~$47,000 were billed by the firm for ~~each of~~both the ~~three month~~three-month periods ended ~~September 30, 2017~~March 31, 2022 and ~~2016, and fees of approximately $255,000 were billed for each of the nine month periods ended September 30, 2017 and 2016,~~2021, at which ~~dates~~times no amounts were outstanding.

~~In July, 2017,~~

The Company uses the ~~Company made partial principal payments aggregating Chinese yuan RMB1,125,000 (approximately $170,000), plus accrued~~equity method to account for its interest in EECP Global as it has the ability to exercise significant influence over the entity and reports its share of EECP Global operations in Other (Expense) Income on ~~notes payable to the president~~its condensed consolidated statements of Life Enhancement Technology Ltd. and the president of Biox Instruments Company Ltd. The notes were issued in conjunction with the acquisition of Genwell Instruments Company Ltd in August 2014. The note balance of RMB3,375,000 (approximately $507,000) matures August 26, 2019.

At September 30, 2017, the Company had contributed $522,000 to the VSK joint venture, and $296,000, net, was due to VSK. The Company's pro-rata share in VSK's income (loss) from operations approximated $29,000 and $48,000 foroperations. For the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, the Company’s share of EECP Global’s income was approximately $16,000 and $13,000, respectively, and ~~$(30,000) and $(29,000) for the nine months ended September 30, 2017 and 2016, respectively, and is~~ included in ~~interest and other income, net~~Other (Expense) Income in ~~the accompanying unaudited~~its condensed consolidated statements of ~~operations~~operations. At March 31, 2022, the Company recorded a net receivable from related parties of approximately $326,000 on its condensed consolidated balance sheet for amounts due from EECP Global for fees and ~~comprehensive (loss) income.~~

cost reimbursements net of amounts due to EECP Global for receivables collected on its behalf.

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Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE M – COMMITMENTS AND CONTINGENCIES

Litigation

The Company is currently, and has been in the past, a party to various legal proceedings, primarily employee related matters, incident to its business. The Company believes that the outcome of all pending legal proceedings in the aggregate is unlikely to have a material adverse effect on the business or consolidated financial condition of the Company.

Sales representation agreement

In ~~September 2012,~~October 2021, the Company concluded an amendment of the GEHC Agreement with GEHC, originally signed on May 19, ~~2010.~~2010 and previously extended in 2012, 2015 and 2017. The amendment ~~effective July 1, 2012,~~further extended the ~~initial~~ term of ~~three years commencing July 1, 2010 to five years through September 30, 2015. In December 2014,~~ the ~~Company concluded an additional amendment, effective January 1, 2015, extending the term~~agreement through December 31, ~~2018,~~2026, subject to earlier termination with or without cause under certain circumstances after timely notice. Under the agreement, VasoHealthcare is the exclusive representative for the sale of select GE Healthcare diagnostic imaging products to specific market segments/accounts in the 48 contiguous states of the United States and ~~termination~~the District of Columbia. The agreement may be terminated by GE Healthcare without cause ~~on six months written notice. These~~subject to certain conditions. The circumstances ~~include~~under which early termination of the agreement may occur with cause include: not materially achieving certain sales goals, not maintaining a minimum number of sales representatives, and not meeting various legal and GEHC policy requirements.

~~Page 17~~

Employment Agreements

On May 10, 2019, the Company modified its Employment Agreement with its President and Chief Executive Officer, Dr. Jun Ma, to provide for a five-year term with extensions, unless earlier terminated by the Company, but in no event can it extend beyond May 31, 2026. The Employment Agreement provides for annual compensation of $500,000. Dr. Ma shall be eligible to receive a bonus for each fiscal year during the employment term. The amount and the occasion for payment of such bonus, if any, shall be at the discretion of the Board of Directors. Dr. Ma shall also be eligible for an award under any long-term incentive compensation plan and grants of options and awards of shares of the Company’s stock, as determined at the Board of Directors’ discretion. The Employment Agreement further provides for reimbursement of certain expenses, and certain severance benefits in the event of termination prior to the expiration date of the Employment Agreement.

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ITEM 2 - ~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for historical information contained in this report, the matters discussed are forward-looking statements that involve risks and uncertainties. When used in this report, words such as ~~"anticipates"~~“anticipates”, ~~"believes"~~“believes”, ~~"could"~~“could”, ~~"estimates"~~“estimates”, ~~"expects"~~“expects”, ~~"may"~~“may”, ~~"plans"~~“plans”, ~~"potential"~~“potential” and ~~"intends"~~“intends” and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the ~~Company's~~Company’s management, as well as assumptions made by and information currently available to the ~~Company's~~Company’s management. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic ~~conditions;~~conditions, including the current COVID-19 pandemic which has already adversely affected operating results; the effect of the dramatic changes taking place in ~~the healthcare environment;~~IT and healthcare; the impact of competitive procedures and products and their pricing; medical insurance reimbursement policies; unexpected manufacturing or supplier problems; unforeseen difficulties and delays in ~~the conduct of clinical trials and other~~ product development programs; the actions of regulatory authorities and third-party payers in the United States and overseas; continuation of the GEHC ~~agreements~~agreement and the risk factors reported from time to time in the ~~Company's~~Company’s SEC reports, including its recent report on Form 10-K. The Company undertakes no obligation to update forward-looking statements as a result of future events or developments.

