American
International Holdings Corp.
Condensed
Consolidated Balance Sheets
The
accompanying notes are an integral part of these consolidated financial statements.
American
International Holdings Corp.
Condensed
Consolidated Statements of Operations
The
accompanying notes are an integral part of these consolidated financial statements.
American
International Holdings Corp.
Consolidated
Statement of Changes in Stockholders’ Deficit
(Unaudited)
| |
| | |
| | |
| | |
Additional | | |
Common | | |
Retained | | |
|
|
|
| | |
Total | |
| |
Preferred
Stock A | | |
Preferred
Stock B | | |
Common
Stock | | |
Paid-in | | |
Stock | | |
Earnings | | |
Noncontrolling |
|
|
Treasury | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Payable | | |
(Deficit) | | |
Interest |
|
|
Stock | | |
(Deficit) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
|
|
| | |
| |
Balance, December 31,
2021 | |
| 1,000,000 | | |
$ | 100 | | |
| - | | |
$ | - | | |
| 1,407,418 | | |
$ | 141 | | |
$ | 16,675,110 | | |
$ | - | | |
$ | (20,540,569 | ) | |
$ |
- |
|
|
$ | (3,894 | ) | |
$ | (3,869,112 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Reclassification of derivative
liabilities due to note conversion | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 89,638 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 89,638 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Issuance of common shares for
note conversion and settlement | |
| - | | |
| - | | |
| - | | |
| - | | |
| 84,878 | | |
| 9 | | |
| 204,796 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 204,805 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Issuance of shares for services
- related parties | |
| - | | |
| - | | |
| - | | |
| - | | |
| 23,717 | | |
| 2 | | |
| 86,122 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 86,124 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Issuance of shares for services | |
| - | | |
| - | | |
| - | | |
| - | | |
| 88,768 | | |
| 9 | | |
| 284,991 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 285,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Net
(loss) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,430,293 | ) | |
|
- |
|
|
| - | | |
| (1,430,293 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Balance, March 31, 2022 | |
| 1,000,000 | | |
$ | 100 | | |
| - | | |
$ | - | | |
| 1,604,781 | | |
$ | 161 | | |
$ | 17,340,657 | | |
$ | - | | |
$ | (21,970,862 | ) | |
$ |
- |
|
|
$ | (3,894 | ) | |
$ | (4,633,838 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Reclassification of derivative
liabilities due to note conversion | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 21,744 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 21,744 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Issuance of common shares for
note conversion and settlement | |
| - | | |
| - | | |
| - | | |
| - | | |
| 301,866 | | |
| 30 | | |
| 52,837 | | |
| 16,170 | | |
| - | | |
|
- |
|
|
| - | | |
| 69,037 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Issuance of shares for service | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 500 | | |
| - | | |
|
- |
|
|
| - | | |
| 500 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Loan settlement - related parties | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 14,106 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 14,106 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Gain on disposition of subsidiary
- related parties | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 102,092 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 102,092 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Rounding up shares due to reverse
split | |
| - | | |
| - | | |
| - | | |
| - | | |
| 21,974 | | |
| 2 | | |
| (2 | ) | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Net
income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,284,920 | | |
|
- |
|
|
| - | | |
| 1,284,920 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Balance, June 30, 2022 | |
| 1,000,000 | | |
$ | 100 | | |
| - | | |
$ | - | | |
| 1,928,621 | | |
$ | 193 | | |
$ | 17,531,434 | | |
$ | 16,670 | | |
$ | (20,685,942 | ) | |
$ |
|
|
|
$ | (3,894 | ) | |
$ | (3,141,439 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Reclassification of derivative
liabilities due to note conversion | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 63,944 | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| 63,944 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Issuance of common shares for
note conversion and settlement | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,979,151 | | |
| 298 | | |
| 218,010 | | |
| (16,170 | ) | |
| - | | |
|
- |
|
|
| - | | |
| 202,138 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Issuance of shares for service | |
| - | | |
| - | | |
| - | | |
| - | | |
| 300,000 | | |
| 30 | | |
| 9,420 | | |
| (500 | ) | |
| - | | |
|
- |
|
|
| - | | |
| 8,950 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Rounding up shares due to reverse split | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
|
- |
|
|
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Net
income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (3,040,307 | ) | |
|
(228,859 |
) |
|
| - | | |
| (3,269,166 | ) |
Net
income (loss) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (3,040,307 | ) | |
|
(228,859 |
) |
|
| - | | |
| (3,269,166 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
| | | |
| | |
Balance, September 30,
2022 | |
| 1,000,000 | | |
$ | 100 | | |
| - | | |
$ | - | | |
| 5,207,772 | | |
$ | 521 | | |
$ | 17,822,808 | | |
$ | - | | |
$ | (23,726,249 | ) | |
$ |
(228,859 |
) |
|
$ | (3,894 | ) | |
$ | (6,135,573 | ) |
The
accompanying notes are an integral part of these consolidated financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
Condensed
Consolidated Statements of Cash Flows
The
accompanying notes are an integral part of these financial statements.
American
International Holdings Corp.
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2022
(Unaudited)
Note
1 - Basis of Presentation
The
accompanying unaudited condensed financial statements of American International Holdings Corp. (“AMIH” or the “Company”)
have been prepared in accordance with the generally accepted accounting principles in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information
or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant
to the applicable rules and regulations for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Annual Report on Form 10-K for the year
ended December 31, 2021. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of
the results to be expected for the year ending December 31, 2022 or for any future interim periods.
Impact
of COVID-19 Pandemic on Consolidated Financial Statements. The outbreak of the 2019 novel coronavirus disease (“COVID-19”),
which was declared a global pandemic by the World Health Organization on March 11, 2020, and the related responses by public health and
governmental authorities to contain and combat its outbreak and spread has severely impacted the U.S. and world economies, the market
for health spa services, nutrition supplements and our other business offerings during the end of the first quarter of 2020, and continuing
through the end of 2020 and into 2021. Government mandated ‘stay-at-home’ and similar orders have to date, and may in the
future, prevent us from operating. In late 2020, we made the decision to discontinue operations of our VISSIA Waterway, Inc. (“VISSIA
Waterway”) and VISSIA McKinney (“VISSA McKinney”) MedSpa locations due to declines in customers and issues staffing
such facilities, each as a result of the pandemic. Additionally, our Legend Nutrition store saw a deep decline in sales due to social
distancing orders and decreases in customers who were willing to venture out to brick-and-mortar establishments during 2020. Legend Nutrition’s
lease was up January 31, 2021, and the Company chose to not renew the lease, closed the store, and will not continue in this line of
business moving forward. We also decided to cease offering construction services around July 2021.
As
of the date of this Report, our operations are limited, and consist mainly of ZipDoctor, Inc., Life Guru, Inc., and EPIQ Scripts, LLC
(51% owned).
Moving
forward, economic recessions, including those brought on by the continued COVID-19 outbreak may have a negative effect on the demand
for our services and our operating results. Any prolonged disruption to our operations or work force availability is likely to have a
significant adverse effect on our results of operations, cash flows and ability to meet continuing debt service requirements. All of
the above may be exacerbated in the future as the COVID-19 outbreak and the governmental responses thereto continues.
Effective
on May 12, 2022, the Company affected a 1-for-60 reverse stock split of its issued and outstanding common stock by the filing of a Certificate
of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada (filed on May 6, 2022 and effective
on May 12, 2022) (the “Reverse Stock Split”). The Reverse Stock Split has been retroactively reflected throughout this Report.
Also on May 6, 2022, a Second Amended and Restated designation of the Company’s Series A Preferred Stock was filed and became effective
with the Secretary of State of Nevada, whereby, among other things, a 1,000-for-1 forward stock split of the outstanding Series A Preferred
Stock of the Company was effected, which has also been retroactively reflected throughout this Report.
Note
2 - Organization, Ownership and Business
Prior
to May 31, 2018, the Company was a 93.2% owned subsidiary of American International Industries, Inc. (“American” or
“AMIN”) (OTCQB: AMIN). Effective May 31, 2018, the Company issued 168,333 shares of restricted common stock. As a
result of the issuance of the common shares, a change in control occurred. American International Industries, Inc. ownership decreased
from 93.2% to 6.4%. Effective April 12, 2019, the Company changed its business focus to the services of medical spas.
On
April 12, 2019, the Company entered into a Share Exchange Agreement (the “Agreement”) with Novopelle Diamond, LLC
(“Novopelle”) and all three members of Novopelle, pursuant to which the Company issued 300,000 shares of the Company
common stock to the members (three individuals) of Novopelle Diamond, LLC (“Novopelle”), a Texas limited company,
to acquire 100% of the membership interests of Novopelle. The issuance of these shares represents a change in control of the Company.
Concurrent with the issuance, Jacob Cohen, Esteban Alexander and Alan Hernandez, representing the three former members of Novopelle,
were elected to the board of directors and to the office of Chief Executive Officer, Chief Operating Officer and Chief Marketing officer
of the Company, respectively (provided that Mr. Alexander and Mr. Hernandez no longer serve as officers or directors of the Company).
Everett Bassie and Charles Zeller resigned as board members of the Company. This transaction was treated as a reverse acquisition for
accounting purposes, with the Company remaining the parent company and Novopelle (which has since been renamed VISSIA McKinney, LLC)
becoming a wholly-owned subsidiary of the Company.
On
April 28, 2020, the Company incorporated a wholly-owned subsidiary, ZipDoctor, Inc. (“ZipDoctor”) in the State of
Texas. ZipDoctor provides its customers with unlimited, 24/7 access to board certified physicians and licensed mental and behavioral
health counselors and therapists via a newly developed, monthly subscription based online telemedicine platform. ZipDoctor was launched
in August 2020 and has generated nominal revenues through the quarter ended September 30, 2022.
On
May 15, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with Global Career Networks Inc,
a Delaware corporation (the “GCN”), the sole owner of Life Guru, Inc., a Delaware corporation (“Life Guru”).
