2520 County Road 81

    Rosharon, Texas 77583

   (713) 510-7445

 (Address and telephone number of principal executive offices)

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

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

---

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

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 shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [  ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	[   ]		Accelerated filer	[   ]
Non-accelerated filer	[   ]		Smaller reporting company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)

Yes [  ] No [X]

The market value of the common equity held by non-affiliates: $10,727,982 based on a $2.10 closing price of the registrant's common stock as of the last business day of the registrant's year ended December 31, 2014.

As of March 31, 2015, the registrant had 10,305,077 shares of common stock issued and outstanding.

 

 

---

TABLE OF CONTENTS

---

PART I

Item 1. Description of Business

FORWARD-LOOKING STATEMENTS

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. This report may contain forward-looking statements which relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "plan," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. Unless the context requires otherwise, the terms 'Company,' 'SAI,' 'SA,' 'we,' 'our,' and 'us' refer to Signal Advance Inc., a Texas corporation formed on June 4, 1992. Our audited financial statements are stated in United States Dollars and are prepared in accordance with U.S. Generally Accepted Accounting Principles.

OVERVIEW:  Signal Advance, Inc. (SAI) is a technology development firm that has been developing its proprietary Signal Advance Technology (SAT) which may significantly reduce signal detection delays associated with a variety of physical sensors and thereby improve performance in control, intervention, and/or signal transmission systems.  The Company has developed and tested SA circuit designs and discrete circuit prototypes for a range of signal characteristics

CHALLENGE:  In interventional medical devices or non-medical responsive control and signal transmission systems, delays in detection, processing and response to various signals negatively affects overall performance. For certain types of biomedical signals (e.g. heart, brain) the greater the delay in responding to anomalous signals, the more difficult it is to successfully intervene in order to contain or limit a pathological process such as cardiac fibrillation or an epileptic seizure.  The earlier the intervention is initiated, the greater the probability of success.  In non-medical applications (e.g. industrial process, equipment, engine control, military), control response signal transmission delays impact performance effecting safety, product yield, fuel efficiency and waste/emissions. In military applications, signal detection and response delays affect reaction effectiveness.

SOLUTION:  In most electronic circuits, signal output is delayed relative to the input as it traverses the circuitry. When a signal is applied to an SA circuit the output signal is advanced in time relative to the input using the advance portion of the waveform and not depending on the wave velocity form of the signal that are conventionally used, thus the term 'Signal Advance'. In other words, the output signal emerges before the complete detection of the input signal.

 

---

The temporal advance achieved using SAT can potentially offset signal detection and processing delays and, thereby, improve response time. Further, we believe that SAT could be implemented in conjunction with other approaches (e.g. faster electronics) to further reduce these response delays to further improve system performance. SAT may also enable the development of novel signal transmission, and control or interventional approaches.

Prototype SAT circuit designs were used to temporally-advance the detection of analog test signals and bioelectric (cardiac) signals in a dissertation study completed by Dr. Hymel (SAI Founder/president) at the University of Texas Health Science Center in the Texas Medical Center, Houston Texas. The study results were later published in a peer-reviewed feature article which appeared in the IEEE Circuits and Systems magazine.

MARKET:  SAI identified multiple classes of sensors with signal characteristics which may be suitable for the application of SAT, and thus, a variety of potential licensing targets. The markets/industries include biomedical (e.g. cardiac rhythm management, neurostimulation) and commercial, industrial, communications, transportation and military applications (e.g. process control, signal transmission, engine control, vehicular/flight control, accident avoidance, and weaponry).

In interventional medical devices, SAT could reduce response delays and improve performance. The improved performance translates directly to increased value, providing a significant opportunity for revenue generation. Examples of non-biomedical applications include transportation, in which SAT could improve accident avoidance, safety/security, engine performance and vehicular control, and thus improve fuel economy and save lives.  In high performance aircraft engines, SAT might increase stability, reduce stall margins improve performance and fuel efficiency. Industrial examples include improved compressor performance and increased petrochemical yields. In military applications, SAT could enhance response effectiveness.

The addressable markets are estimated to be in the billions of dollars. As with any new or disruptive technology, recognition and acceptance will gain momentum over time.

INTELLECTUAL PROPERTY:  The following table lists the patent applications and issued patents:

Additional patent submissions related to specific applications, SA circuit configurations, and signal processing techniques to improve signal fidelity are being drafted.

COMPETITION:  Indirect competition exists as in the form of ever faster electronics used to improve signal detection and processing performance. In addition, alternate control strategies, (e.g. predictive feedback and feed-forward) are often used to improve performance but also have significant drawbacks. Faster electronics alone will reduce, but never eliminate, circuit delays. For a number of applications, some of these techniques may be adequate. SAT, used in conjunction with all of these methods, could further improve performance.

