UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
For the transition period from to
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of Principal Executive Offices) | (ZIP Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
The number of shares outstanding of each of the issuer’s classes of equity as of November 16, 2022, is shares of common stock.
TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report. These factors include:
| ● | estimates of our expenses, future revenue, capital requirements and our needs for additional financing; | |
| ● | our ability to develop, acquire, and advance services and products for our customer base; | |
| ● | the implementation of our business model and strategic plans for our business; | |
| ● | the terms of future licensing, operational or management arrangements, and whether we can enter into such arrangements at all; | |
| ● | timing and receipt of revenues, if any; | |
| ● | the scope of protection we are able to establish and maintain for intellectual property rights and our ability to operate our business without infringing on the intellectual property rights of others; | |
| ● | regulatory developments in the United States; | |
| ● | our ability to maintain and establish collaborations or obtain additional funding; | |
| ● | our financial performance; | |
| ● | the effects of COVID-19 and other epidemics and pandemics on our ability to operate, our ability to generate revenues, and the local, U.S. and global economies in general; | |
| ● | risks associated with increased inflation, rising interest rates and risks of recessions; | |
| ● | risks associated with global conflicts and wars, including the ongoing Russia/Ukraine conflict; | |
| ● | risks associated with our telehealth platform; | |
| ● | developments and projections relating to our competitors and our industry; and | |
| ● | other risks described below under, and incorporated by reference in, “Item 1A. Risk Factors”, below. |
You should read the matters described in, and incorporated by reference in, “Item 1A. Risk Factors” and the other cautionary statements made in this Report, and incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
| 1 |
PART I — FINANCIAL INFORMATION
American International Holdings Corp.
Condensed Consolidated Balance Sheets
| (Unaudited) | (Audited) | |||||||
September 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and equivalents | $ | $ | ||||||
| Inventory | ||||||||
| Prepaid Expenses | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net of accumulated depreciation of $ | ||||||||
| Right-of-use asset - operating lease | ||||||||
| Rent deposits | ||||||||
| Assets of discontinued operations | ||||||||
| NET NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued interest payable | ||||||||
| Accrued compensation - related parties | ||||||||
| Deferred Revenue - related parties | ||||||||
| Right-of-use liability - operating lease | ||||||||
| Convertible notes payable, net of debt discount of $ | ||||||||
| Loans payable to related parties | ||||||||
| Loans payable | ||||||||
| Derivative liabilities | ||||||||
| Net liabilities of discontinued operations | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Loans payable | ||||||||
| TOTAL LONG-TERM LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, (par value $, shares authorized, of which and shares of Series A Preferred Stock were issued and outstanding as of September 30, 2022 and December 31, 2021, respectively) | ||||||||
| Common stock (par value $, shares authorized, of which and shares issued and outstanding as of September 30, 2022 December 31, 2021, respectively) | ||||||||
| Treasury stock, at cost | ( | ) | ( | ) | ||||
| Common Stock Payable | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT ATTRIBUTED TO PARENTS COMPANY | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
American International Holdings Corp.
Condensed Consolidated Statements of Operations
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| For The Three | For The Three | For The Nine | For The Nine | |||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
| Revenues | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Revenue - related party | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit (loss) | ( | ( | ) | ( | ) | |||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in derivative liabilities | ( | ) | ||||||||||||||
| Gain on disposition of subsidiaries | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Settlement gain (loss) | ( | ) | ||||||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| Net (loss) from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Discontinued operations: | ||||||||||||||||
| (Loss) gain from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Total income (loss) from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Net (loss) attributed to non-controlling interest | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Basic income (loss) per share | ||||||||||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Discontinued operations | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Diluted income (loss) per share | ||||||||||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Discontinued operations | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
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, 2020 | $ | $ | $ | $ | $ | $ | ( | ) | $ | - | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Imputed interest | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities due to note conversion | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series B preferred shares for In Process Research and Development | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for Series B preferred shares conversion | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares under private placement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for note settlement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services - related parties | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for debt settlement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Imputed Interest | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities due to note conversion | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for note conversion and settlement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Imputed Interest | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities due to note conversion | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for note conversion and settlement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||
| 4 |
| 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 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities due to note conversion | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for note conversion and settlement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services - related parties | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities due to note conversion | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for note conversion and settlement | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for service | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Loan settlement - related parties | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Gain on disposition of subsidiary - related parties | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Rounding up shares due to reverse split | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities due to note conversion | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for note conversion and settlement | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for service | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Rounding up shares due to reverse split | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | ( | ) | ( |
) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( |
) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
AMERICAN INTERNATIONAL HOLDINGS CORP.