Pursuant to the SPA, the Company acquired a 51% interest in Life Guru from GCN. As consideration for the purchase of the 51% ownership
interest in Life Guru, the Company issued to GCN 500,000 shares of its then newly designated Series B Convertible Preferred Stock, which
had an agreed upon value of $500,000 ($1.00 per share), and agreed to issue GCN up to an additional 1,500,000 shares of Series B Convertible
Preferred Stock (with an agreed upon value of $1,500,000) upon reaching certain milestones, of which 500,000 shares of Series B Convertible
Preferred Stock were issued and which other 1,000,000 shares of contingently issuable shares are no longer issuable.
On
October 23, 2020, the Company incorporated a wholly-owned subsidiary, EPIQ MD, Inc. (“EPIQ MD”) in the state of Nevada. EPIQ
MD is a direct-to-consumer, telemedicine and healthcare company targeting Americans who are uninsured or underinsured. The EPIQ MD service
offering is a convergence of primary care telemedicine, preventative care services and wellness programs – under the EPIQ MD brand
and on a single platform. EPIQ MD markets and sells its services direct to end-use consumers, as well as through business-to-business
(B2B) efforts, by focusing on employers in the targeted industries. We divested our interest in EPIC MD in July 2022, as discussed below.
On
October 7, 2021, the Company incorporated a wholly-owned subsidiary, Mangoceuticals, Inc. (“Mangoceuticals”) in the state
of Texas with the intent of focusing on developing, marketing and selling a variety of men’s wellness products and services via
a telemedicine platform. In June 2022, as discussed below, we divested our interest in Mangoceuticals.
On
January 24, 2022, the Company formed EPIQ Scripts, LLC (“EPIQ Scripts”) in the state of Texas. EPIQ Scripts has been
established with the intent of operating as a close-door online mail order pharmacy with a specific target and vision to obtain licenses
in all 50 states across the U.S. EPIQ Scripts also plans to seek to become accredited with the most respected and highly recognized authorities
in the industry, such as Utilization Review Accreditation Commission (URAC), Legit Script, Accreditation Commission for Health Care (ACHC),
and National Association of Boards of Pharmacy (NABP) Digital Pharmacy. EPIQ Scripts also intends to obtain in-network contracts with
all major Pharmacy Benefit Managers (PBM) and insurance payors. The Company currently owns 51% of EPIQ Scripts. As of the date of this
Report, EPIQ Scripts has obtained the licenses to operate in the following twenty-one (21) states: Alaska, Delaware, Hawaii, Idaho, Kansas,
Maryland, Massachusetts, Missouri, Nebraska, New Jersey, New York, New Mexico, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island,
Texas, Virginia, Washington, and Wisconsin.
The
unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: VISSIA McKinney, LLC
(f/k/a Novopelle Diamond, LLC), VISSIA Waterway, Inc. (f/k/a Novopelle Waterway, Inc.), Novopelle Tyler, Inc., Legend Nutrition, Inc.,
Capitol City Solutions USA, Inc., EPIQ MD, Inc. (which interest was disposed of during the three months ended September 30, 2022, as
discussed below), ZipDoctor, Inc., Mangoceuticals, Inc. (through June 16, 2022) and its majority-owned subsidiary, Life Guru, Inc and
EPIQ Scripts, LLC (51% owned by the Company). All significant intercompany transactions and balances have been eliminated in consolidation.
On
June 16, 2022, the Company entered into and closed the transactions contemplated by a Stock Purchase Agreement (the “SPA”),
with Cohen Enterprises, Inc. (“Cohen Enterprises”), which entity is owned and controlled by Jacob D. Cohen, the Chief Executive
Officer, President and member of the Board of Directors of the Company. Pursuant to the SPA, which was approved by the Board of Directors
(with Mr. Cohen abstaining) and the Audit Committee of the Board of Directors, the Company sold 8,000,000 shares of the outstanding common
stock of Mangoceuticals, which represented 80% of the then outstanding shares of common stock of Mangoceuticals, to Cohen Enterprises
in consideration for $90,000, which was approximately the same amount that had been advanced to Mangoceuticals from the Company through
the date of the SPA ($89,200). Cohen Enterprises also acquired the right to be repaid the $90,000 advanced from the Company to Mangoceuticals,
from Mangoceuticals, pursuant to the terms of the SPA. As a result of the closing of the SPA, Cohen Enterprises owns 90% of Mangoceuticals
(with the remaining 10% of Mangoceuticals being owned by an unrelated third party), and the Company has completely divested its interest
in Mangoceuticals.
On
July 7, 2022, the Company entered into a June 30, 2022 Equity Interest Purchase Agreement (the “Purchase Agreement”), with
Alejandro Rodriguez and Pan-American Communications Services, S.A. (collectively, the “Buyers”) and our then wholly-owned
subsidiary, EPIQ MD. Pursuant to the Purchase Agreement, the Company sold 5,000,000 shares of common stock of EPIQ MD (the “Purchased
Shares”), representing 100% of the then outstanding common stock of EPIQ MD, to the Buyers for an aggregate of $300,000, consisting
of $150,000 of cash paid at closing and a $150,000 secured promissory note entered into on June 30, 2022 (the “Note”). The
transactions contemplated by the Purchase Agreement closed on July 7, 2022 and effective as of June 30, 2022.
Note
3 - Recently Issued Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other
standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes
that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial
position or results of operations upon adoption.
In
December 2019, the FASB issued Accounting Standards Update (ASU) No. 2019-12, “Simplifying the Accounting for Income Taxes
(Topic 740)”. This standard simplifies the accounting for income taxes. This standard is effective for fiscal years beginning
after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted for all entities. The Company
adopted ASU 2019-12 effective on January 1, 2021, and it did not have an effect on the Company’s consolidated financial statements.
In
August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”).
ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible
instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims
to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15,
2021. The Company adopted ASU 2020-06 effective on January 1, 2022, and it did
not have an effect on the Company’s consolidated financial statements.
Note
4 – Other Receivable
On
July 7, 2022, the Company, entered into a June 30, 2022 Equity Interest Purchase Agreement (the “Purchase Agreement”), with
Alejandro Rodriguez and Pan-American Communications Services, S.A. (collectively, the “Buyers”) and our then wholly-owned
subsidiary, EPIQ MD. Pursuant to the Purchase Agreement, the Company sold 5,000,000 shares of common stock of EPIQ MD (the “Purchased
Shares”), representing 100% of the then outstanding common stock of EPIQ MD, to the Buyers for an aggregate of $300,000, consisting
of $150,000 of cash paid at closing and a $150,000 secured promissory note entered into on June 30, 2022 (the “Note”). The
transactions contemplated by the Purchase Agreement closed on July 7, 2022, effective as of June 30, 2022. The $150,000 secured promissory
notes matured on September 30, 2022 and was paid in full.
As
of September 30, 2022, the outstanding other receivable was $0. Cash payments of $300,000 were received during the period ended September
30, 2022.
Note
5 – Property and Equipment
Property
and equipment from continuing operations were as follows on September 30, 2022, and December 31, 2021:
Schedule of Property and Equipment
| |
September 30,
2022 | | |
December 31,
2021 | |
Leasehold
improvement | |
| | | |
| | |
Equipment | |
| 75,970 | | |
| - | |
Furniture & fixtures | |
| 26,388 | | |
| - | |
Gross
property and equipment | |
| 102,358 | | |
| - | |
Less accumulated depreciation and amortization | |
| (7,580 | ) | |
| - | |
Net property and equipment | |
$ | 94,778 | | |
$ | - | |
Property
and equipment from discontinued operations were as follows on September 30, 2022, and December 31, 2021:
Schedule of Property and Equipment
| |
September 30,
2022 | | |
December 31,
2021 | |
Leasehold improvement | |
| 4,262 | | |
| 4,262 | |
Furniture & fixtures | |
| 18,830 | | |
| 18,830 | |
Equipment | |
| - | | |
| - | |
Gross
property and equipment | |
| 23,091 | | |
| 23,092 | |
Less accumulated depreciation and amortization | |
| (11,164 | ) | |
| (8,823 | ) |
Less disposals | |
| (11,927 | ) | |
| - | |
Net property and equipment | |
$ | - | | |
$ | - | |
Depreciation
and amortization expense from continuing operations for the nine months ended September 30, 2022, and 2021 was $7,580 and $3,412, respectively.
Depreciation and amortization expense from discontinued operations for the nine months ended September 30, 2022, and 2021 was $11,164
and $12,122, respectively. There were also disposals of $11,927.
Note
6 – Other assets
On
May 15, 2020, the Company executed a securities purchase agreement with Global Career Networks Inc, a Delaware corporation (the “Seller”),
the sole owner of Life Guru, pursuant to which the Company purchased from the Seller, a 51% interest in the capital stock of Life Guru,
representing an aggregate of 2,040 shares of Life Guru’s common stock. Life Guru owns and operates the LifeGuru.me website which
is currently dormant and non-operational due to the lack of funding required to further develop the business. In consideration for the
purchase, the Company agreed to issue the Seller 500,000 shares of the Company’s Series B Preferred Stock at closing, which occurred
on May 15, 2020. Up to an additional 1,500,000 Series B Preferred Stock shares were to be issuable to the Seller upon Life Guru meeting
certain milestones, provided that such milestones are met prior to the earlier of (i) one (1) year after closing; and (ii) thirty (30)
days after the Company has provided the Seller written notice of a breach by the Seller of any provision of the SPA, which breach has
not been reasonably cured within such thirty (30) day period (such earlier date of (i) and (ii), the “Milestone Termination
Date”):
(a)
500,000 Series B Preferred Stock shares upon completion of the fully operational LifeGuru.me website;
(b)
500,000 Series B Preferred Stock shares upon such time as 300 coaches have signed up at LifeGuru.me; and
(c)
500,000 Series B Preferred Stock shares upon such time as 1,000 coaches have signed up at LifeGuru.me.
The
fair value of 500,000 shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $605,488,
which equaled the market price per common share on the grant multiplied by the equivalent number of common shares which would be issuable
upon conversion of Series B Preferred Stock.
The
Company did not recognize any liabilities related to the milestone shares due to the uncertainty surrounding such milestones.
During
the first quarter of 2021, the Company issued 500,000 Series B Preferred Stock shares for reaching the second milestone (milestone (b)).
The fair value of 500,000 shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $601,852,
which equaled the market price per common share on the grant multiplied by the equivalent number of common shares which would be issuable
upon conversion of Series B Preferred Stock. This amount was expensed as in process research and development.