Unless the context requires otherwise, all references to ~~"we"~~“we”, ~~"our"~~“our”, ~~"us"~~“us”, ~~"Company"~~“Company”, ~~"registrant"~~“registrant”, ~~"Vaso"~~“Vaso” or ~~"management"~~“management” refer to Vaso Corporation and its subsidiaries

General Overview

COVID-19 pandemic

The COVID-19 pandemic has had a significant impact on the world economy and it is possible that some negative impact to the Company’s financial condition and results of operations may continue. At this time, we cannot reasonably estimate what the total impact may be. The pandemic has resulted in workforce and travel restrictions and created business disruptions in supply chain, production and demand across many business sectors. The pandemic continues to cause materials shortage and delivery delay in the diagnostic imaging business and our equipment segment. In addition, we have experienced the negative impact in the recurring revenue business in our IT segment as some of our customers have been adversely affected by the shutdown, and new business in this segment appears to be slower as well. The pandemic also may have a negative impact on our cash receipts as some customers request forbearance or a delay in their payments to us.

The pandemic may continue to impact our operations in 2022, depending on the duration of the pandemic and the timing and success of the reopening of the economy.

We have taken significant steps in our efforts to protect our workforce and our clients. Most of our employees have been working at least partially remotely and we have reopened our work sites consistent with the guidelines promulgated by the CDC and respective state governments.

Our Business Segments

Vaso Corporation ~~("Vaso"~~(“Vaso”) was incorporated in Delaware in July 1987. We principally operate in three distinct business segments in the healthcare and information technology industries. We manage and evaluate our operations, and report our financial results, through these three business segments.

	·	IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc., primarily focuses on healthcare IT and managed network technology services;

	·	Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for GEHC into the healthcare provider middle market; and

	·	Equipment segment, primarily focuses on the design, manufacture, sale and service of proprietary medical devices and software, operating through a wholly-owned subsidiary VasoMedical, Inc., which in turn operates through Vasomedical Solutions, Inc. for domestic business and Vasomedical Global Corp. for international business, respectively.

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Vaso Corporation and ~~managed network technology services;~~

Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for GEHC into the healthcare provider middle market; and

~~Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., primarily focuses on the design, manufacture, sale and service of proprietary medical devices.~~

Subsidiaries

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon the accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("(“U.S. ~~GAAP"~~GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Although these estimates are based on our knowledge of current events, our actual amounts and results could differ from those estimates. The estimates made are based on historical factors, current circumstances, and the experience and judgment of our management, who continually evaluate the judgments, estimates and assumptions and may employ outside experts to assist in the evaluations.

Certain of our accounting policies are deemed ~~"critical"~~“critical”, as they are both most important to the financial statement presentation and require ~~management's~~management’s most difficult, subjective or complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a discussion of our critical accounting policies, see ~~"Management's~~Note B to the condensed consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 as filed with the SEC on March ~~30, 2017.~~

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~~Vaso Corporation and Subsidiaries~~

31, 2022.

Results of Operations – For the Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~

2021

Revenues

Total revenue for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 was ~~$18,041,000~~$17,009,000 and ~~$17,544,000,~~$16,519,000, respectively, representing an increase of ~~$497,000,~~$490,000, or 3% year-over-year. On a segment basis, revenue in the ITprofessional sales service segment increased ~~$1,148,000,~~$1,952,000 while revenue in the ~~professional sales service~~IT and equipment segments decreased ~~$278,000~~$1,250,000 and ~~$373,000,~~$212,000, respectively.

Revenue in the IT segment for the three months ended ~~September 30, 2017~~March 31, 2022 was ~~$10,827,000~~$10,003,000 compared to ~~$9,679,000~~$11,253,000 for the three months ended ~~September 30, 2016, an increase~~March 31, 2021, a decrease of ~~$1,148,000,~~$1,250,000, or 11%, of which ~~$252,000~~$1,090,000 resulted from ~~growth in the operations of~~lower NetWolves revenue, due primarily to lower professional services and ~~$896,000~~COVID-related customer attrition, and $160,000 from ~~the growth in the~~lower healthcare IT ~~VAR business,~~revenue, due primarily to ~~more healthcare IT solutions installations in the third quarter of 2017.~~lower software sales. Our monthly recurring revenue in the ~~managed network services operations continues to grow month over month as we add new customers~~IT segment accounted for $9,234,000 or 92% of the segment revenue in the first quarter of 2022, and ~~expand our services to existing customers; at~~$10,025,000 or 89% of the segment revenue for the same time, the backlog of orders in our healthcare IT operations increased to $10.4 million at September 30, 2017 from $7.4 million at December 31, 2016 and $6.3 million at September 30, 2016, due to growth in orders and clients. We anticipate that as our healthcare IT operations become more developed and the service delivery process accelerated, the backlog will convert to revenue in a more timely fashion and, coupled with continued growth in order volume, profitability will improve in this segment.

quarter last year (see Note C).