Condensed Consolidated Statements of Cash Flows
| For the Year Ended | For the Year Ended | |||||||
September 30, 2022 | September 30, 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinued operations | ( | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash (used in) operating activities: | ||||||||
| Amortization of debt discount | ||||||||
| Change in derivative liabilities | ( | ) | ( | ) | ||||
| Depreciation | ||||||||
| Derivatives expenses | ||||||||
| Forgiveness of Loan | ( | ) | ||||||
| Imputed interest expense | ||||||||
| Interest Expenses | ||||||||
| Gain on disposal | ( | ) | ||||||
| Loss on loans settlement | ||||||||
| Stock issued for services rendered | ||||||||
Stock issued for in process research and development (Increase) decrease in operating assets: | ||||||||
| Inventory | ( | ) | ||||||
| Prepaid income (expenses) | ( | ) | ||||||
| Rent Deposit | ( | ) | ( | ) | ||||
| (Decrease) increase in operating liabilities: | ||||||||
| Accounts payable | ||||||||
| Accrued interest payable | ||||||||
| Accrued compensation - related parties | ( | ) | ( | ) | ||||
| Deferred Revenue | ||||||||
| NET CASH USED IN OPERATING ACTIVITIES OF CONTINUING OPERATIONS | ( | ) | ( | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS | ( | ) | ( | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures for property and equipment | ( | ) | ||||||
| Net cash proceed from disposition of Mangoceuticals, Inc. | ||||||||
| Net cash proceeds from disposition of EPIQ MD, Inc. | ||||||||
| NET CASH PROVIDED IN INVESTING ACTIVITIES OF CONTINUING OPERATIONS | ||||||||
| NET CASH PROVIDED BY USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from borrowings - related parties | ||||||||
| (Repayment) to borrowings - related parties | ( | ) | ( | ) | ||||
| Proceeds from borrowings | ||||||||
| (Repayment) to borrowings | ( | ) | ||||||
| (Repayment) to note payable | ( | ) | ||||||
| Proceeds from sales of stock | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES OF CONTINUING OPERATIONS | ||||||||
| NET CASH USED IN FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS | ( | ) | ( | ) | ||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS: | ||||||||
| Beginning of period | ||||||||
| End of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Non-cash transactions: | ||||||||
| Common shares issued for notes conversion | $ | $ | ||||||
| Common shares issued for loan settlement | $ | $ | ||||||
| Discounts on convertible notes | $ | $ | ( | ) | ||||
| Initial Debt Discount | $ | $ | ||||||
| Adoption of ASC 842 | $ | $ | ||||||
| Settlement of derivative liabilities | $ | $ | ||||||
| Gain on disposition of Mangoceuticals, Inc. | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| 6 |
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.
| 7 |
Note 2 - Organization, Ownership and Business
Prior
to May 31, 2018, the Company was a
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 shares of the Company common stock to the members (three individuals) of Novopelle Diamond, LLC (“Novopelle”), a Texas limited company, to acquire % 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
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.
| 8 |
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 shares of the outstanding common
stock of Mangoceuticals, which represented
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 shares of common stock of EPIQ MD (the “Purchased
Shares”), representing
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.
| 9 |
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 shares of common stock of EPIQ MD (the “Purchased
Shares”), representing % of the then outstanding common stock of EPIQ MD, to the Buyers for an aggregate of $
As
of September 30, 2022, the outstanding other receivable was $
Note 5 – Property and Equipment
Property and equipment from continuing operations were as follows on September 30, 2022, and December 31, 2021:
September 30, 2022 | December 31, 2021 | |||||||
| Equipment | ||||||||
| Furniture & fixtures | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ||||||
| Net property and equipment | $ | $ | ||||||
Property and equipment from discontinued operations were as follows on September 30, 2022, and December 31, 2021:
September 30, 2022 | December 31, 2021 | |||||||
| Leasehold improvement | ||||||||
| Furniture & fixtures | ||||||||
| Equipment | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Less disposals | ( | ) | ||||||
| Net property and equipment | $ | $ | ||||||
Depreciation
and amortization expense from continuing operations for the nine months ended September 30, 2022, and 2021 was $
| 10 |
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”),
(a) Series B Preferred Stock shares upon completion of the fully operational LifeGuru.me website;
(b) Series B Preferred Stock shares upon such time as 300 coaches have signed up at LifeGuru.me; and
(c) Series B Preferred Stock shares upon such time as 1,000 coaches have signed up at LifeGuru.me.