---

REVENUE GENERATION:  While the addressable markets are in the billions, it is expected that many licensees will require exclusivity which would limit SAI to a single license in a given application area. Therefore, SAI will target multiple application areas to generate revenue. Revenue is generated by: 1) licensing intellectual property to product manufacturers, 2) consulting with licensees on implementation of the technology in target applications, and 3) participating in joint ventures.

MARKETING STRATEGY:  To gain exposure and acceptance of SAT, the Company will participate in trade shows, present in scientific and technical meetings and publish application-specific articles.  SAI's marketing approach includes the following steps: 1) identify application targets, 2) develop application-specific SAI circuitry, 3) demonstrate performance improvement, 4) protect the intellectual property, 5) approach target manufacturer(s) and 6) secure licensing/consulting agreements.

Target application selection is based on: 1) intervention/control impact, 2) signal characteristics, 3) market size, 4) supplier market share, 5) competition, and 6) regulations.

The initial approach is to identify applications and protect IP; then consult with market-specific clients to develop SAT for their specific application and demonstrate improved product performance. Later strategy will shift development costs to the client.

PROGRESS:  The Company has developed proprietary Signal Advance technology which operates on broadband analog signals (over a specified frequency range) with little signal distortion. Prototype SA circuits have been developed for various application-specific signals and a number of SA circuit designs have been tested using a range of analog test signals. The company is located near the Texas Medical Center in Houston and has broad contacts in a number of its research institutions.

SAI has initiated collaborations with private entities and research institutions to protect its intellectual property, further develop/refine SAT, embody in microelectronics (integrated circuitry), and test for improved performance in biomedical applications by the use of SAT. Although the collaborations terms are not yet established, the company expects to assume the costs to develop/refine SAT and its microelectronic implementation, as well as intellectual property protection.  Collaborations related to the use of SA technology in specific biomedical applications are likely to be funded through research grants or take the form of joint ventures.

In the year-ended December 31, 2014, the Company has initiated the investigation of a specific biotechnology application for its proprietary technology, specifically, neural training systems.

VALIDATION/RECOGNITION:

Scientific:  Prototype SA circuit design was tested using a range of simulated test signals as well as bioelectric (cardiac)   signals. The results were reviewed and confirmed by University facility (including Ph.D. physicists and engineers). This study resulted in completion of a successful doctoral study, by the Company's President, Dr. Hymel, at the University of Texas Health Science Center at Houston in the Texas Medical Center (2010);

Technical:  A peer-reviewed feature article summarizing the technology, study results, and broad range of potential SAT applications was published in the IEEE Circuits and Systems Magazine in 2011;

 

---

Commercial:  SAI was awarded first place in the 2011 Goradia Innovation Prize competition. The selection was based on: 1) the commercial potential of the technology, 2) the soundness of the business plan, 2) the potential for job growth within the region, and 4) the likelihood of significant long-term success.

Innovation:  The Intellectual Property Section of the Oklahoma Bar Association named Dr. Chris Hymel, the Company's president, the 2012 Innovator of the Year for his development work on Signal Advance technology. 

REVENUE GENERATION: The Company plans to continue to refine and develop SAT, demonstrate improved performance in targeted applications, pursue related intellectual property protection and begin to commercialize the technology through licensure.  SA technology is in the development and early commercialization stage. To date, the Company has not yet sold any products or licensed the technology, is not yet profitable, currently lacks sufficient capital to generate revenue or operate the business in a profitable manner and has not generated sufficient revenues to fund planned R&D, marketing and intellectual protection in the near-term.  SAI continues to rely upon capital investment to cover the projected costs of executing the Company's business plan and effectively commercialize its proprietary Signal Advance technology.

BROAD RISKS AFFECTING THE COMPANY:  The Company is subject to numerous risks, which are more fully discussed in the section of this prospectus entitled 'Risk Factors'.  Some of the more significant risks included the following:

·

The Company is undercapitalized and has limited liquidity.

·

The Company is in the development/early commercialization stage.

·

The technology is novel and thus requires recognition and acceptance in various markets.

·

If the Company does not successfully license its technology, it may never achieve profitability.

·

As a result of the industry competition, the Company may not gain enough market share to be profitable.

·

If the Company fails to protect its proprietary technology, its competitive position may be impaired.

·

There will be a limited trading market for the Company's common stock

·

The market price of our common stock may fluctuate significantly and may decline.