Since
more than one year has elapsed since closing, the right of the Seller to earn the milestone shares set forth in (a) and (c) above has
expired.
Since
the asset is not substantiating a future cash flow, the Company determined an impairment adjustment was necessary for the periods presented.
Investment in Life Guru of $605,488 was impaired in full during the fourth quarter of 2020.
The
51% owned subsidiary is a consolidated entity which requires the presentation of noncontrolling interest in the consolidated statements
of operations for the nine months ended September 30, 2022. As there was minimal activity for the entity as of September 30, 2022, and
minimal assets and liabilities and, no noncontrolling interest was presented at the period ended September 30, 2022.
Note
7 – Capital lease
On
June 17, 2020, the Company entered into an agreement with a vendor to purchase equipment used in its spa operations. Pursuant to the
agreement, the Company agreed to pay a total amount of $44,722 in 24 installments, or $1,819 per month plus tax. The outstanding balance
of this capital lease was $34,987 as of December 31, 2020. Due to the discontinued operation, the Company returned equipment in the first
quarter of 2021. The Company impaired $1,455 to bring the asset down to the value of the liability. As of December 31, 2021, the Company
was released from the capital lease with an outstanding balance of $0.
On
July 14, 2020, the Company entered into an agreement with a vendor to purchase equipment used in its spa operations. Pursuant to the
agreement, the Company agreed to pay a total amount of $44,722 in 24 installments, or $1,819 per month plus tax. The outstanding balance
of this capital lease was $31,457 as of December 31, 2020. Due to the discontinued operation, the Company returned equipment in the first
quarter of 2021. The Company impaired $5,991 to bring the asset down to the value of the liability. As of December 31, 2021, the Company
was released from the capital lease with an outstanding balance of $0.
Note
8 – Operating Right-of-Use Lease Liability
On
January 1, 2019, the Company adopted ASU No. 2016-2, Leases (Topic 842), as amended, which supersedes the lease accounting guidance under
Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU)
assets on the balance sheet and to provide enhanced disclosure surrounding the amount, timing and uncertainty of cash flows arising from
leasing arrangements.
As
of September 30, 2021, the Company had one leasing agreement subject to Accounting Standards Codification (ASC) 842.
Location
1 – EPIQ Scripts, LLC
On
February 15, 2022, the Company recognized an operating right-of-use asset in the amount of $69,439 and an operating lease liability in
the amount of $69,439 in connection with Location 1. The lease term is seventeen (17) months and expires in July 2023.
The
following is a schedule, by year, of maturities of lease liabilities as of September 30, 2022:
Schedule
of Maturities of Lease Liabilities
2023 | |
| 28,747 | |
2022 | |
| 12,320 | |
2023 | |
| 28,747 | |
Total undiscounted cash flow | |
| 41,067 | |
Less imputed interest (8%) | |
| (3,517 | ) |
Present value of lease liabilities | |
$ | 37,550 | |
The
operating lease right-of-use asset net balance at September 30, 2022 related to this location was $33,682.
Note
9 – Accrued Compensation for Related Parties
At
September 30, 2022, accrued compensation was $100,000, representing $50,000 owed to Jacob Cohen, the Company’s CEO and $25,000
owed to each of Alan Hernandez and Esteban Alexander, the Company’s former officers and directors.
Note
10 – Notes Payable
Notes
payable represent the following at September 30, 2022:
Schedule of Notes
Payable
| |
| | |
| |
| 40,000 | |
Note payable to an individual dated July 8, 2019 for $40,000, with interest at 8% per annum and due on July 8, 2020. The Note is currently past due. | |
$ | 40,000 | |
| |
| | |
Note payable dated July 7, 2020 for $50,000, with interest at 5% per annum and due on July 7, 2021. The Note is unsecured. The Note is currently past due. | |
$ | 50,000 | |
| |
| | |
Note payable of $53,000 dated August 5, 2020 for cash of $53,000, with interest at 8% per annum and due on November 5, 2021. The annual interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $70,736 was paid during the six months ended June 30, 2021. | |
| 53,000 | |
Less: Repayment | |
| (53,000 | ) |
| |
| - | |
| |
| | |
Note payable of $105,000 dated August 11, 2020 for cash of $100,000, net of original issue discount of $5,000, with one-time interest charge of 8% payable and due on May 11, 2021. The outstanding balance of the Note will be increased by 135% if in default. The Note is a convertible promissory note. The conversion price equals the lower of $30 per share (as adjusted for the reverse stock split) or 60% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 40%. The note and accrued interest totaling $111,466 was settled by the issuance of 11,813 post-reverse split common shares of the Company and $50,000 in cash. The note and accrued interest were converted at $9.68 per share (as adjusted for the reverse stock split) and settled with additional shares valued at $27 (as adjusted for the reverse stock split) per share. Accordingly, the Company recorded a loss on loan settlement of $58,059 during the six months ended June 30, 2021. | |
$ | 105,000 | |
Less: Repayment | |
| (105,000 | ) |
| |
| - | |
Note payable of $53,000 dated September 14, 2020 for cash of $53,000, with interest at 8% per annum and due on December 14, 2021. The annual interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $70,736 was paid during the six months ended June 30, 2021. | |
$ | 53,000 | |
Less: Repayment | |
| (53,000 | ) |
| |
| - | |
| |
| | |
Note payable to an unrelated party dated September 11, 2020 for $4,000, with no interest and due on demand. | |
$ | 4,000 | |
| |
| | |
Note payable to an unrelated party dated September 16, 2020 for $5,000, with no interest and due on demand. | |
$ | 5,000 | |
| |
| | |
Note payable of $56,750 dated October 12, 2020, for cash of $52,750, with interest at 8% per annum and due on October 12, 2021. The annual interest rate will increase to 24% if in default. The Note is a convertible promissory note. The conversion price equals the lesser of $3.00 per share or 60% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 40%. The Note and accrued interest totaling $56,750 was converted into 12,682 post-reverse split common shares of the Company within the terms of the note during the six months ended June 30, 2021. | |
$ | 56,750 | |
Less: Repayment | |
| (56,750 | ) |
| |
| - | |
Note
payable of $138,00 dated November 13, 2020 for cash of $138,000, with interest at 8% per annum and due on November 13, 2021. The
annual interest rate will increase to 18% if it is in default. The Note is a convertible promissory note. The conversion price equals
61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to
the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $183,483
was paid during the six months ended June 30, 2021. |
|
$ |
138,000 |
|
Less:
Repayment |
|
|
(138,000 |
) |
|
|
|
- |
|
Note
payable of $83,500 dated December 2, 2020 for cash of $83,500, with interest at 8% per annum and due on March 2, 2022. The annual
interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the
lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion
date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $104,527 was paid during
the six months ended June 30, 2021. |
|
$ |
83,500 |
|
Less:
Repayment |
|
|
(83,500 |
) |
|
|
|
- |
|
Note
payable of $425,000 dated January 6, 2021 for cash of $400,000, with interest at 6% per annum and due on January 7, 2022. The annual
interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser
of $3.00 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period
prior to the conversion date, representing a discount rate of 25%. The note and accrued interest totaling $437,359 was converted
into 42,500 post-reverse stock split common shares of the Company within the terms of the note during the six months ended June 30,
2021. |
|
$ |
425,000 |
|
Less:
Conversion |
|
|
(425,000 |
) |
|
|
|
-
|
|
Note payable of $425,000 dated January 6, 2021 for cash of $400,000, with interest at 6% per annum and due on January 7, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser of $3.00 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. The note and accrued interest totaling $437,297 was converted into 53,675 post-reverse stock split common shares of the Company within the terms of the note during the six months ended June 30, 2021. | |
$ | 425,000 | |
Less: Conversion | |
| (425,000 | ) |
| |
| - | |
| |
| | |
Note payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. The Note is currently past due. | |
$ | 300,000 | |
| |
| | |
Note payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. During the nine months ended September 30, 2022, the Company incurred penalties totaling $6,458. A partial conversion of the Note and accrued interest totaling $130,955 was converted into 132,041 post-reverse stock split common shares of the Company within the terms of the note during the nine months ended September 30, 2022. The Note is currently past due. | |
$ | 300,000 | |
Less: Conversion | |
| (165,000 | ) |
| |
| 135,000 | |
Note
payable of $265,958 dated June 24, 2021 for cash of $250,000, with interest at 6% per annum and due on June 24, 2022. The annual
interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor
of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the common
stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A
partial conversion of note totaling $66,962 converted into 99,000 post-reverse
stock split common shares of the Company within the terms of the note during the nine months ended September 30, 2022. The
Note is currently past due. |
|
$ |
265,958 |
|
Less:
Conversion |
|
|
(185,630 |
) |
|
|
|
80,328 |
|
Note
payable of $271,958 dated June 24, 2021 for cash of $256,000, with interest at 6% per annum and due on June 24, 2022. The annual
interest rate will increase to 15% if it is in default. The Note is a convertible promissory note. The conversion price equals the
lesser of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the
common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A
partial conversion of the note and accrued interest totaling $73,345 was converted
into 473,614 post-reverse stock split shares of the Company within the terms of the note during the nine months ended September 30,
2022. The Note is currently past due. |
|
$ |
271,958 |
|
Less:
Conversion |
|
|
(202,559 |
) |
|
|
|
69,399 |
|
On September 24, 2021, the Company had a short-term advance payable in the amount of $50,000 to an unrelated party, with no interest and due on demand. The short-term advance was paid in full on December 1, 2021. | |
$ | 50,000 | |
Less: Repayment | |
$ | (50,000 | ) |
| |
| - | |
| |
| | |
Note payable of $750,000 dated November 22, 2021 for cash of $750,000, with interest at 10% per annum and due on June 24, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lesser of $4.50 (as adjusted for the reverse stock split) or 80% of the offering price per share of Common Stock at which the Company offers shares of Common Stock in a public offering which results in the Common Stock being uplisted on a national stock exchange or Nasdaq, that occurs within 220 days from the date the Notes are issued, which date has passed (an “Uplist Offering”). A partial conversion of the note and accrued interest totaling $86,719 was converted into 1,024,745 post-reverse stock split shares of the Company within the terms of the Note during the nine months ended September 30, 2022. The Note is currently past due. | |
$ | 750,000 | |
Less: Conversion | |
| (22,764 | ) |
| |
| 727,236 | |
| |
| | |