The fair value of shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $, 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 Series B Preferred Stock shares for reaching the second milestone (milestone (b)).
The fair value of shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $
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 $ was impaired in full during the fourth quarter of 2020.
The % 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 $
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 $
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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 $
The following is a schedule, by year, of maturities of lease liabilities as of September 30, 2022:
| 2022 | ||||
| 2023 | ||||
| Total undiscounted cash flow | ||||
| Less imputed interest ( | ( | ) | ||
| Present value of lease liabilities | $ |
The
operating lease right-of-use asset net balance at September 30, 2022 related to this location was $
Note 9 – Accrued Compensation for Related Parties
At
September 30, 2022, accrued compensation was $
Note 10 – Notes Payable
Notes payable represent the following at September 30, 2022:
| Note payable to an individual dated July 8, 2019 for $ | $ | |||
| Note payable dated July 7, 2020 for $ | $ | |||
| Note payable of $ | ||||
| Less: Repayment | ( | ) | ||
| Note payable of $ | $ | |||
| Less: Repayment | ( | ) | ||
| 12 |
| Note payable of $ | $ | |||
| Less: Repayment | ( | ) | ||
| Note payable to an unrelated party dated September 11, 2020 for $ | $ | |||
| Note payable to an unrelated party dated September 16, 2020 for $ | $ | |||
| Note payable of $ | $ | |||
| Less: Repayment | ( | ) | ||
| Note
payable of $ |
$ | |||
| Less: Repayment | ( |
) | ||
| Note
payable of $ |
$ | |||
| Less: Repayment | ( |
) | ||
| Note
payable of $ |
$ | |||
| Less: Conversion | ( |
) | ||
| 13 |
| Note payable of $ | $ | |||
| Less: Conversion | ( | ) | ||
| Note payable of $ | $ | |||
| Note payable of $ | $ | |||
| Less: Conversion | ( | ) | ||
| Note
payable of $ |
$ | |||
| Less: Conversion | ( |
) | ||
| Note
payable of $ |
$ | |||
| Less: Conversion | ( |
) | ||
| 14 |
| On September 24, 2021, the Company had a short-term advance payable in the amount of $ | $ | |||
| Less: Repayment | $ | ( | ) | |
| Note payable of $ | $ | |||
| Less: Conversion | ( | ) | ||
| Note payable of $ | $ | |||
| Less: Conversion | ( | ) | ||
| Note payable of $ | $ | |||
| Note payable of $ | $ | |||
| Less: Conversion | ( | ) | ||
| As of September 30, 2022, the Company had a short-term Advance payable in the amount of $ | $ |
| 15 |
| Note payable of $ | $ | |||
| Note payable of $ | $ | |||
| Note payable of $ | $ | |||
| Note payable of $ | $ | |||
| Total | $ | |||
| Less: unamortized discount | ( | ) | ||
| Total | $ | |||
| Short term convertible notes, net of discount of $816,599 | $ | |||
| 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 | $ | |||
| Long-term non-convertible notes – discontinued operations | $ | |||
| Long-term non-convertible notes | $ |
Note 11 – 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 post-reverse stock split shares of their AMIH common stock. The Company issued individual promissory notes with an aggregate principal amount of $ | $ | |||
| Less: Conversion | ( | ) | ||
| 16 |
| Short-term
note payable in the amount of $ |
||||
| As
of September 30, 2022, outstanding loan balances payable to the Company’s CEO and board member, Jacob Cohen, were $ |
||||
| Less: payment | ( |
) | ||
| $ | ||||
| Less: unamortized discount | ||||
| Total | $ | |||
| Long-term loan from related parties | $ | |||
| Short-term loan from related parties – continuing operations | $ | |||
| 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 $
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.