Commission revenues in the professional sales ~~services~~service segment were ~~$6,305,000~~$6,607,000 in the ~~third~~first quarter of ~~2017, a decrease~~2022, an increase of 4%$1,952,000, or 42%, as compared to ~~$6,583,000~~$4,655,000 in the same quarter of ~~2016.~~2021. The ~~decrease~~increase in commission revenues was due primarily to ~~a decrease~~an increase in the volume of underlying equipment delivered by GEHC during the ~~period.~~period as well as a higher blended commission rate applicable to such deliveries. The Company only recognizes commission revenue when the underlying equipment has been accepted at the customer site in accordance with the specific terms of the sales agreement. Consequently, amounts billable, or billed and received, under the agreement with GE Healthcare prior to customer acceptance of the equipment are recorded as deferred revenue in the condensed consolidated balance sheet. As of ~~September 30, 2017, $21,132,000~~March 31, 2022, $26,945,000 in deferred commission revenue was recorded in the ~~Company's~~Company’s condensed consolidated balance sheet, of which ~~$9,013,000~~$8,975,000 was long-term. At ~~September 30, 2016, $17,355,000~~March 31, 2021, $18,472,000 in deferred commission revenue was recorded in the ~~Company's~~Company’s condensed consolidated balance sheet, of which ~~$10,115,000~~$6,090,000 was long-term. The increase in deferred revenue is principally due to an increase in new orders booked ~~and~~in the ~~decrease in deliveries by GEHC.~~

first quarter 2022.

Revenue in the equipment segment decreased by ~~$373,000,~~$212,000, or ~~29%~~35%, to ~~$909,000~~$399,000 for the three-month period ended ~~September 30, 2017~~March 31, 2022 from ~~$1,282,000~~$611,000 for the same period of the prior ~~year. The decrease was~~year, principally due to lower ~~EECP~~^® ~~deliveries.~~

deliveries in our China operations as a result of COVID lockdowns in China.

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Gross Profit

Gross profit for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 was ~~$10,028,000,~~$9,767,000, or ~~56%~~57% of revenue, and ~~$10,150,000,~~$8,559,000, or ~~58%~~52% of revenue, respectively, representing ~~a decrease~~an increase of ~~$122,000,~~$1,208,000, or 1%14% year-over-year. On a segment basis, gross profit in the ITprofessional sales service segment increased ~~$387,000,~~$1,641,000, or 45%, while gross profit in the ~~professional sales services segment~~IT and equipment ~~segment~~segments decreased ~~$339,000~~$272,000, or 6%; and ~~$170,000,~~$161,000, or 33%, respectively.

IT segment gross profit for the three months ended ~~September 30, 2017~~March 31, 2022 was ~~$4,516,000,~~$4,134,000, or ~~42%~~41% of the segment revenue, compared to ~~$4,129,000,~~$4,406,000, or ~~43%~~39% of the segment revenue for the three months ended ~~September 30, 2016, with~~March 31, 2021. The year-over-year decrease of $272,000, or 6%, was primarily a result of lower sales volume at NetWolves partially offset by higher margin product sales mix in the ~~increase primarily resulting from higher sales.~~

healthcare IT business.

Professional sales ~~services~~service segment gross profit was ~~$4,919,000,~~$5,306,000, or ~~78%~~80% of segment revenue, for the three months ended ~~September 30, 2017~~March 31, 2022 as compared to ~~$5,258,000,~~$3,665,000, or ~~80%~~79% of the segment revenue, for the three months ended ~~September 30, 2016,~~March 31, 2021, reflecting ~~a decrease~~an increase of ~~$339,000,~~$1,641,000, or 6%45%. The ~~decrease~~increase in absolute dollars was primarily due to ~~lower~~higher commission revenue as a result of ~~lower~~higher blended commission rate and higher volume of GEHC equipment delivered during the ~~third~~first quarter of ~~2017~~2022 than in the same period last year.

Cost of commissions in the professional sales service segment of ~~$1,386,000~~$1,301,000 and ~~$1,325,000,~~$990,000, for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, respectively, reflected commission expense associated with recognized commission revenues.

Commission expense associated with short-term deferred revenue is recorded as short-term deferred commission expense, or with long-term deferred revenue as part of other assets, on the balance sheet until the related commission revenue is recognized.

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Equipment segment gross profit decreased to ~~$593,000,~~$327,000, or ~~65%~~82% of segment revenues, for the ~~third~~first quarter of ~~2017~~2022 compared to ~~$763,000,~~$488,000, or ~~60%~~80% of segment revenues, for the same quarter of ~~2016. Gross~~2021. The $161,000, or 33%, decrease in gross profit ~~decreased~~was the result of lower revenue in our China operations due to ~~lower sales~~reduced delivery volume ~~and~~for the first quarter of 2022, partially offset by higher gross profit margin ~~increased due mainly to a higher proportion of higher margin products in~~product mix during the ~~sales mix in 2017, compared to the third quarter 2016.~~

quarter.

Operating ~~Income (Loss)~~

Loss

Operating ~~(loss) income~~loss for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 was ~~$(619,000)~~$354,000 and ~~$502,000,~~$539,000, respectively, representing ~~a decrease~~an improvement of ~~$1,121,000,~~$185,000, or 34%, due primarily ~~due~~ to higher ~~operating costs and lower~~ gross profit. On a segment basis, ~~operating loss in the IT segment decreased $230,000, while operating income in~~ the professional sales service segment ~~decreased $1,118,000. Operating loss~~recorded operating income of $237,000 in the ~~equipment segment was $(273,000) for the third~~first quarter of ~~2017~~2022 as ~~compared~~opposed to an operating loss of $336,000 in the same period of 2021; the IT segment recorded an operating loss of $139,000 in the first quarter of 2022 as opposed to operating income of ~~$10,000~~$69,000 in the same period of 2021; and the equipment segment recorded an operating loss of $79,000 in the first quarter of ~~2016. In addition, corporate expenses decreased $50,000.~~

2022 as opposed to operating income of $13,000 in the same period of 2021.