Note payable of $500,000 dated November 30, 2021 for cash of $450,000, with interest at 10% per annum and due on November 30, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lesser of $0.075 (as adjusted for the reverse stock split) or 80% of the offering price per share of Common Stock at which the Uplist Offering is made. A partial conversion of the note and accrued interest totaling $73,557 was converted into 1,198,000 post-reverse stock split shares of the Company within the terms of the Note during the nine months ended September 30, 2022. The Note is currently past due. | |
$ | 500,000 | |
Less: Conversion | |
| (32,294 | ) |
| |
| 467,707 | |
| |
| | |
Note payable of $250,000 dated December 1, 2021 for cash of $250,000, with interest at 10% per annum and due on December 1, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lesser of 4.50 (as adjusted for the reverse stock split) or 80% of the offering price per share of Common Stock at which the Uplist Offering is made. | |
$ | 250,000 | |
| |
| | |
Note payable of $500,000 dated December 2, 2021 for cash of $500,000, with interest at 10% per annum and due on December 2, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lesser of $4.50 (as adjusted for the reverse stock split) or 80% of the offering price per share of Common Stock at which the Uplist Offering is made. A partial conversion of the note and accrued interest totaling $22,775 was converted into 294,194 post-reverse stock split shares of the Company within the terms of the Note during the nine months ended September 30, 2022. The Note is currently past due. | |
$ | 500,000 | |
Less: Conversion | |
| (22,775 | ) |
| |
| 477,225 | |
| |
| | |
As of September 30, 2022, the Company had a short-term Advance payable in the amount of $20,000 to an unrelated party, with no interest which is due on demand. | |
$ | 20,000 | |
Note payable of $137,500 dated May 13, 2022 for cash of $128,450, with interest at 6% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded an original issue discount (OID) of $9,050 which is to be amortized over the term of the note and derivative liabilities of $55,323. The annual interest rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals 75% of the lowest daily VWAP of the Common Stock during the seven (7) consecutive trading day period prior to conversion. | |
$ | 137,500 | |
| |
| | |
Note payable of $88,775 dated June 16, 2022 for cash of $85,775, with interest at 6% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $3,000 which is to be amortized over the term of the note and derivative liabilities of $38,713. The annual interest rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals 75% of the lowest daily VWAP of the Common Stock during the seven (7) consecutive trading day period prior to conversion. | |
$ | 88,775 | |
| |
| | |
Note payable of $62,250 dated August 29, 2022 for cash of $56,025, with interest at 12% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $6,225 which is to be amortized over the term of the note and derivative liabilities of $23,543. The annual interest rate will increase to 16% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals $0.04, subject to adjustment. | |
$ | 62,250 | |
| |
| | |
Note payable of $62,250 dated September 13, 2022 for cash of $56,025, with interest at 12% per annum and due on September 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $6,250 which is to be amortized over the term of the note and derivative liabilities of $10,748. The annual interest rate will increase to 16% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals $0.04, subject to adjustment. | |
$ | 62,250 | |
| |
| | |
Total | |
$ | 2,976,670 | |
Less: unamortized discount | |
| (816,599 | ) |
Total | |
$ | 2,160,071 | |
Short term convertible notes, net of discount of $816,599 | |
$ | 2,081,071 | |
Long-term convertible notes, net of discount of $0 | |
$ | - | |
Short-term non-convertible notes – continuing operations -related parties | |
$ | - | |
Short-term non-convertible notes – continuing operations | |
$ | 75,000 | |
Long-term non-convertible notes – discontinued operations | |
$ | 4,000 | |
Long-term non-convertible notes | |
$ | - | |
Note
11 – Loans from Related Parties
Schedule of Loans from Related Parties
| |
| | |
On April 12, 2019, the Company entered into individual share exchange agreements and promissory notes with each of Daniel Dror, Winfred Fields and former Directors Everett Bassie and Charles Zeller (the “AMIH Shareholders”), whereby the AMIH Shareholders agreed to cancel and exchange a total of 98,334 post-reverse stock split shares of their AMIH common stock. The Company issued individual promissory notes with an aggregate principal amount of $350,000 (the “Promissory Notes”) for cancellation of the 98,334 post-reverse stock split common shares. The Promissory Notes have a term of two years and accrue interest at the rate of 10% per annum until paid in full by the Company. The Company recorded interest of $7,506 on these notes during the year ended December 31, 2020. The accrued interest on these notes was $18,982 as of December 31, 2020. The Note and accrued interest totaling $280,108 was settled by the issuance of 57,942 post-reverse stock split common shares of the Company. The shares were valued at $18.60 and $16.20 (as adjusted for the reverse stock split) per share based on the market price at the settlement date. Accordingly, the Company recorded a loss on loan settlement of $758,601 during the year ended December 31, 2020. | |
$ | 350,000 | |
Less: Conversion | |
| (240,000 | ) |
Loans
from related parties, gross | |
| 110,000 | |
Short-term
note payable in the amount of $13,473 to Kemah Development Texas, LP, a company owned by Dror Family Trust, a related party. The
Company settled this note payable of $13,473 and accrued interest of $2,633 with a payment of $2,000 in cash on May 23, 2022. |
|
|
- |
|
|
|
|
|
|
As
of September 30, 2022, outstanding loan balances payable to the Company’s CEO and board member, Jacob Cohen, were $0 with no
interest and due on demand |
|
|
50 |
|
Less:
payment |
|
|
(50 |
) |
Loans
from related parties, gross |
|
|
- |
|
|
|
|
|
|
Loans
from related parties, gross |
|
$ |
110,000 |
|
Less:
unamortized discount |
|
|
0 |
|
Total |
|
$ |
110,000 |
|
Long-term
loan from related parties |
|
$ |
-
|
|
Short-term
loan from related parties – continuing operations |
|
$ |
110,000 |
|
Short-term
loan from related parties – discontinued operations |
|
$ |
-
|
|
Note
12 – Derivative Liabilities
Notes
that are convertible at a discount to market are considered embedded derivatives.
Under
FASB U.S. GAAP, Accounting Standards Codification (ASC), “Derivatives and Hedging”, ASC Topic 815 (“ASC 815”)
requires that all derivative financial instruments be recorded on the balance sheet at fair value. Fair values for exchange traded securities
and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market-based
pricing models incorporating readily observable market data and requiring judgment and estimates.
The
Company’s convertible notes have been evaluated with respect to the terms and conditions of the conversion features contained in
the notes to determine whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company
determined that the conversion features contained in the notes totaled $3,743,817 and represent a freestanding derivative instrument
that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument
in the notes is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument
of the convertible notes was measured using the Lattice Model at the inception date of the notes and will do so again on each subsequent
balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income
or expense at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion.
The
Convertible Note derivatives were valued as of December 31, 2021, at issuance, at conversion and at September 30, 2022, as set forth
in the table below.
Schedule of Convertible Note Derivatives
| |
| | |
Derivative liabilities as of December 31, 2021 | |
$ | 4,141,272 | |
Derivative
liabilities, beginning | |
$ | 4,141,272 | |
Initial derivative liabilities at new note issuance | |
| 400,779 | |
Initial loss | |
| - | |
Conversion | |
| (175,325 | ) |
Mark to market changes | |
| (622,909 | ) |
Derivatives liabilities as of September 30, 2022 | |
$ | 3,743,817 | |
As
of September 30, 2022, the Company had derivative liabilities of $3,743,817, and recorded changes in derivative liabilities in the amount
of $622,909 during the nine months ended September 30, 2022.
The
following assumptions were used for the valuation of the derivative liability related to the Notes:
|
- |
The
stock price would fluctuate with the Company’s projected volatility; |
|
- |
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 116% through 206% at issuance, conversion, and quarter ends; |
|
- |
The
Company would not redeem the notes; |
|
- |
An
event of default adjusting the interest rate would occur initially 0% of the time for all notes with increases 1% per month to a
maximum of 10% with the corresponding penalty; |
|
- |
The
Company would raise capital quarterly at market, which could trigger a reset event; and |
|
- |
The
Holder would convert the note monthly if the Company was not in default. |
The
following assumptions were used for the valuation of the warrant derivative liability related to the Notes:
|
- |
The
stock price would fluctuate with the Company’s projected volatility; |
|
- |
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 166% through 166.9% at issuance, conversion, and quarter ends. |
|
- |
The
Warrants with the fixed $12.00, $21.00, and $30.00 (each as adjusted for the reverse stock split) exercise prices are subject to
full ratchet reset provisions; |
|
- |
The
Company would raise capital quarterly at market, which could trigger a reset event; |
|
- |
The
cash flows are discounted to net present values using risk free rates; discount rates were based on risk free rates in effect based
on the remaining term; |
|
- |
The
occurrence of a fundamental transaction by a public company was estimated at 2.5% after 2.5 years and 5% prior to maturity; and |
|
- |
The
Holder would hold the warrant to maturity (5-year terms) at which point it could exercise the warrant if the warrant were in the
money. |
Note
13 – Capital Stock
Preferred
Stock
The
Company is authorized to issue up to 5,000,000 shares of preferred stock, $0.0001 par value, of which 1,000,000 shares were designated
as Series A Preferred Stock and 2,000,000 were designated as Series B Preferred stock, the balance of 2,000,000 shares of preferred stock
were undesignated as of September 30, 2022.
The
holders of Series A Preferred Stock have no dividend rights, liquidation preference and conversion rights. As long as any shares of Series
A Preferred Stock remain issued and outstanding, the holders of Series A Preferred Stock have the right to vote on all shareholder matters
equal to sixty percent (60%) of the total vote. At the option of the Company, Series A Preferred Stock is redeemable at $1.00 per share.
The
holders of Series B Preferred Stock have the same dividend rights as common stockholders on a fully converted basis, are entitled to
receive pari passu with any distribution of any of the assets of the Company to the holders of the Company’s common stock, but
not prior to any holders of senior securities. Each share of Series B Preferred Stock may be converted, at the option of the holder thereof,
into that number of shares of common stock of the Company as equals $1.00 divided by 90% of the average of the volume weighted average
prices (“VWAP”) of the Company’s common stock, for the five trading days immediately preceding the date the notice
of conversion is received, subject to the limit of 4.999% of the Company’s outstanding shares of common stock. The holders of Series
B Preferred Stock have no voting rights.