EMERGING GROWTH COMPANY STATUS: The Company qualifies as an 'emerging growth company' as defined in Section 2(a)(19) of the Securities Act of 1933 and, as such, is allowed to provide in this report more limited disclosures than an issuer that would not so qualify. Furthermore, for as long as we remain an emerging growth company, we will qualify for certain limited exceptions from investor protection laws such as the Sarbanes-Oxley Act of 2002 and the Investor Protection and Securities Reform Act of 2010. Unlike other public companies, SAI is not required to:

·

provide an auditor's attestation report on management's assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002;

·

comply with any new requirements adopted by the Public Company Accounting Oversight Board (PCAOB), requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

·

comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the Securities and Exchange Commission determines otherwise;

·

provide certain disclosure regarding executive compensation required of larger public companies; or

·

obtain shareholder approval of any golden parachute payments not previously approved.

 

---

We will cease to be an 'emerging growth company' upon the earliest of:

·

When we have $1.0 billion or more in annual revenues;

·

When we have at least $700 million in market value of our common units held by non-affiliates;

·

When we issue more than $1.0 billion of non-convertible debt over a three-year period; or

·

The last day of the fiscal year following the fifth anniversary of our initial public offering.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to take advantage of the extended transition period, and as a result, we will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

CORPORATE INFORMATION:  Our principal executive offices are located at 2520 County Road 81, Rosharon, Texas 77583.  Our website is www.signaladvance.com.

 

Item 1A.  Risk Factors

 

Not applicable to smaller reporting companies.

 

Item 2.  Description of Property

 

We do not own any real estate or other properties.  

 

Item 3.  Legal Proceedings

We know of no legal proceedings to which we are a party or to which any of our property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against us.

 

Item 4.  Submission of Matters to a Vote of Security Holders

None.

---

PART II

Item 5. Market for Common Equity and Related Stockholder Matters      

MARKET INFORMATION:  There is a limited public market for our common shares.  Our common shares are quoted on the OTC Bulletin Board at this time.  Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company's operations or business prospects.  We cannot assure you that there will be a market in the future for our common stock.

 

OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange.  Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks.  OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

NUMBER OF HOLDERS:  As of December 31, 2014, the 10,273,410 issued and outstanding shares of common stock were held by a total of 173 shareholders of record.

DIVIDENDS:  No cash dividends were paid on our shares of common stock during the fiscal years ended December 31, 2014 and 2013.  We have not paid any cash dividends since our inception and do not foresee declaring any cash dividends on our common stock in the foreseeable future. 

RECENT SALES OF UNREGISTERED SECURITIES:

During the year ended December 31, 2013, the Company made the following Common Stock issuances:

1)

1,000,000 shares were issued to the Company's President was issued 1,000,000 per the terms of IP assignment agreement valued at $1,000,000.

2)

116,750 shares were issued in exchange for services rendered valued at $116,750.

During the year ended December 31, 2014, the Company made the following Common Stock issuances:

1)

121,667 shares of common stock to various individuals for cash proceeds of $156,500;

2)

145,000 shares of the Company's common stock valued at $145,000 to repay $145,000 of the loan payable.

3)

461,334 shares of common stock valued at $627,001 to five consultants in exchange for services.

4)

25,000 shares of common stock valued at $25,000 to members of the Board of Directors in exchange for services.

 

Subsequent to year ended December 31, 2014, and prior to the date of this report, the Company made the following Common Stock issuances:

1)

26,667 shares of common stock valued at $40,000 to two consultants in exchange for services.

2)

10,000 shares of common stock valued at $15,000 to three members of the Board of Directors in exchange for services.

These issuances of unregistered shares were exempt pursuant to Section 4(2) of the Securities Act as these were privately negotiated transactions in which there was no advertising and no commissions paid. Accordingly, the stock certificates representing these shares were issued with restrictive legends indicating that the shares have not been registered and may not be traded until registered or otherwise exempt from registration.

 

---

PURCHASE OF OUR EQUITY SECURITIES BY OFFICERS AND DIRECTORS:  None.

OTHER STOCKHOLDER MATTERS:  None.

 

Item 6. Selected Financial Data                                       

Not applicable to smaller reporting companies.

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in the forward-looking statements.   Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

RESULTS OF OPERATIONS

We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

Our auditors have issued a going concern opinion as the Company has generated insufficient revenues to fund planned R&D, marketing and intellectual protection in the near-term. SAI will continue to rely on capital investment to cover the projected costs to execute the Company's business plan and commercialize its proprietary signal advance technology. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. There is no assurance that the Company will be able to raise sufficient capital which would require operations to be scaled back accordingly.