| Derivative liabilities as of December 31, 2021 | $ | |||
| Initial derivative liabilities at new note issuance | ||||
| Initial loss | ||||
| Conversion | ( | ) | ||
| Mark to market changes | ( | ) | ||
| Derivatives liabilities as of September 30, 2022 | $ |
As
of September 30, 2022, the Company had derivative liabilities of $
| 17 |
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 | |
| - | The Company would not redeem the notes; | |
| - | ||
| - | 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 | |
| - | The
Warrants with the fixed $ | |
| - | 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
Holder would hold the warrant to maturity ( |
Note 13 – Capital Stock
Preferred Stock
The Company is authorized to issue up to shares of preferred stock, $ par value, of which shares were designated as Series A Preferred Stock and were designated as Series B Preferred stock, the balance of shares of preferred stock were undesignated as of September 30, 2022.
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 shares of Series B Preferred Shares to a third party for services related to research
and development. The shares were subsequently converted into post-reverse stock split shares of common stock. The shares were valued
at $
The Company had million post-forward split shares of Series A Preferred Stock and shares of Series B Preferred Stock issued and outstanding as of September 30, 2022 and December 31, 2021.
| 18 |
Common Stock
The Company is authorized to issue up to shares of common stock, $ par value, of which post-reverse stock split shares were issued and outstanding as of September 30, 2022 and 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 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 $
In
the first quarter of 2022, the Company issued post-reverse stock split common shares to investors in exchange for $
In
the second quarter of 2022, the Company issued common shares to investors in exchange for $
In
the third quarter of 2022, the Company issued common shares to investors in exchange for $
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 $
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.
| 19 |
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 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 of the
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 $
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 $
| 20 |
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 $
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 $
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 $
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:
| Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses) | ||||||||
| Net loss | $ | ( | ) | $ | ||||
| As of | ||||||||
| September 30, 2022 | December 31, 2021 | |||||||
| Assets of discontinued operations - current | $ | $ | ||||||
| Assets of discontinued operations - intangible | ||||||||
| Assets of discontinued operations - non-current | ||||||||
| Net liabilities of discontinued operations | $ | $ | ||||||
| 21 |
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
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
Note 18 – Subsequent Events
On
October 3, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 3, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 6, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 7, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 12, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 13, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 17, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 18, 2022, the Company issued shares of common stock to a note holder in exchange for $
| 22 |
On
October 24, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 26, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 26, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
October 27, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
November 2, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
November 3, 2022, the Company issued shares of common stock to a note holder in exchange for $
On
November 7, 2022, the Company issued shares of common stock to a note holder in exchange for $
| 23 |
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.
| 24 |
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. | |
| ● | Results of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2022, and 2021. | |
| ● | Liquidity and Capital Resources. A discussion of our financial condition, including descriptions of balance sheet information and cash flows. | |
| ● | 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.
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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.
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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.
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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.
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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.
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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.
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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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer/principal financial/accounting officer), to allow timely decisions regarding required disclosures.
Management, with the participation of our Chief Executive Officer (principal executive officer/principal financial/accounting officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Report. As of September 30, 2022, based on the evaluation of these disclosure controls and procedures, and in light of the material weakness we found in our internal controls over financial reporting as of December 31, 2021 (as described in greater detail in our annual report on Form 10-K for the year ended December 31, 2021), our Chief Executive Officer (principal executive officer/principal financial/accounting officer) has concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Exchange Act, is recorded properly, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer/principal financial/accounting officer), as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.
Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “Item 1. Legal Proceedings” of this Form 10-Q from, “Part I - Item 1. Financial Statements” in the Notes to Consolidated Financial Statements under “Note 15 – Commitments and Contingencies”. The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.
Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Commission on March 29, 2022 (the “Form 10-K”), under the heading “Risk Factors”, which are incorporated by reference herein, except as set forth below, and investors should review the risks provided in the Form 10-K and below, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K for the year ended December 31, 2021, under “Risk Factors”, and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
The risk factors relating to and discussing risks associated with EPIQ MD, Inc. and Mangoceuticals, Inc. are no longer relevant as we no longer hold an interest in such entities.
The risk factor entitled “We have various outstanding convertible notes which are convertible into shares of our common stock at a discount to market.” from the Form 10-K is replaced and superseded by the following:
We have various outstanding convertible notes which are convertible into shares of our common stock at a discount to market.