Operating loss in the IT segment ~~decreased~~was $139,000 for the three-month period ended March 31, 2022, a net change of $208,000 from operating income of $69,000 in the same period of 2021, due to lower gross profit partially offset by lower selling, general, and administrative (“SG&A”) and research and development (“R&D”) costs. The professional sales service segment reporting operating income of $237,000 in the three-month period ended ~~September 30, 2017~~March 31, 2022 as compared to an operating loss of $336,000 in the same period of ~~2016~~2021, an improvement of $573,000. The improvement was due to higher gross profit partially offset by higher ~~research and development~~SG&A costs. ~~Operating income~~The equipment segment reported an operating loss of $79,000 in the ~~professional sales service segment decreased in the three-month period ended September 30, 2017 as~~first quarter of 2022, compared to operating income of $13,000 in the ~~same period~~first quarter 2021, a decrease of ~~2016 due to lower gross profit combined with higher selling, general, and administrative ("SG&A") costs.~~$92,000. The ~~change from equipment segment operating income in the third quarter of 2016 to operating loss in the third quarter of 2017~~decrease was due to lower gross profit ~~and higher~~partially offset by lower SG&A costs.

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SG&A costs for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 were ~~$10,412,000~~$9,999,000 and ~~$9,531,000,~~$8,954,000, respectively, representing an increase of ~~$881,000,~~$1,045,000, or 9%12% year-over-year. On a segment basis, SG&A costs in the ~~professional sales service~~IT segment ~~increased $778,000 due to increased headcount and other personnel-related costs, and SG&A costs~~decreased by $14,000 in the ~~equipment segment increased $127,000 due mainly to higher travel and exhibition costs. SG&A costs in the IT segment increased by $29,000 to $4,941,000 in the third~~first quarter of ~~2017~~2022 from ~~$4,912,000 in~~ the same quarter of the prior year due to ~~increased~~reduced third-party commissions partially offset by higher personnel costs; SG&A costs in the ~~IT VAR business.~~professional sales service segment increased $1,069,000 due mainly to cost of national sales meeting (which was held online last year), and higher travel and personnel costs; and SG&A costs in the equipment segment decreased $97,000 due mainly to lower personnel costs. Corporate costs not allocated to segments ~~decreased by $50,000 from $329,000 for~~increased $88,000 to $373,000 in the three months ended ~~September 30, 2016 to $279,000~~March 31, 2022 from $285,000 for the ~~three months ended September 30, 2017,~~same period in 2021 due ~~primarily~~mainly to ~~lower director fees.~~

higher accounting and insurance costs.

Research and development ("(“R~~&D"~~&D”) expenses were ~~$235,000,~~$122,000, or 1% of revenues, for the ~~third~~first quarter of ~~2017, an increase~~2022, a decrease of ~~$118,000,~~$22,000, or ~~101%~~15%, from ~~$117,000,~~$144,000, or 1% of revenues, for the ~~third~~first quarter of ~~2016.~~2021. The ~~increase~~decrease is primarily attributable to ~~higher software~~lower product development expenses and a reduction in technical staff in the IT segment.

Adjusted EBITDA

We define Adjusted EBITDA (earnings (loss) before interest, taxes, depreciation and amortization), which is a non-GAAP financial measure, as net income (loss), plus interest expense (income), net; tax expense; depreciation and amortization; and non-cash expenses for share-based compensation. Adjusted EBITDA is a metric that is used by the investment community for comparative and valuation purposes. We disclose this metric in order to support and facilitate the dialogue with research analysts and investors.

Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered a substitute for operating income, which we consider to be the most directly comparable U.S. GAAP measure. Adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, you should not consider Adjusted EBITDA in isolation, or as a substitute for net income or other consolidated income statement data prepared in accordance with U.S. GAAP. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

A reconciliation of net ~~income~~loss to Adjusted EBITDA is set forth below:

~~Page 20~~

~~Vaso Corporation and Subsidiaries~~

(in thousands)

Three months ended September 30,

2017 2016
(unaudited) (unaudited)
Net (loss) income $ (816 ) $ 328
Interest expense (income), net 163 166
Income tax expense (benefit) 94 103
Depreciation and amortization 611 549
Share-based compensation 100 275
Adjusted EBITDA $ 152 $ 1,421

	(in thousands)
	Three months ended March 31,
	2022			2021
	(unaudited)			(unaudited)
Net loss	$	(344	)	$	(643	)
Interest expense (income), net		19			121
Income tax expense		12			18
Depreciation and amortization		453			596
Share-based compensation		7			9
Adjusted EBITDA	$	147		$	101

Adjusted EBITDA ~~decreased~~increased by ~~$1,269,000,~~$46,000, to ~~$152,000~~$147,000 in the quarter ended ~~September 30, 2017~~March 31, 2022 from ~~$1,421,000~~$101,000 in the quarter ended ~~September 30, 2016.~~March 31, 2021. The ~~decrease~~increase was ~~primarily~~ attributable to the ~~lower~~decrease in net ~~income and share-based compensation,~~loss, partially offset primarily by ~~higher fixed asset~~the decrease in depreciation ~~in the IT segment.~~

and amortization and interest expense.