The majority of the Company's resources have historically been devoted to technology development and protection of its proprietary technology. During the year ended December 31, 2014, significant resources have been allocated to initiating commercialization of our proprietary technology and raising the capital required to successfully execute our business plan. The Company will continue to pursue consulting work which is either directly related to SA technology development or may lead to a potential future collaboration.

INCOME:  In the year ended 2013, the Company recognized revenue in the amount of $2,350. No revenues were recognized in the year ended December 31, 2014.

---

EXPENSES:  Expenses are classified into the following six broad categories: 1) General and Administrative, 2) Sales and marketing, 3) Intellectual Property 4) Professional Services, 5) Research and Development and 6) Depreciation, SAI has engaged consultants to accomplish its goals over the last two years. Given sufficient capital, the majority of these consultants have expressed interest in working full-time for the Company. Professional Services includes expenses for such services as legal, accounting/auditing, transfer agent, investor and public relations, video/graphics, securities/reporting, engineering and director's fees. Expense increases seen in year ended December 31, 2014, relative to the preceding fiscal year reflect increased costs associated with 1) accounting, audits and reporting in fulfillment of reporting requirements with the Securities and Exchange Commission, 2) public and investor relations, 3) seeking capital to fund on-going efforts related to in scientific, technical and commercial validation, business development and investigation into specific applications for our proprietary technology and 4) initiation of a sales/marketing efforts to commercialize the Company's proprietary technology, specifically, the engagement VEDI Partners to pursue license agreements. On the other hand, in the year-ended December 31, 2013, $1,000,000 in equity was paid to the Company's President per the terms of the IP assignment.  Further, we incurred expenses related to the on-going prosecution of our patent applications in the U.S., Europe and Mexico, three of which have since issued. Increased research and development expenses reflect the Company's investigation regarding a specific biomedical application for SA technology as well as on-going efforts related to in scientific, technical and commercial validation.

In fiscal year ended December 31, 2014 and 2013, significant resources were applied to the acquisition and protection of our intellectual property. In 2013, a large installment was due per the terms of the assignment agreement. In addition, intellectual property protection involved: 1) responses to preliminary searches and initial office actions resulting from the international filings, 3) preparation and submission of amendments and additional disclosures in the US Patent and Trademark Office (USPTO) as well as the European and Mexican Patent Offices, 4) reviews of, and responses to, office actions by the US, European and Mexican patent offices and 5) issuance and annual renewal fees. Patents have been issued in China (Nov. 2012), the U.S. (May 2013) and Mexico (Apr. 2014).

All costs associated with intellectual property (IP) protection have been expensed. IP acquisition and protection costs totaled $8,911, in year ended December 31, 2014, and $1,039,508 the year ended December 31, 2013. Further discussion regarding the intellectual property can be found in Note B – Intellectual Property, of the Financial Statements).

Expenses for fiscal years ended December 31, 2014 and 2013 were as follows:

Comprehensive loss:  Includes an unrealized loss on "Available for Sales Securities" of $13 in the year ended December 31, 2014.

---

LIQUIDITY AND CAPITAL RESOURCES

CURRENT ASSETS:  As of December 31, 2014, the Company had cash and cash equivalents of $37,177. These assets are used as working capital to execute the Company's business plan. As such, the Company requires additional capital through debt or equity financing to fund operations over the next 12 months.

Fixed assets (office/laboratory equipment) were $4,730 and $3,913, as of December 31, 2014 and 2013, respectively.

Change in fair value for an Available for Sale Security is an unrealized loss of $13 in the year ended December 31, 2014.

LIABILITIES:  Liabilities include a Line of Credit provided by the Company's President which totaled $10,769 and $122,906 as of December 31, 2014 and 2013, respectively. In the year ended 2014, $145,000 of the debt was converted to equity issued to the Company's President.

SHAREHOLDERS' EQUITY:  The accumulated deficit totaled $5,052,829 and $4,237,962 for years ended December 31, 2014 and 2013, respectively. The shares issued and outstanding as of years ended December 31, 2014 and 2013, totaled 10,273,410 and 9,520,409, respectively.

OFF-BALANCE SHEET TRANSACTIONS:  There are no off-balance sheet items, all transactions are in U.S. dollars, and SAI is not currently subject to currency fluctuations or similar market risks.

SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS:  The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

AVAILABLE FOR SALE SECURITIES: The Company holds certain investments that are treated as available-for-sale securities (FASB ASC 320-10-25) and stated at their fair market values. All investments are available for current operations and are classified as other assets in the balance sheet. Unrealized holding gains and losses are included as a component of other comprehensive income (loss) until realized (FASB ASC 320-35-1). Realized gains and losses are included in 'Other Income (Loss)' in the income statement.