In
the first quarter of 2021, the Company issued 500,000 shares of Series B Preferred Shares to a third party for services related to research
and development. The shares were subsequently converted into 572 post-reverse stock split shares of common stock. The shares were valued
at $601,582.
The
Company had one million post-forward split shares of Series A Preferred Stock and no shares of Series B Preferred Stock issued and outstanding
as of September 30, 2022 and December 31, 2021.
Common
Stock
The
Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, of which 5,207,772 post-reverse stock split
shares were issued and outstanding as of September 30, 2022 and 1,407,418 post-reverse stock split common stock shares were issued and
outstanding at December 31, 2021.
During
the nine months ended September 30, 2022, the Company issued 412,485 post-reverse stock split shares of the Company’s common stock
in consideration for services performed by employee, directors and non-employee consultants. The shares were valued at $380,074
based on the market price on the date of agreement.
In
the first quarter of 2022, the Company issued 84,878 post-reverse stock split common shares to investors in exchange for $204,805 of
principal and accrued interest owed under the terms and conditions of convertible notes as issued.
In
the second quarter of 2022, the Company issued 301,866 common shares to investors in exchange for $69,476 of principal and accrued interest
owed under the terms and conditions of convertible notes as issued.
In
the third quarter of 2022, the Company issued 3,279,151 common shares to investors in exchange for $201,639 of principal and accrued
interest owed under the terms and conditions of convertible notes as issued.
Note
14 – Going Concern
These
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the
realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As
reflected in the accompanying financial statements, the Company has a net loss from continuing operations of $3,257,239 for the nine
months ended September 30, 2022, and net loss from continuing operations of $7,498,626 for the nine months ended September 30, 2021,
a loss from discontinued operations of $14,199 for the nine months ended September 30, 2022 and gain from discontinued operations of
$169,501 for the nine months ended September 30, 2021. The effect of the above increased accumulated deficit to $23,726,249 as of September
30, 2022. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or
to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they
come due. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts
or amounts and classifications of liabilities that might result from this uncertainty. There can be no assurance that the Company will
become commercially viable without additional financing, the availability, and terms of which are uncertain. If the Company cannot secure
necessary capital when needed on commercially reasonable terms, its business, condition (financial and otherwise) and commercial viability
may be harmed. Although management believes that it will be able to successfully execute its business plan, which includes third party
financing and the raising of capital to meet the Company’s future liquidity needs, there can be no assurances in this regard. These
matters raise substantial doubt about the Company’s ability to continue as a going concern.
Note
15 – Commitments and Contingencies
In
the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation,
if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm
its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on
our continued financial position, results of operations or cash flows.
Robert
Holden vs AMIH
On
October 14, 2019, Robert Holden, the Company’s former CEO, filed a Petition and Application for Temporary Restraining Order in
the District Court of Harris County, Texas, against the Company stating that the Company is blocking Mr. Holden’s legal right to
trade his shares in the open market and further attempting to stake his claim that he maintains his rights to the 63,334 shares he received
in connection with his acceptance as CEO of the Company on or around May 31, 2018. The Company is maintaining the position that Mr. Holden
does not have the right to those shares as he was in breach of his obligation to convey a digital marketing business to the Company and
subsequently resigned from the Company shortly thereafter, on or around August 15, 2018 and that he procured the shares through fraud.
On November 11, 2019, the Company issued a response with a Motion to Dismiss Under the Texas Citizen’s Participation Act (TCPA)
citing that any declaratory judgment and breach of contract claims be dismissed unless Mr. Holden can, through “clear and specific
evidence”, establish a prima facie case for each essential element of his claims.
After
an attempt to remand the case to federal court, the Company filed an amended notice of submission for its TCPA motion for submission
on May 18, 2020, whereby Holden failed to respond to the motion in a timely manner. On May 18, 2020, the Company filed a response in
support of its motion to dismiss under the TCPA, which was denied on June 3, 2020. Immediately thereafter, on June 4, 2020, the Company
filed a notice of accelerated interlocutory appeal to appeal the denial of the motion to dismiss under the TCPA and the trial court’s
failure to rule on the Company’s objection to the timeliness of Holden’s response. Ultimately, the Court of Appeals ruled
that the TCPA did not apply to Holden’s action. This ruling does not imply that Holden’s claims have merit, but only that they
are not subject to expedited dismissal. The Company sought review from the Texas Supreme Court, but it was denied. The outcome
of this action, and the ultimate outcome of the lawsuit is currently unknown at this time, provided that the Company intends to vehemently
defend itself against the claims made in the lawsuit.
AMIH
vs. Winfred Fields
On
November 11, 2019, the Company filed an original petition and jury demand against Winfred Fields, a shareholder, in the 458th Judicial
District Court of Fort Bend County seeking damages related to breach of contract and fraud related charges. The Company executed an exchange
agreement with Mr. Fields on or around April 12, 2019 whereby Mr. Fields was required to tender to the Company a total of 10,833 of the
12,500 shares of the Company’s common stock that Mr. Fields then owned (the “Exchanged Shares”) in exchange
for a promissory note with a maturity date of April 12, 2021 payable in the amount of $42,500 (the “Fields Note”)
(see also “Note 12 – Loans from Related Parties”). The Exchange Agreement required that Mr. Fields immediately return
the stock certificates for the Exchanged Shares to the Company or its designated agent for immediate cancellation and for Mr. Fields
to retain the remaining 1,667 shares. Mr. Fields agreed in the Exchange Agreement that these shares would not become unrestricted until
such time as Mr. Fields received an opinion of counsel satisfactory to the Company that the shares were not restricted for trade under
SEC regulations. After executing the Exchange Agreement, Mr. Fields—rather than return the Exchanged Shares or obtain said opinion
of counsel—attempted to deposit and trade the Exchanged Shares and the restricted shares, which was a direct violation of the Exchange
Agreement. The Company asserts that Mr. Fields knowingly, willingly and fraudulently attempted to deposit and trade the Exchanged Shares
and is seeking damages and equitable relief. Upon several attempts to serve Mr. Fields, service was perfected on or around February 3,
2020. On March 2, 2020, Mr. Fields filed a response generally denying all claims. On May 22, 2020,
the Company filed its first request for production and request for disclosure and discovery insisting that Mr. Fields produce all documentation
related to the fraudulent transaction and is awaiting a response to these requested discovery items. The outcome of this action is currently
unknown at this time. In November 2019, the Company recovered 10,834 shares
from Mr. Fields which were cancelled in 2019. Mr. Fields twice moved for summary judgment, once against the Company’s
claims, and once in favor of his own claims. However, the court denied his motions. The Company has moved for summary judgment
on its claims and against Mr. Fields’ claims and a hearing has been set for December 7, 2022.
Asher
Park, LLC vs. Novopelle Tyler
On
August 11, 2021, Asher Park, LLC (“Asher Park”) filed a petition against the Company and its subsidiary, Novopelle Tyler,
Inc. (“Novopelle Tyler”) in the 241st Judicial District Court of Smith County, Texas seeking to recover damages
in the amount of $66,651 against that commercial lease and commercial lease guaranty agreement that was signed between the parties on
or around January 8, 2020 to occupy retail premises located at 1058 Asher Way, Suite 100, in Tyler, Texas. As this commercial lease was
executed prior to the COVID-19 pandemic, and due to the uncertainty of the effects on retail establishments during the pandemic, Novopelle
Tyler never officially took possession of the retail premise. On September 23, 2021, the Company and Novopelle Tyler filed an Original
Answer and Affirmative Defense denying the allegations made by Asher Park.
On
January 26, 2022, Novopelle Tyler and the Company entered into a Settlement Agreement & Mutual Release with Asher Park whereby Novopelle
Tyler and the Company agreed to pay Asher Park a total of $35,000 in full and final settlement of all of the Asher Park’s claims.
Accordingly, Asher Park, in consideration for the execution of the Settlement Agreement dismissed the lawsuit against both Novopelle
Tyler and the Company.
Stanley
Tate d/b/a Triangle Cabinets vs. Capitol City Solutions USA, Inc.
On
September 10, 2021, Stanley Tate d/b/a Triangle Cabinets (“Tate”), a materials supplier and subcontractor that was hired
by the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against the Company, CCS, and CCS’s
construction client, PC Gateway, LLC (“PC Gateway”) in the 136th Judicial District Court of Jefferson County,
Texas seeking payment in the amount of $77,681 for services Tate claimed to provide CCS and PC Gateway. The Company and CCS were not
officially served until on or around October 21, 2021. On October 25, 2021, the Company and CCS filed an Original Answer denying the
allegations made by Tate as Tate had failed to provide the services in which they were hired to perform and demanding strict proof by
a preponderance of credible evidence. On December 29, 2021, Tate dismissed all claims against both the Company and CCS.
Capitol
City Solutions USA, Inc. vs. Peak Living, LLC and PC Gateway, LLC
On
November 1, 2021, the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against PC Gateway and Peak
Living, LLC (“Peak Living”) in the 58th Judicial District Court of Jefferson County Texas demanding the payment
of the final invoice as delivered to Peak Living in the amount of $2,069,908 representing the balance as owed to CCS for substantial
supplemental charges (including but not limited to dehumidifiers, various material cost and labor increases, code compliance costs, and
additional profit and overhead). Throughout the term of a project completed by CCS for Peak Living, Peak Living instructed CCS to perform
additional work beyond the original scope of the contracted agreement and fully understood that CCS expected to be compensated at the
fair market value for the additional labor and materials. In addition to seeking actual and statutory damages, CCS is seeking to recover
attorney’s fees, prejudgment and post judgment interest, costs of court and has further placed a constitutional lien on the PC
Gateway property, known as Gateway Village, located at 2825 12th Street, Beaumont, Texas, 77705 and which is the subject of the lawsuit.
Based on information received through the discovery process, CCS entered into a Settlement Agreement and Release on March 29, 2022, with
Peak Living whereby CCS agreed to dismiss Peak Living of all claims under the lawsuit.