As of September 30, 2022, we owed approximately $2,897,670 under various convertible promissory notes and as of the date of this Report we owe approximately $2,897,670 under various convertible promissory notes, many of which are in default. The conversion prices of the convertible notes are based on a discount to the market value of our common stock, subject in many cases to adjustments to the conversion prices upon defaults and anti-dilution and other rights which may result in such conversion prices declining (see also See also “Note 13 – Derivative Liabilities”, to the notes to unaudited financial statements included above). As a result, any conversion of the convertible notes and sale of shares of common stock issuable in connection with the conversion thereof may cause the value of our common stock to decline in value, as described in greater detail under the Risk Factors below. Notwithstanding the above, we hope to repay the convertible notes in full before any conversions take place.
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The below are new risk factors not included in the Form 10-K:
We are contemplating starting a process to explore a corporate restructuring.
The Company is contemplating pursuing a corporate restructuring which may include, among other things, a merger, acquisition, or divestiture of certain of the Company’s assets or subsidiaries. The Company does not currently have any plans to go private or cease filing reports with the Securities and Exchange Commission. As part of the corporate restructuring, the Company may seek to divest its healthcare related subsidiaries which may include any or all of the equity or assets of the following owned by the Company: EPIQ Scripts, LLC (51% owned by the Company), LifeGuru, Inc., and ZipDoctor, Inc. Such divestiture may be to a third party or an affiliate of the Company, on arms-length terms. No definitive agreements have been entered into to date and the ultimate terms of any such agreement(s), if any, are currently unknown. The Company may be unable to complete a corporate restructuring timely, on favorable terms, or at all, and may not be able to obtain required consents and approvals for such a transaction. The outcome of this process may result in the liquidation of the above-named subsidiaries or their assets for significantly less than we paid to acquire or develop them, the write-off of prior expenses incurred in connection with the development of such assets or such assets, and may have a material adverse effect on our results of operations and liquidity. Notwithstanding the above, the Board of Directors will seek to maximize the value of such assets and operations to the extent possible. We may also be unable to complete a corporate restructuring, which may result in us failing to generate any significant revenues and being forced to seek bankruptcy protection.
Separately, we have had discussions with various parties seeking to merge and/or combine with us. While we have not entered into any definitive agreements or understandings with any such parties to date, in the event that we do enter into a business combination in the future, our majority stockholders may change and new shares of common stock or preferred stock could be issued resulting in substantial dilution to our then current stockholders. As a result, our new majority stockholders may change the composition of our Board of Directors and replace our current management. Any combination or sale transaction may also result in a change in our business focus. We have not entered into any combination agreements as of the date of this filing and may not enter into such agreements in the future. Any future material combination may have a material effect on our operations, cash flows, results of operations, prospects, plan of operations, the quotation of our common stock on the OTCQB Market, our officers, directors and majority stockholders, and the value of our securities. We may also be subject to material payments or penalties under outstanding agreements in the event of the consummation of a transaction similar to the above.
The issuance of common stock upon conversion of our outstanding Series A Convertible Preferred Stock will cause immediate and substantial dilution to existing shareholders.
As of the date of this Report, we had 1,000,000 outstanding shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”), all of which were held by Jacob D. Cohen, the Chief Executive Officer and director of the Company. Each holder of Series A Preferred Stock may, at its option, convert its shares of Series A Preferred Stock (each a “Series A Conversion”) into that number of shares of common stock equal to the holder’s pro rata share of all Series A Preferred Stock then issued and outstanding, multiplied by (i) 60%, minus the aggregate percentage of the Company’s outstanding common stock previously converted by holders of the Series A Preferred Stock, through such applicable date (for example, if prior to the applicable date of determination, shares of Series A Preferred Stock have been converted into 3% of the outstanding shares of common stock as of such date of determination, the Series A Preferred Stock would, in aggregate, be convertible into 57% of the then outstanding shares of common stock of the Company), multiplied by (ii) the outstanding shares of our common stock outstanding immediately after such conversion, divided by (iii) the total number of shares of Series A Preferred Stock then outstanding. No individual conversion by any individual holder shall be in an amount greater than 9.99% of the outstanding common stock of the Company on the date on which the holder delivers notice of such conversion to the Company (the “Individual Conversion Limitation”). The result of the above, is that such Series A Preferred Stock is convertible into 60% of the Company’s outstanding common stock (on a post-conversion basis, i.e., 150% of the Company’s outstanding common stock on a pre-conversion basis) currently. The conversion of the Series A Preferred Stock into common stock of the Company will cause substantial dilution to the then holders of our common stock.