RESEARCH AND DEVELOPMENT:  Research and development expenses are expensed as incurred until technological feasibility can be determined. Upfront and milestone payments made to third parties in connection with research and development collaborations are expensed as incurred up to the point of regulatory approval, marketability, licensing, lease, or sale when the net present value and useful life is able to be determined. Costs associated with intellectual property protection have been expensed until such time as the useful can be determined, at which time, amounts capitalized will be included in intangible property, less the net of accumulated amortization.

REVENUE RECOGNITION:  Revenue is not be recognized until it is realized or realizable and earned. An extended discussion regarding the sources of revenue expected as well as how revenue from these sources will be recognized can be found under the section entitled 'Revenue Recognition' of the Financial Statements.

---

PROPERTY AND EQUIPMENT:  Fixed Assets (land, buildings and equipment) are carried at cost less accumulated depreciation. Depreciation is based on the estimated service lives of depreciable assets and is depreciated using the straight line method. In the case of disposals, assets and related depreciation are removed from the accounts, and the net amounts, less proceeds from disposal, are included in income.

INCOME TAXES:  The Company takes an asset and liability approach to financial accounting and reporting for income taxes. The difference between the financial statement and tax basis of assets and liabilities is determined annually. Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income. Valuation allowances are established, if necessary, to reduce the deferred tax asset to the amount that will assure full realization, As of December 31, 2014, the Company recorded a valuation allowance that reduced its deferred tax assets to zero.

CONCENTRATIONS OF CREDIT RISK:  Significant concentrations of credit risk consist primarily of investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities can occur in the near term and that each change could materially affect the amounts reported in the financial statement.

IMPAIRMENT:  The Company amortizes intangible assets over their estimated useful lives unless such lives are deemed indefinite. Amortized intangible assets are tested for impairment based on undiscounted cash flows, and, if impaired, written down to fair value based on either discounted cash flows or appraised values. Intangible assets with indefinite lives are tested annually for impairment and written down to fair value as required.

NET EARNINGS PER SHARE:  Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period.

PLAN OF OPERATION AND FUNDING

We anticipate that required working capital will continue to be funded through a combination of our existing funds and further issuances of securities. Working capital requirements will likely to increase in line with the business growth. Existing working capital, further advances, debt instruments, and firm commitments are expected to be adequate to fund our operations over the next three months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: i) technology development, ii) marketing and commercialization, and iii) intellectual property protection. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements.

Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

---

MATERIAL COMMITMENTS:

The Company indemnified its transfer agent, Nevada Agency and Transfer Company against any loss related to the re-issuances of 75,000 shares to replace lost certificates.

The Company currently leases office space, from its president, on a month to month basis at a rate of $700 per month. Rental expense amounted to $8,400 for the years ended December 31, 2014 and 2013.

PURCHASE OF SIGNIFICANT EQUIPMENT: Contingent on available funding we anticipate purchasing $30,000 on equipment during the next twelve months.

GOING CONCERN

The independent auditors' report accompanying our Financial Statements for the years ended December 31, 2014 and 2013 contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk   

Not applicable to smaller reporting companies.

---

FINANCIAL STATEMENTS	Page No.
Report of Independent Auditors'	F-1
Predecessor Auditors' Report	F-2
Balance Sheets	F-3
Statements of Operations	F-4
Statements of Cash Flows	F-5
Statements of Changes in Shareholders' Equity (Deficit)	F-6
Notes to Financial Statements	F-7 – F-13

---

 

 

F-1

---

 F-2

17

Signal Advance, Inc.

Balance Sheets

As of December 31, 2014 and 2013

See Accompanying Notes to the Financial Statements

 

F-3

---

See Accompanying Notes to the Financial Statements

F-4

---

See Accompanying Notes to the Financial Statements

 

F-5

---

See Accompanying Notes to the Financial Statements

 

F-6

---

22

23

24

25

26

27

28

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A(T). Controls and Procedures

MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES:  Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that compliance with the policies or procedures may deteriorate. Management evaluated the effectiveness of the Company's internal control over financial reporting as of December 31, 2014 using the criteria established in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2014, based on the above referenced guidelines, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

 

1)

We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management's view that such a committee, including a financial expert member, is an important entity level control over the Company's financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management's activities.

2)

We did not maintain appropriate cash controls – As of December 31, 2014, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company's bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts.

3)

We did not implement appropriate information technology controls – As at December 31, 2014, the Company retains copies of all financial data and material agreements and periodically make backups of the Company's data; however there is no formal procedure or evidence of normal backup of the Company's data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.

Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls.  As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2014 based on criteria established in Internal Control—Integrated Framework issued by COSO.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:  There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of December 31, 2014, that occurred subsequent to the evaluation that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the SEC applicable to an Emerging Growth Company  that permit the Company to provide only management's report in this annual report.

---

Item 10. Directors, Executive Officers, Promoters and Control Persons of the Company

DIRECTORS AND EXECUTIVE OFFICERS: The following table sets forth the names, positions and ages of the current SAI Directors and Officers. Directors are elected during the annual shareholders' meeting and serve for one year and until their successors are elected and qualify. Officers are elected by our board of directors and their terms of office are at the discretion of our board. None of our Directors is independent per NASDAQ listing standards.

All directors hold office until the next annual meeting of the shareholders of the Company and until their successors have been duly elected and qualified. The Company's Bylaws provide that the Board of Directors will consist of no less than three members.  In the year-ended December 31, 2014 one of our directors, Karl Zercoe, resigned.

BIOGRAPHIES:

Chris M. Hymel, Ph.D. (President/Treasurer, Director):   served as a director and its President and Treasurer since its inception. Dr. Hymel previously founded a computer systems/networking consulting and development firm and, later, a medical-legal firm which developed over 60 animations used in litigation support.  He also served on the board of a non-profit corporation, Educational Enrichment Center through 2009. Professional experience also includes technology development at the University of Texas, Neurophysiology Research Center, including the development of proprietary neurostimulation, signal generation and data acquisition systems, and control systems engineering for Shell Oil & Shell Development Companies and Johnson Controls, Inc. Dr. Hymel holds a doctorate in biomedical sciences from the University of Texas Health Science Center, Houston as well as bachelors and masters degrees in electrical engineering from Texas A&M University. Dr. Hymel holds multiple patents and has authored a number of scientific / technical publications. Dr. Hymel developed the proprietary Signal Advance technology and successfully demonstrated temporally advanced detection of a range of analog (including bioelectric) signals in his doctorate research completed at the University of Texas Health Science Center in August 2010.

Malcolm Skolnick (Secretary, Director):  Dr. Skolnick received his Ph.D. in physics from Cornell University and J.D. from the University of Houston Law Center. He retired in 2008 after ten years as a Director, President/CEO of CytoGenix, Inc., a publicly traded, development stage biotechnology firm in Houston Texas. Prior to joining CytoGenix, Dr. Skolnick, a tenured professor, held academic positions in the Medical School, the Graduate School of Biomedical Sciences and the School of Public Health (SPH) of the University of Texas Health Science Center, Houston (UT Health). In addition to his service as a Department Chair in the Medical School and professorial duties, Dr. Skolnick directed the UT Health Office of Technology Management, overseeing the University's activities in protecting and licensing its technology portfolio.

 

Dr. Skolnick headed the UT Health Neurophysiology Research Center and served as principal investigator of several clinical trials in pain management, smoking cessation and reduction of withdrawal symptoms in drug addiction. He also serves as Director and Vice President of the Southwest Health Technology Foundation, Resolution Forum, Inc., Responsible Community Design International, Inc., and Hudson Forest Homeowners' Association. He has served as an expert witness in intellectual property, product liability, and accident reconstruction matters. Dr. Skolnick is a registered patent attorney, patented inventor and is licensed to practice law in the State of Texas. In addition to his service on various corporate boards, since his retirement from CytoGenix, Inc., he has been active in patent prosecution and licensing for selected clients and has been an invited lecturer at several local universities.

Ron A, Stubbers (Vice-President, Director): Mr. Stubbers has been developing and manufacturing electronic biomedical devices for over 20 years, much of it while VP of Engineering and VP of Operations for Neuroscan, Inc. and its successor Compumedics, USA from 1991-2003, and aDEPtas, Inc. and its successor InGeneron, Inc. from 2004-Present. His experience includes development and production of medical devices ranging from neurostimulation systems to EEG acquisition and analysis systems. He has also worked in the areas of product design and manufacturing engineering, quality, regulatory and technical support for startup companies. Mr. Stubbers has managed corporate ISO/EN/QSR quality management systems requirements and compliance and European CE and FDA 510K Class II as well as other regulatory approvals for world-wide medical device distribution. Mr. Stubbers received his bachelor's degree in electrical engineering from the University of Idaho in 1985, completed graduate coursework at the University of Texas, Graduate School of Biomedical Sciences and at Rice University, and completed his MBA at the University of Houston (2013).