Note
16 – Discontinued Operations
During
2021, the Company decided to discontinue the operation of its VISSIA McKinney, VISSIA Waterway, Legend Nutrition, Capitol City Solutions
USA, Inc. subsidiaries. VISSIA McKinney, VISSIA Waterway, Legend Nutrition, Capitol City Solutions USA, Inc. have been presented as discontinued
operations in the accompanying consolidated financial statements and are summarized below:
Schedule of Discontinued Operations
| |
2022 | | |
2021 | |
| |
Nine Months Ended September 30, | |
| |
2022 | | |
2021 | |
Revenue | |
$ | - | | |
$ | 2,530 | |
Cost of revenue | |
| - | | |
| - | |
Gross profit | |
| - | | |
| 2,530 | |
Operating expenses | |
| (14,199 | ) | |
| (46,208 | ) |
Loss from operations | |
| (14,199 | ) | |
| (43,678 | ) |
Other income (expenses) | |
| - | | |
| 213,179 | |
Net loss | |
$ | (14,199 | ) | |
$ | 169,501 | |
| |
As of | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Assets of discontinued operations - current | |
$ |
- | | |
$ |
- | |
Assets of discontinued operations - intangible | |
- | | |
- | |
Assets of discontinued operations - non-current | |
| - | | |
| 14,199 | |
Net liabilities of discontinued operations | |
$ | 4,948 | | |
$ | 112,199 | |
Note
17 – Disposition of Subsidiaries
On
June 16, 2022, the Company entered into a Stock Purchase Agreement with Cohen Enterprises, Inc., which entity is owned by Jacob D. Cohen,
our Chief Executive Officer and director (buyer) to sell buyer all shares of common stock of Mangoceuticals, Inc. (which represented
80% of the then outstanding shares of common stock of Mangoceuticals, Inc.) which the Company then held for $90,000 in cash paid at closing.
Pursuant to the Stock Purchase Agreement, the disposition of Mangoceuticals, Inc generated net cash proceed of $85,753, release of accounts
payable and accrued expenses of $16,339 and resulted in a gain of $102,092. This transaction is considered as a related party transaction
in accordance with the ASC 850.
On
June 30, 2022, the Company entered into an Equity Interest Purchase Agreement with Alejandro Rodriguez and Pan-American Communications
Services S.A. (buyers) to sell buyers all of the issued and outstanding shares of common stock of Epiq MD, Inc. which the Company then
held (representing 100% of the issued and outstanding shares of common stock of Epiq MD, Inc.) for an aggregate amount of $300,000, consisting
of $150,000 of cash paid at closing and a $150,000 secured promissory note. (Refer to Note 4 – Other Receivable). Pursuant to the
Equity Interest Purchase Agreement, the disposition of Epiq MD, Inc. generated net cash outflow of $2,123, increase in other receivable
of $300,000, loss on security deposit of $3,599, release of accounts payable and accrued expenses of $28,484 and resulted in a gain of
$322,762.
Note
18 – Subsequent Events
On
October 3, 2022, the Company issued 229,000 shares of common stock to a note holder in exchange for $9,160 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Blue Lake Partners, LLC, dated December
2, 2021.
On
October 3, 2022, the Company issued 140,213 shares of common stock to a note holder in exchange for $5,609 of principal and interest
owed under the terms and conditions of that certain 6% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On
October 6, 2022, the Company issued 245,000 shares of common stock to a note holder in exchange for $9,923 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Talos Victory Fund, LLC dated November
30, 2021.
On
October 7, 2022, the Company issued 140,213 shares of common stock to a note holder in exchange for $5,609 of principal and interest
owed under the terms and conditions of that certain 6% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On
October 12, 2022, the Company issued 265,000 shares of common stock to a note holder in exchange for $10,733 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Talos Victory Fund, LLC dated November
30, 2021.
On
October 13, 2022, the Company issued 140,213 shares of common stock to a note holder in exchange for $5,609 of principal and interest
owed under the terms and conditions of that certain 6% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On
October 17, 2022, the Company issued 315,000 shares of common stock to a note holder in exchange for $12,758 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Talos Victory Fund, LLC dated November
30, 2021.
On
October 18, 2022, the Company issued 317,484 shares of common stock to a note holder in exchange for $12,699 of principal and interest
owed under the terms and conditions of that certain 6% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On
October 24, 2022, the Company issued 310,000 shares of common stock to a note holder in exchange for $12,555 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Talos Victory Fund, LLC dated November
30, 2021.
On
October 26, 2022, the Company issued 362,000 shares of common stock to a note holder in exchange for $14,661 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Talos Victory Fund, LLC dated November
30, 2021.
On
October 26, 2022, the Company issued 317,484 shares of common stock to a note holder in exchange for $12,699 of principal and interest
owed under the terms and conditions of that certain 6% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On
October 27, 2022, the Company issued 398,000 shares of common stock to a note holder in exchange for $15,920 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Blue Lake Partners, LLC, dated December
2, 2021.
On
November 2, 2022, the Company issued 360,000 shares of common stock to a note holder in exchange for $14,580 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Talos Victory Fund, LLC dated November
30, 2021.
On
November 3, 2022, the Company issued 317,484 shares of common stock to a note holder in exchange for $12,699 of principal and interest
owed under the terms and conditions of that certain 6% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On
November 7, 2022, the Company issued 450,000 shares of common stock to a note holder in exchange for $18,225 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note issued to Talos Victory Fund, LLC dated November
30, 2021.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
The
following discussion should be read in conjunction with the American International Holdings Corp. financial statements and accompanying
notes included elsewhere in this Report.
All
references to years relate to the fiscal year ended December 31 of the particular year.
This
information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly
Report on Form 10-Q, and the audited financial statements and notes thereto and “Part II. Other Information - Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the
year ended December 31, 2021, filed with the Securities and Exchange Commission on March 29, 2022 (the “Annual Report”).
Certain
capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated
financial statements included above under “Part I - Financial Information - Item 1. Financial Statements”.
Our
logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service
marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to in this Report may
appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate
in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if
any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their
rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with,
or endorsement or sponsorship of us by, any other companies.
The
market data and certain other statistical information used throughout this Report are based on independent industry publications, reports
by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third-party research,
surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do
not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosures contained in this Report,
and we believe these industry publications and third-party research, surveys and studies are reliable. While we are not aware of any
misstatements regarding any third-party information presented in this Report, their estimates, in particular, as they relate to projections,
involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those
discussed under, and incorporated by reference in, the section entitled “Risk Factors”, below. These and other factors could
cause our future performance to differ materially from our assumptions and estimates. Some market and other data included herein, as
well as the data of competitors as they relate to American International Holdings Corp., is also based on our good faith estimates.
Effective
on May 12, 2022, the Company affected a 1-for-60 reverse stock split of its issued and outstanding common stock by the filing of a Certificate
of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada (filed on May 6, 2022 and effective
on May 12, 2022)(the “Reverse Stock Split”). The Reverse Stock Split has been retroactively reflected in the disclosures
below. Also on May 6, 2022, a Second Amended and Restated designation of the Company’s Series A Preferred Stock was filed and became
effective with the Secretary of State of Nevada, whereby, among other things, a 1,000-for-1 forward stock split of the outstanding Series
A Preferred Stock of the Company was effected, which has also been retroactively reflected below.
Unless
the context requires otherwise, references to the “Company,” “we,” “us,” “our,”
“American International”, “AMIH” and “American International Holdings Corp.”
refer specifically to American International Holdings Corp. and its consolidated subsidiaries.
In
addition, unless the context otherwise requires and for the purposes of this Report only:
|
● |
“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended; |
|
|
|
|
● |
“SEC”
or the “Commission” refers to the United States Securities and Exchange Commission; and |
|
|
|
|
● |
“Securities
Act” refers to the Securities Act of 1933, as amended. |
Where
You Can Find Other Information
We
file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the
public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge, soon after
such reports are filed with or furnished to the SEC, on our website at https://amihcorp.com/investors/. Copies of documents filed
by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at
the address and telephone number set forth on the cover page of this Report. Our website address is https://amihcorp.com. The
information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered
a part of this Report.
Summary
of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the
accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash
flows. MD&A is organized as follows:
|
● |
Business
of the Company and Recent Restructuring Events. Discussion of our business and recent events affecting us, to provide context
for the remainder of MD&A. |
|
|
|
|
● |
Plan
of Operations. Discussion of our strategy moving forward and how we plan to seek to increase stockholder value. |
|
|
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|
● |
Results
of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2022, and 2021. |
|
|
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|
● |
Liquidity
and Capital Resources. A discussion of our financial condition, including descriptions of balance sheet information and cash
flows. |
|
|
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|
● |
Critical
Accounting Policies and Estimates. Critical accounting policies and estimates that we believe are important to understanding
the assumptions and judgments incorporated in our reported financial results and forecasts. |
Business
of the Company and Recent Restructuring Events
The
Company is headquartered in Dallas, Texas and is an investor, developer and asset manager diversified across the healthcare supply chain.
The Company’s portfolio encompasses a 51% interest in an accredited mail order pharmacy currently licensed in 21 states and a subscriber
based primary care telemedicine platform, as well as its own proprietary life coaching platform. The Company also seeks opportunities
to acquire and grow businesses that possess strong brand values and that can generate long-term sustainable free cash flow and attractive
returns in order to maximize value for all stakeholders.
COVID-19
Outlook
The
outbreak of the 2019 novel coronavirus disease (“COVID-19”), which was declared a global pandemic by the World Health
Organization on March 11, 2020, and the related responses by public health and governmental authorities to contain and combat its outbreak
and spread has severely impacted the U.S. and world economies, the market for health spa services, nutrition supplements and our other
business offerings during the end of the first quarter of 2020, and continuing through the end of 2020 and into 2021. Government mandated
‘stay-at-home’ and similar orders have to date, and may in the future, prevent us from operating. In late 2020, we made the
decision to discontinue operations of our VISSIA Waterway, Inc. and VISSIA McKinney MedSpa locations, due to declines in customers and
issues staffing such facilities, each as a result of the pandemic. Additionally, our Legend Nutrition store saw a deep decline in sales
due to social distancing orders and decreases in customers who are willing to venture out to brick-and-mortar establishments. Legend
Nutrition’s lease was up January 31, 2021, and the Company chose to not renew the lease, closed the store, and will not continue
in this line of business moving forward. We also decided to cease offering construction services around July 2021.