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The issuance and sale of common stock upon conversion of our outstanding Series A Preferred Stock may depress the market price of our common stock.
If conversions of our outstanding Series A Preferred Stock and sales of such converted shares take place, the price of our common stock may decline. In addition, the common stock issuable upon conversion of our outstanding Series A Preferred Stock may represent overhang that may also adversely affect the market price of our common stock. Overhang occurs when there is a greater supply of a company’s stock in the market than there is demand for that stock. When this happens the price of the company’s stock will decrease, and any additional shares which shareholders attempt to sell in the market will only further decrease the share price. If the share volume of our common stock cannot absorb converted shares sold by the holder of the Series A Preferred Stock, then the value of our common stock will likely decrease.
We have been and may continue to be negatively impacted by inflation.
Increases in inflation have had an adverse effect on us. Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the ongoing conflict between the Ukraine and Russia. Continuing increases in inflation, have in the past, and could in the future, impact our costs of labor and services and the margins we are able to realize on our services, all of which could have an adverse impact on our business, financial position, results of operations and cash flows. Inflation has also resulted in higher interest rates, which in turn raises our cost of debt borrowing.
Our industry and the broader US economy have experienced higher than expected inflationary pressures in the first three quarters of 2022, related to continued supply chain disruptions, labor shortages and geopolitical instability. Should these conditions persist, our business, results of operations and cash flows could be materially and adversely affected.
The first three quarters of 2022 have seen significant increases in the costs of labor and certain materials and equipment, and longer lead times for such materials and equipment, as a result of availability constraints, supply chain disruption, increased demand, labor shortages associated with a fully employed US labor force, high inflation and other factors. Supply and demand fundamentals have been further aggravated by disruptions in global energy supply caused by multiple geopolitical events, including the ongoing conflict between Russia and Ukraine. Recent supply chain constraints and inflationary pressures may in the future adversely impact our operating costs, as a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Economic uncertainty may affect our access to capital and/or increase the costs of such capital.
Global economic conditions continue to be volatile and uncertain due to, among other things, consumer confidence in future economic conditions, fears of recession and trade wars, the price of energy, fluctuating interest rates, the availability and cost of consumer credit, the availability and timing of government stimulus programs, levels of unemployment, increased inflation, tax rates, and the war between Ukraine and Russia which began in February 2022. These conditions remain unpredictable and create uncertainties about our ability to raise capital in the future. In the event required capital becomes unavailable in the future, or more costly, it could have a material adverse effect on our business, results of operations, and financial condition.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There have been no sales of unregistered securities during the quarter ended September 30, 2022 and from the period from October 1, 2022 to the filing date of this Report, which have not previously been disclosed in a Current Report on Form 8-K, except as set forth below:
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.
On July 1, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $16,693 of accrued and unpaid interest owed under the terms and conditions of that certain 10% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On July 8, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $11,328 of accrued and unpaid interest owed under the terms and conditions of that certain 10% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
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On July 12, 2022, the Company issued 104,286 shares of common stock to a note holder in exchange for $9,855 of principal and interest owed under the terms and conditions of that certain 6% convertible promissory note issued to Quick Capital, LLC, dated June 24, 2021.
On July 13, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $11,328 of accrued and unpaid interest owed under the terms and conditions of that certain 10% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On July 18, 2022, the Company issued 113,000 shares of common stock to a note holder in exchange for $15,820 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 July 21, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $11,328 of accrued and unpaid interest owed under the terms and conditions of that certain 10% convertible promissory note issued to Mast Hill Fund, LP, dated November 22, 2021.
On July 25, 2022, the Company issued 119,194 shares of common stock to a note holder in exchange for $16,687 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 August 4, 2022, the Company issued 124,378 shares of common stock to a note holder in exchange for $10,000 of principal and interest owed under the terms and conditions of that certain 6% convertible promissory note issued to Quick Capital, LLC, dated June 24, 2021.