Interest and Other Income (Expense)

Interest and other income (expense) for the three months ended ~~September 30, 2017~~March 31, 2022 was ~~$(103,000)~~$22,000 as compared to ~~$(71,000)~~$(86,000) for the corresponding period of ~~2016.~~2021. The ~~expense~~ increase in interest and other income (expense) was due primarily to lower interest expense due to principal payments against the line of credit and other ~~income for the three months ended September 30, 2017.~~

notes payable.

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Income Tax Expense

For the three months ended ~~September 30, 2017,~~March 31, 2022, we recorded income tax expense of ~~$94,000~~$12,000 as compared to ~~$103,000~~income tax expense of $18,000 for the corresponding period of ~~2016.~~2021. The decrease ~~arose~~was due mainly from lower state income taxes.

Net ~~(Loss) Income~~

Loss

Net loss for the three months ended ~~September 30, 2017~~March 31, 2022 was ~~$816,000~~$344,000 as compared to ~~net income of $328,000~~$643,000 for the three months ended ~~September 30, 2016,~~March 31, 2021, representing ~~a decrease~~an improvement of ~~$1,144,000. Our net loss~~$299,000, or 47%. Loss per share of $0.00 was ~~$0.00~~recorded in both the three-month ~~period~~periods ended ~~September 30, 2017, as compared to net income of $0.00 per share in the three-month period ended September 30, 2016.~~March 31, 2022 and 2021. The principal cause of the decrease in net ~~income~~loss is the ~~decrease in revenue and gross profit in the professional sales service segment resulting~~change from ~~lower deliveries, combined with the increase in SG&A costs.~~

~~Results of Operations – For the Nine Months Ended September 30, 2017 and 2016~~

~~Revenues~~

Total revenue for the nine months ended September 30, 2017 and 2016 was $52,268,000 and $53,300,000, respectively, representing a decrease of $1,032,000, or 2% year-over-year. On a segment basis, revenue in the IT segment increased $1,908,000, while revenue in the professional sales service and equipment segments decreased $2,108,000 and $832,000, respectively.

Revenue in the IT segment for the nine months ended September 30, 2017 was $31,438,000 compared to $29,530,000 for the nine months ended September 30, 2016, an increase of $1,908,000, of which $1,136,000 resulted from growth in the operations of NetWolves, and $772,000 from growth in the healthcare IT business due to an increase in new installations in the first nine months of 2017, partially offset by lower average revenue per installation. Our monthly recurring revenue in the managed network services operations continues to grow month over month as we add new customers and expand our services to existing customers; at the same time, the backlog of orders in our healthcare IT operations increased to $10.4 million at September 30, 2017 from $7.4 million at December 31, 2016 and $6.3 million at September 30, 2016, due to growth in orders and clients. We anticipate that as our healthcare IT operations become more developed and the service delivery process accelerated, the backlog will convert to revenue in a more timely fashion and, coupled with continued growth in order volume, profitability will improve in this segment.

~~Page 21~~

~~Vaso Corporation and Subsidiaries~~

Commission revenues in the professional sales services segment were $18,181,000 in the first nine months of 2017, a decrease of 10%, as compared to $20,289,000 in the same period of 2016. The decrease in commission revenues was due primarily to a decrease in the volume of equipment delivered by GEHC during the period. The Company recognizes commission revenue when the underlying equipment has been accepted at the customer site in accordance with the specific terms of the sales agreement. Consequently, amounts billable under the agreement with GE Healthcare prior to customer acceptance of the equipment are recorded as deferred revenue in the condensed consolidated balance sheet. As of September 30, 2017, $21,132,000 in deferred commission revenue was recorded in the Company's condensed consolidated balance sheet, of which $9,013,000 was long-term. At September 30, 2016, $17,355,000 in deferred commission revenue was recorded in the Company's condensed consolidated balance sheet, of which $10,115,000 was long-term.

Revenue in the equipment segment decreased by $832,000, or 24%, to $2,649,000 for the nine-month period ended September 30, 2017 from $3,481,000 for the same period of the prior year. The decrease was principally due to a decrease in EECP^® ~~and Biox ambulatory monitor revenues as a result of lower sales volume, as well as lower EECP~~^®~~service contract and accessory revenues.~~

~~Gross Profit~~

Gross profit for the nine months ended September 30, 2017 and 2016 was $28,896,000, or 55% of revenue, and $30,275,000, or 57% of revenue, respectively, representing a decrease of $1,379,000, or 5% year-over-year. On a segment basis, gross profit in the IT segment increased $818,000, while gross profit in the professional sales services segment and equipment segment decreased $1,736,000 and $461,000, respectively.

IT segment gross profit for the nine months ended September 30, 2017 was $12,912,000, or 41% of the segment revenue, compared to $12,094,000, or 41% of the segment revenue for the nine months ended September 30, 2016, with the $411,000 of the increase attributable to growth in both revenue and gross margin in the healthcare IT business and $407,000 of the increase resulting from higher sales at NetWolves.

Professional sales services segment gross profit was $14,235,000, or 78% of segment revenue, for the nine months ended September 30, 2017 as compared to $15,971,000, or 79% of the segment revenue, for the nine months ended September 30, 2016, reflecting a decrease of $1,736,000, or 11%. The decrease in absolute dollars was due to lower commission revenue as a result of lower volume of GEHC equipment delivered during the first three quarters of 2017 than in the same period last year, partially offset by lower commission expense in the first three quarters of 2017 compared to the same period of 2016.