As
of the date of this Report, our operations are limited, and consist mainly of ZipDoctor, Inc., Life Guru, Inc., and EPIQ Scripts, LLC
(51% owned by the Company).
Moving
forward, economic recessions, including those brought on by the continued COVID-19 outbreak may have a negative effect on the demand
for our services and our operating results. Any prolonged disruption to our operations or work force available is likely to have a significant
adverse effect on our results of operations, cash flows and ability to meet continuing debt service requirements. All of the above may
be exacerbated in the future as the COVID-19 outbreak and the governmental responses thereto continues.
Recent
Restructuring Events
Mangoceuticals
Sale
On
June 16, 2022, Company entered and closed the transactions contemplated by a Stock Purchase Agreement (the “SPA”),
with Cohen Enterprises, Inc. (“Cohen Enterprises”), which entity is owned and controlled by Jacob D. Cohen, the Chief
Executive Officer, President and member of the Board of Directors of the Company. Pursuant to the SPA, which was approved by the Board
of Directors (with Mr. Cohen abstaining) and the Audit Committee of the Board of Directors, the Company sold 8,000,000 shares of the
outstanding common stock of Mangoceuticals, which represented 80% of the then outstanding shares of common stock of Mangoceuticals, to
Cohen Enterprises in consideration for $90,000, which was approximately the same amount that had been advanced to Mangoceuticals from
the Company through the date of the SPA ($89,200). Cohen Enterprises also acquired the right to be repaid the $90,000 advanced from the
Company to Mangoceuticals, from Mangoceuticals, pursuant to the terms of the SPA. As a result of the closing of the SPA, Cohen Enterprises
owned 90% of Mangoceuticals (with the remaining 10% of Mangoceuticals being owned by an unrelated third party), and the Company has completely
divested its interest in Mangoceuticals.
EPIQ
MD Sale
On
July 7, 2022, we entered into a June 30, 2022 Equity Interest Purchase Agreement (the “Purchase Agreement”), with
Alejandro Rodriguez and Pan-American Communications Services, S.A. (collectively, the “Buyers”) and our then wholly-owned
subsidiary, EPIQ MD, Inc., a Nevada corporation (“EPIQ MD”).
Pursuant
to the Purchase Agreement, the Company sold 5,000,000 shares of common stock of EPIQ MD (the “Purchased Shares”),
representing 100% of the then outstanding common stock of EPIQ MD, to the Buyers for an aggregate of $300,000, consisting of $150,000
of cash paid at closing and a $150,000 secured promissory note entered into on June 30, 2022 (the “Note”). The Purchase
Agreement includes customary representations and warranties of the parties, confidentiality obligations of the parties, covenants, closing
conditions and indemnification obligations of the parties, subject to certain deductibles. The
Company’s aggregate indemnification obligations under the Purchase Agreement are subject to a twelve-month limitation period, a
$300,000 liability cap, and a $5,000 deductible, subject in each case to certain exclusions, and the Buyers have the right to offset
any indemnification obligation not timely paid by the Company against the payments due pursuant to the Note and the Royalty Agreement
(as discussed below).
The
transactions contemplated by the Purchase Agreement closed on July 7, 2022 and effective as of June 30, 2022.
As
additional consideration for the sale of the Purchased Shares, the Company and EPIQ MD also entered into a Royalty Agreement dated June
30, 2022 and entered into on July 7, 2022 (the “Royalty Agreement”), pursuant to which the Company is entitled to
receive a 2.50% royalty interest, calculated and payable on a quarterly basis, on the gross revenues of EPIQ MD’s telehealth business,
beginning on January 1, 2023 and continuing until the earliest to occur of (i) the Company’s receipt of $900,000 in aggregate royalty
payments, (ii) EPIQ MD’s exercise of a right of first refusal to buy out the Company’s royalty interest for $900,000 (or
another mutually agreed amount) following the Company’s receipt of a bona fide third-party offer to purchase the Company’s
royalty interest, and (iii) December 31, 2026. The Royalty Agreement also provides for EPIQ MD to have a right of first refusal to purchase
the Company’s rights under the Royalty Agreement, in the event the Company chooses to sell such rights in the future.
The
Note has a maturity date of September 30, 2022, and bears no interest unless an event of default occurs. Upon the occurrence of an event
of default, the Note bears interest at a default rate of 18% per annum until paid in full. The Note was paid in full on September 29,
2022.
In
connection with the Company’s divestment of its interest in EPIQ MD, each of Mr. Rodriguez, and Mr. Verdie Bowen (the CEO and COO,
respectively, of EPIQ MD), and certain other employees of the Company, executed separate release and termination agreements with the
Company (the “Releases”). Pursuant to the Releases, each of Mr. Rodriguez, and Mr. Bowen terminated their respective
Executive Employment Agreements with the Company dated as of January 21, 2021, without any severance or continuing obligations of the
Company. Each release and termination agreement contains a mutual release of claims and mutual non-disparagement covenants. The Company
agreed that all shares of Company common stock issued to each such releasing party which was previously subject to forfeiture would be
deemed fully-earned upon the entry into such Releases. As a result, an aggregate of 83,334 shares of common stock previously subject
to forfeiture became fully-vested.
Plan
of Operations
The
Company intends to continue to grow its business both organically and through identifying acquisition targets over the next 12 months
in the technology, health and wellness space, funding permitting. Specifically, the Company plans to continue to grow and expand its
operations and further develop, market and advertise its mail order digital pharmacy business to direct-to-consumer telemedicine companies,
and identify strategic acquisitions that complement the Company’s vision of building an ecosystem of healthcare and wellness related
companies, funding permitting. As these opportunities arise, the Company will determine the best method for financing such acquisitions
and growth which may include the issuance of additional debt instruments, common stock, preferred stock, or a combination thereof, all
of which may result in significant dilution to existing shareholders and which funding may not be available on favorable terms, if at
all.
Results
of Operations
Revenues
We
had revenues of $48 for the three months ended September 30, 2022, compared to revenues of $3,831 for the three months ended September
30, 2021. We had revenues of $13,452 for the nine months ended September 30, 2022, compared to revenues of $17,198, for the nine months
ended September 30, 2021.
We
recognized revenues in accordance with Accounting Standards Codification (ASC) Topic 606. A five-step process has been designed for the
individual or pool of contracts to keep financial statements focused on this principle. Revenues from fixed-price and cost-plus contracts
are recognized on the percentage of completion method, whereby revenues on long-term contracts were recorded on the basis of the Company’s
estimates of the percentage of completion of contracts based on the ratio of actual cost incurred to total estimated costs. This cost-to-cost
method was used because management considered it to be the best available measure of progress on these contacts. Revenues from cost-plus-fee
contracts were recognized on the basis of costs incurred during the period plus the fee earned, measured on the cost-to-cost method.
Revenues from time-and-material and rate chart contracts were recognized currently as work is performed . During the three
and nine months ended September 30, 2022, respectively, we recognized revenues of $48 and $13,404 in connection with membership income
from ZipDoctor and EPIQ MD. During the three and nine months ended September 30, 2022, respectively, we recognized related parties revenues
of $60,000 and $0 in connection with service income from EPIQ Scripts, the Company’s 51% owned subsidiary.
Cost
of Revenues
We
had cost of revenues of $500 and $10,500 for the three months ended September 30, 2022 and 2021, respectively. We had cost of revenues
of $6,320, for the nine months ended September 30, 2022, compared to cost of revenues of $25,738, for the nine months ended September
30, 2021. Cost of revenues includes a subscription to an online medical platform. Selling, general, and administrative costs are charged
to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.
The
cost of revenues in the three and nine months ended September 30, 2022, was primarily associated with the membership income from EPIQ
MD, Inc.
The
cost of revenues in the three and nine ended September 30 2021, was primarily associated with the membership income from ZipDoctor.
Cost
of revenues as a percentage of revenues was 1% and 274% for the three months ended September 30, 2022 and 2021 and 10% for the nine months
ended September 30, 2022, compared to 150% for the nine months ended September 30, 2021. Cost of revenues as a percentage of revenue
decreased for the three and nine months ended September 30, 2022, compared to the prior period in 2021, as a result of the revenues being
generated from a different subsidiary.
Operating
Expenses
General
and administrative expenses were $384,759 and $592,283 for the three months ended September 30, 2022 and 2021 and $2,081,267 and $6,344,163
for the nine months ended September 30, 2022 and 2021, respectively. The decrease during the three months ended September 30, 2022, compared
to the prior three month period, was due primarily to consulting service expenses in the amount of $40,578 and $194,814, for the three
months ended September 30, 2022 and 2021, respectively, and advertising and marketing expenses in the amount of $0 and $117,939, for
the three months ended September 30, 2022 and 2021, respectively. The decrease for the nine months ended September 30, 2022, compared
to the prior nine month period, was primarily related to the decrease in stock-based compensation to $301,905 in 2022, from $4,183,390
in 2021; and the decrease in consulting service expenses to $391,194 from $575,210, for the nine months ended September 30, 2022, compared
to the nine months ended September 30, 2021, respectively. The professional expenses incurred as a public company included legal expenses
in the amount of $44,862 and $159,442 for the three months and nine months ended September 30, 2022, respectively and the financial reporting,
accounting and auditing compliance expenses incurred as a public company totalled $13,398 and $152,099, for the three months and nine
months ended September 30, 2021, respectively .
Other
Income (Expenses)
During
the three months ended September 30, 2022, and 2021, we incurred interest expense of $78,333 and $19,621, respectively, of which $0 and
$481, respectively, were recorded as imputed interest in connection with related party loans. During the nine months ended September
30, 2022, and 2021, we incurred interest expense of $230,805 and $139,003, respectively, of which $0 and $1,497, respectively, were recorded
as imputed interest in connection with related party loans .
Amortization
of debt discount was $733,122 and $186,521 during the three months ended September 30, 2022 and 2021; and $1,894,010 and $1,501,923 during
the nine months ended September 30, 2022 and 2021, respectively .