Richard C. Seltzer (Director):  Mr. Seltzer received his J.D. from South Texas College of Law in 1981 and his LL.M. in Taxation from the University of Florida in 1982. Mr. Seltzer has been in private practice for more than thirty years representing both established and startup businesses in acquisitions and mergers, financial and tax issues, contractual matters, shareholder disputes, real estate acquisitions and general business litigation in Texas State Courts. His practice includes arranging viable capital infusions for ongoing businesses, negotiating business and real estate related contracts. He has handled the licensing of proprietary information for a non-profit organization in Texas. He also continues to successfully represent numerous taxpayer corporations and individuals before the Internal Revenue Service, including both its Appellate and Collection Divisions as well as representing taxpayers for matters filed with the U.S. Tax Court. For more than fifteen years Mr. Seltzer has been a frequent invited speaker covering general business topics at the People's Law School in conjunction with the University of Houston Law School. He is also an approved mediator in the State of Texas having received his certification in 2008.

Mr. Seltzer has continued to serve as a member of the Board of Directors of Bridges to Life, a nonprofit organization in Houston, since 2003. He was appointed in 2011 as a member of the Board of Directors of STARBASE, Inc., a federally funded educational program working in conjunction with the Department of Defense and the National Guard that works with upper elementary school students particularly interested in math, science, engineering and technology related programs. In addition, Mr. Seltzer serves on the Boards of Directors of the following Texas corporations: Atlas Management, Inc. (appointed in 2000), Innovative Tooling and Accessories, Inc. (appointed in 2007), Intuitec, Inc. (appointed in 2003), Milsob Properties, Inc. (appointed in 2008). He has also served on the Board of Directors of Delta Shaver Company, Inc., a Delaware corporation since 2011.

---

AUDIT COMMITTEE:  We do not have an audit committee financial expert, as the cost related to retaining a financial expert at this time is prohibitive. Further, our President has the requisite financial experience and knowledge, thus, we believe the services of a financial expert are not warranted.

SIGNIFICANT EMPLOYEES: We have no employees other than our directors/officers of which only the President/Treasurer devotes full time to company matters. Others devote time as needed. We intend to hire employees on an as needed basis.

FAMILY RELATIONSHIPS: There are no family relationships among our directors, executive officers, director nominees or significant employees.

 

Item 11. Executive Compensation

We are providing compensation disclosure that satisfies the requirements applicable to emerging growth companies, as defined in the JOBS Act. The summary compensation table below shows certain compensation information paid for services rendered in all capacities to us by our principal executive officer and by each other executive officer whose total annual salary and bonus exceeded $100,000 during years ended December 31, 2014 and 2013. Other than as set forth below, no executive officer's total annual compensation exceeded $100,000 during our last fiscal period.

SUMMARY COMPENSATION TABLE:

(1) Non-cash compensation: Equity issued for services rendered

(2) Reimbursement of medical and professional development expenses

SAI entered into a consulting agreement with Dr. Chris M. Hymel, the Company President, whereby he was compensated at $108,000 per year in 2014 and 2013, plus limited reimbursement of medical and professional development expenses.  Dr. Hymel is expected to devote essentially full-time (at least 40 hours/week) on activities related to the Company. The term of the agreement is year-to-year but may be terminated by giving one month's notice. Eligible medical and professional development expenses are either paid or reimbursed in cash and annual compensation for services rendered has been in the form of equity, specifically common stock, for years ended December 31, 2014 and 2013.

 

---

In year ending December 31, 2013, Dr Skolnick received $5,000, in the form of equity (common stock) in exchange for services related to intellectual property protection. During the year ended December 31, 2014, Mr. Seltzer received $10,000 and Dr. Skolnick, Mr. Stubbers and Mr. Zercoe each received $5,000 (for a total of $15,000) in the form of equity (common stock) in exchange for services.  Other than as described above, all other directors and executive officers received well under less than $10,000 compensation in the same periods, also in the form of equity (common stock) in exchange for their services. No executive officers received a bonus or deferred compensation.

Other Executive Officer Compensation (to date):

 

 

There are no employment contracts, compensatory plans or arrangements (except as referenced above for the Company President), including payments to be received from the Company with respect to any executive officer of the Company which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with the Company or its subsidiaries, any change in control of the Company or a change in the person's responsibilities following a change in control of the Company. Nor are there any agreements or understandings for any director or officer to resign at the request of another person. None of the Company's directors or executive officers is acting on behalf of or will act at the direction of any other person.

COMPENSATION PURSUANT TO PLANS:  There is no retirement, pension, profit sharing, or other plan covering any of our officers and directors. The Company has adopted no formal stock option plans for our officers, directors and/or employees. SAI reserves the right to adopt one or more stock options plans in the future. Presently, there is no plan to issue additional equity in the Company or options to acquire the same to our officers, directors or their affiliates or associates except for compensation of Director and Officers as described previously.