Cost of commissions in the professional sales service segment of $3,946,000 and $4,318,000, for the nine months ended September 30, 2017 and 2016, respectively, reflected commission expense associated with recognized commission revenues. The decrease is due to the lower commission revenue. Commission expense associated with deferred revenue is recorded as deferred commission expense until the related commission revenue is recognized.

Equipment segment gross profit decreased to $1,749,000, or 66% of segment revenues, for the first three quarters of 2017 compared to $2,210,000, or 63% of segment revenues, for the same period of 2016, due to lower sales volume in the first three quarters of 2017, compared to the first three quarters of 2016.

~~Operating (Loss) Income~~

Operating (loss) income for the nine months ended September 30, 2017 and 2016 was $(3,169,000) and $925,000, respectively, representing a decrease of $4,094,000, primarily due to higher operating costs and lower gross profit. On a segment basis, operating loss ~~decreased $193,000 in the IT segment and~~to operating income in the professional sales service segment, ~~decreased $4,209,000, while operating loss in the equipment segment increased $105,000. In addition, corporate expenses decreased $27,000.~~

~~Operating loss in the IT segment decreased in the nine-month period ended September 30, 2017~~an improvement of $573,000, as compared to the same period of 2016 due to higher gross profit, partially offset by higher research and development and SG&A costs. Operating income in the professional sales service segment decreased in the nine-month period ended September 30, 2017well as ~~compared to the same period of 2016 due to~~ lower gross profit combined with higher SG&A costs. Operating loss in the equipment segment increased in the nine-month period ended September 30, 2017 as compared to the same period of 2016 due to lower gross profit,interest expense, partially offset by lower ~~SG&A costs.~~

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~~Vaso Corporation and Subsidiaries~~

SG&A costs for the nine months ended September 30, 2017 and 2016 were $31,349,000 and $28,981,000, respectively, representing an increase of $2,368,000, or 8% year-over-year. On a segment basis, SG&A costs in the equipment segment decreased $317,000 due mainly to a provision for loan loss made in the first three quarters of 2016, while SG&A costs in the professional sales service segment increased $2,473,000 due to increased headcount and other personnel-related costs. SG&A costs in the IT segment increased by $240,000 to $14,713,000 in the first three quarters of 2017 from $14,473,000 in the same period of the prior year due to increased personnel costs in the healthcare IT business. Corporate costs not allocated to segments decreased by $27,000 from $1,011,000 for the nine months ended September 30, 2016 to $984,000 for the nine months ended September 30, 2017, due primarily to lower legal and director fees.

Research and development ("R&D") expenses were $716,000, or 1% of revenues, for the first three quarters of 2017, an increase of $347,000, or 94%, from $369,000, or 1% of revenues, for the first three quarters of 2016. The increase is primarily attributable to higher software development expenses in the IT segment.

~~Adjusted EBITDA~~

~~A reconciliation of net income to Adjusted EBITDA is set forth below:~~

~~Page 23~~

~~Vaso Corporation and Subsidiaries~~

(in thousands)

Nine months ended September 30,

2017 2016
(unaudited) (unaudited)
Net (loss) income $ (3,934 ) $ 437
Interest expense (income), net 494 478
Income tax expense 314 154
Depreciation and amortization 1,781 1,608
Share-based compensation 417 342
Adjusted EBITDA $ (928 ) $ 3,019

Adjusted EBITDA decreased by $3,947,000, to $(928,000) in the nine months ended September 30, 2017 from $3,019,000 in the nine months ended September 30, 2016. The decrease was primarily attributable to the change from income generated in the nine month period ended September 30, 2016 to net loss incurred in the nine month period ended September 30, 2017, partially offset by higher fixed asset depreciation in the IT segment and income tax expense.

~~Interest and Other Income (Expense)~~

Interest and other income (expense) for the nine months ended September 30, 2017 was $(451,000) as compared to $(334,000) for the corresponding period of 2016. The increase was due primarily to higher interest expense due to additional equipment financing and lower other income in 2017.

~~Income Tax Expense~~

For the nine months ended September 30, 2017, we recorded income tax expense of $314,000 as compared to income tax expense of $154,000 for the corresponding period of 2016. The increase arose mainly from application of alternative minimum tax credits in the prior year period.

~~Net (Loss) Income~~

Net loss for the nine months ended September 30, 2017 was $3,934,000 compared to net income of $437,000 for the nine months ended September 30, 2016, representing a decrease of $4,371,000. Our net loss per share was $0.02 in the nine month period ended September 30, 2017, as compared to net income of $0.00 per share in the nine month period ended September 30, 2016. The principal cause of the decrease in net income is the decrease in revenue and gross profit in the ~~professional sales service segment resulting from lower deliveries, combined with the increase in SG&A costs.~~

IT and equipment segments.

Liquidity and Capital Resources

Cash and Cash Flow

We have financed our operations from working capital. At ~~September 30, 2017,~~March 31, 2022, we had cash and cash equivalents of ~~$5,522,000~~$4,971,000 and negative working capital of ~~$5,956,000~~$3,100,000, compared to cash and cash equivalents of ~~$7,087,000~~$6,025,000 and negative working capital of ~~$567,000~~$3,197,000 at December 31, ~~2016. $9,752,000~~2021. $14,451,000 in negative working capital at ~~September 30, 2017~~March 31, 2022 is attributable to the net balance of deferred commission expense and deferred revenue. These are non-cash expense and revenue items and have no impact on future cash flows.