On August 9, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $6,506 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 August 9, 2022, the Company issued 135,000 shares of common stock to a note holder in exchange for $10,854 of accrued and unpaid interest owed under the terms and conditions of that certain 10% convertible promissory note as issued to Talos Victory Fund, LLC dated November 30, 2021.
On August 19, 2022, the Company issued 140,213 shares of common stock to a note holder in exchange for $11,273 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 August 19, 2022, the Company issued 130,000 shares of common stock to a note holder in exchange for $10,452 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 August 22, 2022, the Company issued 152,628 shares of common stock to a note holder in exchange for $6,809 of principal and interest owed under the terms and conditions of that certain 6% convertible promissory note issued to Quick Capital, LLC, dated June 24, 2021.
On September 6, 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 September 6, 2022, the Company issued 165,000 shares of common stock to a note holder in exchange for $13,266 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 September 12, 2022, the Company issued 175,000 shares of common stock to a note holder in exchange for $7,088 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.
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On September 16, 2022, the Company issued 185,000 shares of common stock to a note holder in exchange for $7,493 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 September 16, 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 September 22, 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 September 28, 2022, the Company issued 225,000 shares of common stock to a note holder in exchange for $9,113 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.
September 28, 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 September 30, 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 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.
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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 as 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 as 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.
On November 9, 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 9, 2022, the Company issued 475,000 shares of common stock to Sultan Haroon who serves as the Director of Business Operations for Epiq Scripts as a bonus for services rendered to date. The shares were valued at $.02 per share, or $9,500.
On November 9, 2022, the Company issued 475,000 shares of common stock to Maja Matthews who serves as the Director of Business Development for Epiq Scripts as a bonus for services rendered to date. The shares were valued at $.02 per share, or $9,500.
On November 9, 2022, the Company issued 200,000 shares of common stock to Justin Baker who serves as a pharmacy technician for Epiq Scripts as a bonus for services rendered to date. The shares were valued at $.02 per share, or $4,000.
On November 9, 2022, the Company issued 200,000 shares of common stock to John Helfrich who serves as the Pharmacist in Charge for Epiq Scripts as a bonus for services rendered to date. The shares were valued at $.02 per share, or $4,000.
On November 12, 2022, the Company issued 550,000 shares of common stock to a note holder in exchange for $22,000 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 12, 2022, the Company issued 470,000 shares of common stock to a note holder in exchange for $5,640 of principal and interest owed under the terms and conditions of that certain 6% convertible promissory note issued to FirstFire Global Opportunities Fund, LLC, dated June 24, 2021.
On November 14, 2022, the Company issued 550,011 shares of common stock to a note holder in exchange for $6,200 of principal and interest owed under the terms and conditions of that certain 6% convertible promissory note issued to Quick Capital, LLC, dated June 24, 2021.
* * * * * * *
We claim an exemption from registration afforded by Section 3(a)(9) of the Securities Act, for the above conversions, as the securities were exchanged by the Company with its existing security holders exclusively in transactions where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.
On September 14, 2022, the Company issued 300,000 shares of common stock to GreenTree Financial Group, Inc. in connection with an addendum to a service agreement for consulting services related to accounting and financial reporting. The shares were issued at $0.04 per share, or a total of $12,000.
We claim an exemption from registration for the issuance above pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, since the foregoing issuance did not involve a public offering, the recipient was an “accredited investor”, and the recipient acquired the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by us or our representatives. No underwriters or agents were involved in the foregoing issuances and we paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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| * | Filed herewith. |
| ** | Furnished herewith. |
| *** | Indicates management contract or compensatory plan or arrangement. |
# Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or Exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that American International Holdings Corp. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or Exhibit so furnished.
£ Certain portions of this Exhibit has been omitted in accordance with Regulation S-K Item 601 because they are both (i) not material to investors and (ii) the type of information that American International Holdings Corp. customarily and actually treats as private or confidential, and have been marked with ‘‘[***]’’ to indicate where omissions have been made. American International Holdings Corp. agrees to furnish supplementally an unredacted copy of the Exhibit to the SEC upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| American International Holdings Corp. | ||
| By | /s/ Jacob D. Cohen | |
| Jacob D. Cohen | ||
Chief Executive Officer, President and Director (Principal Executive Officer and Principal Financial/Accounting Officer) |
||
| November 16, 2022 | ||
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