CORPORATE GOVERNANCE:  Currently, the Company has no formal Audit or Compensation Committee.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The Company is authorized to issue 100,000,000 shares of common stock, with no par value. Holders of common stock are entitled to one vote per share on all matters subject to shareholder vote. The common stock has no cumulative, preemptive or other subscription rights. All of the presently issued shares of common stock are fully paid and non-assessable. The Board of Directors may declare dividends payable to holders of common stock out of legally available funds. If the Company is liquidated or dissolved, holders of shares of common stock will be entitled to share ratably in any assets of the Company remaining after satisfaction of all of its liabilities. As of December 31, 2014, 10,273,410 shares had been issued to 173 shareholders.

 

---

The following table sets forth the number of shares of common stock that are beneficially owned as of December 31, 2014 by (i) each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (ii) each of our directors and executive officers, (iii) all officers and directors as a group and, (iv) all officers and directors and each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock as a group. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder's name, subject to community property laws, where applicable.

(1) Beneficial ownership is determined in accordance with SEC rules, and   includes any shares as to which the stockholder has sole or shared voting power or investment power. Any indication herein, regarding beneficial ownership, is not an admission, on the part of the stockholder, that he, she or it is a direct or indirect beneficial owner of those shares.

(2) The address for all Directors/Officers: 2520 CR 81, Rosharon, TX  77583

(3) The address for the Corkrans: 321 Grand Ranch Lane, Friendswood, TX 77546

(4) Includes shares held by spouses and minor children.

(5) The percent of class is based on 10,273,410 shares of common stock issued and outstanding as of December 31, 2014.

Item 13. Certain Relationships and Related Transactions, and Director Independence

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

The Company owes its President, Chris M Hymel, $10,769 as of December 31, 2014, in the form of an unsecured loan (Line of Credit).  The note is due on demand and bears 2.5% interest per quarter. The Company currently leases office space, from its President, on a month to month basis at a rate of $700 per month. The Company obtained rights to the intellectual property though an assignment agreement with its President (discussed in greater detail in Note B - Intellectual Property of the Financial Statements.

Other than the President's compensation, related transactions,  discussed previously, since the company's inception, there has not been, nor is there currently proposed, any transaction or series of similar transactions with related parties to which the Company was or will be a party:

  1) In which the amount involved exceeds $120,000; and

  2) In which any director, executive officer, shareholder who beneficially owns 5% or more of SAI common stock, or any member of their immediate family, had or will have a direct or indirect material interest.

DIRECTOR INDEPENDENCE The Company has not established its own definition for determining whether its directors and nominees for directors are 'independent' nor has it adopted any other standard of independence employed by any national securities exchange or inter-dealer quotation system. None of the Company's current directors are considered independent as determined by the NASDAQ listing standards.

---

Item 14. Principal Accountant Fees and Services 

As of the date of this report, the Company has incurred approximately $13,350 in fees to our principal independent accountants for professional services rendered in connection with the reviews and audits of our financial statements for the year ended December 31, 2014 and 2013 and quarters ended September 31, June 30, and March 31, 2014 and 2013.

 

 

 

 

 

---

PART IV

Item 15. Exhibits

The following exhibits are filed as part of this Annual Report.

 

Exhibit 31.1	Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
Exhibit 31.2	Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act
Exhibit 32.1	Certification of Chief Executive Officer and Chief Financial Officer under Section 1350 as Adopted Pursuant Section 906 of the Sarbanes-Oxley Act
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

 

*

Furnished herewith. XBRL (Extensible Business Reporting Language) information   is furnished and not filed or a part of a registration statement or prospectus   for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not   filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

---

SIGNATURES

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.

                                       

     

   Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and as of the dates indicated.

 

SIGNATURE		TITLE		DATE
/s/ Chris M. Hymel		Chairman: Board of Directors,  President and Treasurer		April 2, 2015
Chris M. Hymel		(Principal Executive, Financial and Accounting Officer)
/s/ Malcolm H. Skolnick		Member: Board of Directors, Secretary		April 2, 2015
Malcolm H. Skolnick
/s/ Richard C. Seltzer		Member of the Board of Directors		April 2, 2015
Richard C. Seltzer

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act

As of the date of filing of this report, no annual report or proxy material has been sent to security holders. An annual report and/or proxy material will be furnished to security holders subsequent to the filing of the annual report of this Form and the registrant shall furnish copies of such material to the Commission when it is sent to security holders.