Cash ~~provided by~~used in operating activities during the three months ended March 31, 2022 was ~~$866,000,~~$625,000, which consisted of net loss after adjustments to reconcile net loss to net cash of ~~$1,250,000~~$251,000 and cash ~~provided~~used by operating assets and liabilities of ~~$2,116,000, during the nine months ended September 30, 2017,~~$876,000, compared to cash provided by operating activities of ~~$3,756,000~~$5,475,000 for the same period in ~~2016.~~2021. The $6,100,000 decrease in cash provided by operating activities was due to the late arrival of a commission payment of $7,747,000 that was scheduled for March 2022 and the Company received in April 2022. The changes in the account balances primarily reflect decreases in accrued commissions and accrued expenses and other liabilities of $1,174,000 and $1,026,000, respectively, partially offset by an increase in deferred revenue of $1,989,000 and a decrease in accounts and other receivables of ~~$1,671,000 and increase in deferred revenue of $2,674,000, partially offset by decreases in accrued expenses and other liabilities of $658,000 and accrued commissions of $763,000.~~

~~Page 24~~

~~Vaso Corporation and Subsidiaries~~

$563,000.

Cash used in investing activities during the ~~nine-month~~three-month period ended ~~September 30, 2017~~March 31, 2022 was ~~$1,981,000~~$195,000 for the purchase of equipment and ~~software.~~

software and $158,000 for the purchase of short-term investments.

Cash used in financing activities during the ~~nine-month~~three-month period ended ~~September 30, 2017~~March 31, 2022 was ~~$383,000 primarily as a result of $288,000 in payments of notes and capital leases issued for equipment purchases and $170,000 in~~$62,000 resulting from repayments of notes payable ~~to related parties.~~

and finance lease obligations.

Liquidity

The Company expects to ~~maintain~~generate sufficient ~~liquidity through its~~ cash ~~on hand, availability of funds under its lines of credit, and internally generated funds~~flow from operations to ~~meet~~satisfy its obligations ~~as they come due. The Company's profitability~~ for the ~~year will be largely dependent~~next twelve months.

It is anticipated that the COVID-19 pandemic may continue to adversely impact our operations during and beyond the remaining quarters of 2022, depending on ~~deliveries~~the duration of ~~product by GEHC in our professional sales service segment since~~ the ~~Company does not recognize revenue in this segment until~~pandemic and the ~~equipment is delivered.~~

~~Page 25~~

timing and success of the reopening of the economy.

Page 22

Table of Contents

Vaso Corporation and Subsidiaries

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures reporting as promulgated under the Exchange Act is defined as controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer ~~("CEO"~~(“CEO”) and Chief Financial Officer ~~("CFO"~~(“CFO”), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our CEO and our CFO have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2017~~March 31, 2022 and have concluded that the ~~Company's~~Company’s disclosure controls and procedures were effective as of ~~September 30, 2017.~~

March 31, 2022.

Changes in Internal Control Over Financial Reporting

There ~~was~~were no ~~change~~changes in the ~~Company's~~Company’s internal control over financial reporting during the ~~Company's~~Company’s fiscal quarter ended ~~September 30, 2017~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

~~Page 26~~

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Table of Contents

Vaso Corporation and Subsidiaries

PART II - OTHER INFORMATION

ITEM 6 – EXHIBITS

Exhibits

31		Certifications of the Chief Executive Officer and the Chief Financial Officer pursuant to Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
32		Certifications of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Page 24

Table of Contents

~~Page 27~~

Vaso Corporation and Subsidiaries

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VASO CORPORATION

	By:	/s/ Jun Ma
		Jun Ma
		President and Chief Executive Officer
		(Principal Executive Officer)

		/s/ Michael J. Beecher .
		Michael J. Beecher
		Chief Financial Officer and Principal Accounting Officer

Date: May 16, 2022

Page 25

~~Date: November 14, 2017~~

~~Page 28~~

	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	5,522		$	7,087
Accounts and other receivables, net of an allowance for doubtful
accounts and commission adjustments of $4,710 at September 30,
2017 and $4,159 at December 31, 2016		10,944			12,741
Receivables due from related parties		19			18
Inventories, net		2,658			2,395
Deferred commission expense		2,899			1,917
Prepaid expenses and other current assets		1,138			925
Total current assets		23,180			25,083

PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$4,723 at September 30, 2017 and $3,835 at December 31, 2016		4,777			4,021
GOODWILL		17,407			17,280
INTANGIBLES, net		5,452			5,996
OTHER ASSETS, net		3,898			5,001
	$	54,714		$	57,381

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	5,074		$	5,219
Accrued commissions		1,399			2,139
Accrued expenses and other liabilities		4,617			5,275
Sales tax payable		773			718
Income taxes payable		42			30
Deferred revenue - current portion		12,651			7,628
Notes payable and capital lease obligations - current portion		4,142			4,245
Notes payable - related parties - current portion		127			-
Due to related party		311			396
Total current liabilities		29,136			25,650