We
had a loss of $2,060,973 and a gain of $679,988 during the three months ended September 30, 2022, and 2021, respectively, due to the
change in derivative liabilities. We had a gain of $428,216 and a gain of $508,808 during
the nine months ended September 30, 2022, and 2021, respectively, due to the change in derivative liabilities. See also “Note 12
– Derivative Liabilities”, to the notes to unaudited financial statements included above for a more detailed discussion of
gain (loss) in derivative liabilities which is non-cash.
We
had a gain on disposition of subsidiaries of $400 and $0 for the three months ended September 30, 2022 and 2021, respectively, and $323,162
and $0 for the nine months ended September 30, 2022 and 2021, respectively. See also “Note 2 - Organization, Ownership and Business”
and “Note 17 – Disposition of Subsidiaries” , to the notes to unaudited financial statements, for further information
regarding these transactions.
We
had a net settlement gain of $44,254 for the three months ended September 30, 2021, in connection with lease settlements, that occurred
during the period.
We had a net settlement gain of $47,232 for the nine months ended September 30, 2022, in connection with lease settlements, and settlement
gain in connection with the debt and equity settlement with two former officers, compared to a net settlement loss of $13,805 for the
nine months ended September 30, 2021.
Discontinued
operations
Customer
traffic and demand at our VISSIA Waterway, Inc. and VISSIA McKinney MedSpa locations which were re-opened after mandatory closures associated
with COVID-19 in June and August 2020, respectively, failed to rebound to pre-closure levels due to COVID-19 and the pandemic’s
effects on the economy, and because we are unable to predict the length of the pandemic or ultimate outcome thereof, and further due
to our limited capital resources, effective in October 2020, we made the decision to close both our VISSIA Waterway, Inc. and VISSIA
McKinney locations and discontinued such operations. While such locations are closed, they are not generating any revenue. The continuing
expenses, without corresponding revenues, may have a significant negative affect on our results of operations and cash flows. Separately,
Legend Nutrition’s lease was up January 31, 2021, and the Company chose not to renew the lease, closed the store, and not continue
in that line of business moving forward. During the fourth quarter of 2021, the Company chose to discontinue the operation of Capitol
City Solution, Inc.
VISSIA
Waterway, Inc., VISSIA McKinney LLC, Legend Nutrition, Capitol City Solution, Inc. (collectively referred to as “Discontinued
Subsidiaries”) have been presented as discontinued operations in the accompanying consolidated financial statements for the
three and nine months ended September 30, 2022, and 2021 , and are summarized below:
| |
Three Month Ended September, 30, | |
| |
2022 | | |
2021 | |
Revenue | |
$ | - | | |
$ | - | |
Cost of revenue | |
| - | | |
| - | |
Gross profit | |
| - | | |
| - | |
Operating expenses | |
| (11,927 | ) | |
| (31,675 | ) |
Loss from operations | |
| (11,927 | ) | |
| (31,675 | ) |
Other income (expenses) | |
| - | | |
| 213,180 | |
Net loss | |
$ | (11,927 | ) | |
$ | 181,505 | |
| |
Nine Month Ended September, 30, | |
| |
2022 | | |
2021 | |
Revenue | |
$ | - | | |
$ | 2,530 | |
Cost of revenue | |
| - | | |
| - | |
Gross profit | |
| - | | |
| 2,530 | |
Operating expenses | |
| (14,199 | ) | |
| (46,208 | ) |
Loss from operations | |
| (14,199 | ) | |
| (43,678 | ) |
Other income (expenses) | |
| - | | |
| 213,179 | |
Net loss | |
$ | (14,199 | ) | |
$ | 169,501 | |
| |
As of | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Assets of discontinued operations - current | |
$ |
- | | |
$ |
- | |
Assets of discontinued operations - intangible | |
- | | |
- | |
Assets of discontinued operations - non-current | |
| - | | |
| 14,199 | |
Net liabilities of discontinued operations | |
$ | 4,948 | | |
$ | 112,199 | |
Net
Loss
We
had net loss from continuing operations of $3,257,239, or ($1.02) per common share and a net loss from continuing operations of
$80,852 or ($0.06) per common share, for the three months ended September 30, 2022 and 2021, respectively. We had a net loss of
$11,927 from discontinued operations and net gain of $181,505 from discontinued operations during the three months ended September
30, 2022 and 2021, respectively. The non-controlling interest for the three months ended September 30, 2022 and 2021 was a loss of
$50,668 and a loss of $0, respectively The increase in loss from continuing operations during the three months ended September 30,
2022, was mainly due to the loss in change in fair value of derivative liabilities associated with convertible debt and warrants, a
gain on forgiveness of loan, and a gain on disposition of subsidiaries, offset by an increase in amortization of debt discount and
interest expense.
We
had a net loss of $3,400,340, or $(1.60) per share from continuing operations and a net loss of $14,199 or ($0.01) per share from discontinued
operations during the nine months ended September 30, 2022, for a total net loss of $3,369,539 or $(1.58) per common share from continuing
and discontinued operations. We had a net loss of $7,498,626, or $(6.21) per share from continuing operations and net income of $169,501
or $0.14 per common share from discontinued operations during the nine months ended September 30, 2021, totalling an aggregate of $7,329,125
or $(6.07) per common share in total net loss. The non-controlling interest for the three months ended September 30, 2022 and 2021 was a loss of $228,859 and a
loss of $0, respectively. The decrease in net loss in 2022 was primarily attributable to non-cash expenses in connection
with stock-based compensation, amortization of debt discount, the gain in change in derivative liabilities associated with outstanding
convertible debt and warrants, a gain on forgiveness of loan, a gain on disposition of subsidiaries, reduction in amortization of debt
discount and increased interest expense, and settlement gain in connection with the debt and equity settlement with two former officers.
Liquidity
and Capital Resources
As
of September 30, 2022, and December 31, 2021, the Company had total assets of $318,405 and $1,231,445, respectively, including $0 and
$14,199 of assets of discontinued operations, respectively and $165,024 and $1,209,807 of cash, respectively.
As
of September 30, 2022, and December 31, 2021, the Company had total liabilities of $6,408,978 and $5,100,557, respectively, which consisted
of accounts payable, accrued liabilities, accrued interest and accrued compensation in the amount of $311,435 and $252,194, respectively,
rights-of-use liability of $37,550 and $0, respectively, convertible notes payable (net of discount) in the amount of $2,081,070 and
$396,419 and loans payable to related parties in the amount of $110,000 and $123,473 and non-related parties (net of discount) in the
amounts of $75,000, and $75,000. We also had $4,948 and $112,199 of net liabilities related to discontinued operations as of September
30, 2022, and December 31, 2021. Derivative liability, as discussed in greater detail in “Note 12 – Derivative Liabilities”,
to the notes to unaudited financial statements included above, was $3,743,817 and $4,141,272, respectively as of September 30, 2022 and
December 31, 2021. The Company had a total stockholders’ deficit of 6,135,573 and $3,869,112 as of September 30, 2022, and December
31, 2021, respectively.
During
the nine months ended September 30, 2022, net cash used in operating activities was $1,874,132, compared to net cash used in operating
activities of $1,577,120 for the nine months ended September 30, 2021. Negative cash flows from operating activities during the nine
months ended September 30, 2022, were due primarily to the net loss of $3,400,340, together with a change in derivative liability of
$622,909 and gain of disposal of assets of $322,762, partially offset by non-cash expenses, including amortization of debt discount of
$1,894,010, and stock-based compensation of $391,824. Negative cash flows from operating activities during the nine months ended September
30, 2021, were due primarily to the net loss of $7,498,626, together with a change in derivative liabilities of $1,779,896, partially
offset by non-cash expenses, including stock-based compensation of $4,291,999, amortization of debt discount of $1,501,923, derivative
expenses of $1,271,088, loss on loans settlement of $59,304 and in process research and development of $601,852.
During
the nine months ended September 30, 2022 and 2021, we had net cash provided in investing activities of $314,173 and $10,000, respectively.
For the nine months ended September 30, 2022, net cash provided in investing activities included proceeds from the disposition of Mangoceuticals,
Inc. of $85,753 and net cash inflow from disposition of EPIQ, Inc. of $297,877, offset by $69,457 of capital expenditures for property
and equipment.
During
the nine months ended September 30, 2022, and 2021, net cash flows provided by financing activities were $515,176 and $1,654,336, respectively,
primarily attributable to the proceeds from notes payable to related parties and non-related parties during the respective periods, offset
by repayments of such borrowings. We had proceeds of $0 from related party borrowings and proceeds of $519,968 from non-related party
borrowings in the nine months ended September 30, 2022, compared to proceeds of $59,820 and $1,919,000, respectively, in the nine months
ended September 30, 2021. We made repayments of $32,984 of related party borrowings and repayments of $377,500 of non-related party borrowings
in the nine months ended September 30, 2021, compared to repayments of $4,742, in the nine months ended September 30, 2022. We had proceeds
of $100,000 from sales of stock in 2021 (which shares of stock were sold in connection with our Regulation A offering).
We
had cash of $165,024 and a working capital deficit of $6,197,235, as of September 30, 2022. On a short-term basis, we will be required
to raise a significant amount of additional funds over the next 12 months to sustain operations and pay outstanding liabilities. On a
long-term basis, we will need to raise capital to grow and develop our business.
On
March 28, 2022, we repaid Jacob Cohen, our Chief Executive Officer and director, $50 which was advanced in the amount of $50 by Mr. Cohen,
which loan was payable on demand and non-interest bearing. As of the filing of this Report, we owe Mr. Cohen an aggregate of $0 related
to this short term advance.
It
is likely that we will require significant additional financing within the next 12 months and if we are unable to raise the needed funds
on an acceptable basis, we may be forced to cease or curtail operations.
Additional
information regarding the Company’s (a) accrued compensation for related parties can be found in “Note 9 – Accrued
Compensation for Related Parties”; (b) notes payable can be found in “Note 10 – Notes Payable”; (c) related party
loans can be found in “Note 11 – Loans from Related Parties”; and (d) derivative liabilities can be found in “Note
12 – Derivative Liabilities”; in the notes to unconsolidated financial statements included herein.
Critical
Accounting Policies and Estimates
Our
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.
See “Note 1 – Summary of Significant Accounting Policies” to the audited financial statements included in Part II,
Item 8, “Financial Statements and Supplementary Data”, of our Annual Report on Form 10-K for the year ended December 31,
2021. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for
the year ended December 31, 2021.