LONG-TERM LIABILITIES
Notes payable and capital lease obligations		4,858			4,935
Notes payable - related parties		380			648
Deferred revenue		9,427			11,776
Deferred tax liability		292			112
Other long-term liabilities		1,114			1,349
Total long-term liabilities		16,071			18,820

COMMITMENTS AND CONTINGENCIES (NOTE M)

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,000,000 shares authorized; nil shares
issued and outstanding at September 30, 2017 and December 31, 2016		-			-
Common stock, $.001 par value; 250,000,000 shares authorized;
175,387,306 and 173,811,533 shares issued at September 30, 2017 and
December 31, 2016, respectively; 165,079,219 and 163,503,446 shares
outstanding at September 30, 2017 and December 31, 2016, respectively		175			174
Additional paid-in capital		63,269			62,856
Accumulated deficit		(51,724	)		(47,790	)
Accumulated other comprehensive loss		(213	)		(329	)
Treasury stock, at cost, 10,308,087 shares at September 30, 2017 and December 31, 2016		(2,000	)		(2,000	)
Total stockholders' equity		9,507			12,911
	$	54,714		$	57,381

	Three months ended						Nine months ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenues
Managed IT systems and services	$	10,827		$	9,679		$	31,438		$	29,530
Professional sales services		6,305			6,583			18,181			20,289
Equipment sales and services		909			1,282			2,649			3,481
Total revenues		18,041			17,544			52,268			53,300

Cost of revenues
Cost of managed IT systems and services		6,311			5,550			18,526			17,436
Cost of professional sales services		1,386			1,325			3,946			4,318
Cost of equipment sales and services		316			519			900			1,271
Total cost of revenues		8,013			7,394			23,372			23,025
Gross profit		10,028			10,150			28,896			30,275

Operating expenses
Selling, general and administrative		10,412			9,531			31,349			28,981
Research and development		235			117			716			369
Total operating expenses		10,647			9,648			32,065			29,350
Operating (loss) income		(619	)		502			(3,169	)		925

Other income (expense)
Interest and financing costs		(166	)		(162	)		(506	)		(474	)
Interest and other income, net		63			91			55			140
Total other expense, net		(103	)		(71	)		(451	)		(334	)

(Loss) income before income taxes		(722	)		431			(3,620	)		591
Income tax expense		(94	)		(103	)		(314	)		(154	)
Net (loss) income		(816	)		328			(3,934	)		437

Other comprehensive (loss) income
Foreign currency translation gain (loss)		25			34			116			(58	)
Comprehensive (loss) income	$	(791	)	$	362		$	(3,818	)	$	379

(Loss) income per common share
- basic and diluted	$	(0.00	)	$	0.00		$	(0.02	)	$	0.00

Weighted average common shares outstanding
- basic		163,307			160,268			161,817			158,730
- diluted		163,307			161,675			161,817			159,479

																	Accumulated
											Additional						Other			Total
	Common Stock				Treasury Stock						Paid-in-			Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Shares			Amount			Capital			Deficit			Income (Loss)			Equity
Balance at December 31, 2015		168,750	$	168		(10,308	)	$	(2,000	)	$	62,263		$	(48,610	)	$	(80	)	$	11,741
Share-based compensation		3,949		4		-			-			424			-			-			428
Shares issued to settle liability		1,113		2		-			-			176			-			-			178
Shares not issued for employee tax liability		-		-		-			-			(7	)		-			-			(7	)
Foreign currency translation loss		-		-		-			-			-			-			(249	)		(249	)
Net income		-		-		-			-			-			820			-			820
Balance at December 31, 2016		173,812	$	174		(10,308	)	$	(2,000	)	$	62,856		$	(47,790	)	$	(329	)	$	12,911
Share-based compensation		1,576		1		-			-			416			-			-			417
Shares not issued for employee tax liability		-		-		-			-			(3	)		-			-			(3	)
Foreign currency translation gain		-		-		-			-			-			-			116			116
Net loss		-		-		-			-			-			(3,934	)		-			(3,934	)
Balance at September 30, 2017 (unaudited)		175,388	$	175		(10,308	)	$	(2,000	)	$	63,269		$	(51,724	)	$	(213	)	$	9,507
																					.

	(in thousands)
	As of September 30, 2017		As of December 31, 2016
	(unaudited)
Cash and cash equivalents	$	35	$	13
Total assets	$	1,443	$	1,451
Total liabilities	$	1,700	$	1,133

	(in thousands)
	Three months ended September 30,					Nine months ended September 30,
	2017			2016		2017			2016
	(unaudited)			(unaudited)		(unaudited)			(unaudited)
Total net revenue	$	318		$	399	$	1,049		$	1,314

Net (loss) income	$	(90	)	$	84	$	(626	)	$	244

	(in thousands)
	For the three months ended				For the nine months ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Basic weighted average shares outstanding		163,307		160,268		161,817		158,730
Dilutive effect of options and unvested restricted shares		-		1,407		-		749
Diluted weighted average shares outstanding		163,307		161,675		161,817		159,479

	(in thousands)
	Carrying Amount

Balance at December 31, 2016	$	17,280
Foreign currency translation adjustment		127
Balance at September 30, 2017 (unaudited)	$	17,407

	(in thousands)
Years ending December 31,	(unaudited)
Remainder of 2017	$	292
2018		1,015
2019		893
2020		809
2021		737
Total	$	3,746