ITEM
1. FINANCIAL STATEMENTS
eWELLNESS
HEALTHCARE CORPORATION
CONDENSED
BALANCE SHEETS
(unaudited)
|
|
June 30, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
82,655
|
|
|
$
|
383,335
|
|
Prepaid Expenses
|
|
|
256,400
|
|
|
|
95,508
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
339,055
|
|
|
|
478,843
|
|
|
|
|
|
|
|
|
|
|
Property & equipment, net
|
|
|
12,793
|
|
|
|
14,092
|
|
Intangible assets, net
|
|
|
10,000
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
361,848
|
|
|
$
|
503,935
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
299,046
|
|
|
$
|
236,741
|
|
Accounts payable - related party
|
|
|
674,192
|
|
|
|
684,173
|
|
Accrued expenses - related party
|
|
|
200,516
|
|
|
|
214,076
|
|
Accrued compensation
|
|
|
1,070,191
|
|
|
|
1,113,470
|
|
Contingent liability
|
|
|
90,000
|
|
|
|
90,000
|
|
Convertible debt, net of discount
|
|
|
1,253,819
|
|
|
|
562,362
|
|
Derivative liability
|
|
|
1,807,796
|
|
|
|
1,584,102
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
5,395,560
|
|
|
|
4,484,924
|
|
|
|
|
|
|
|
|
|
|
LONG TERM LIABILITIES
|
|
|
|
|
|
|
|
|
Convertible debt, net of discount
|
|
|
6,006
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total long term liabilities
|
|
|
6,006
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
5,401,566
|
|
|
|
4,484,924
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Preferred stock, authorized, 20,000,000 shares, $.001 par value, 0 shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, authorized 900,000,000 shares, $.001 par value, 221,471,504 and 206,406,951
issued and outstanding, respectively outstanding
|
|
|
221,472
|
|
|
|
206,407
|
|
Additional paid in capital
|
|
|
19,243,825
|
|
|
|
17,213,838
|
|
Accumulated deficit
|
|
|
(24,505,015
|
)
|
|
|
(21,401,234
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Deficit
|
|
|
(5,039,718
|
)
|
|
|
(3,980,989
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
361,848
|
|
|
$
|
503,935
|
|
The
accompanying notes are an integral part of these condensed financial statements
eWELLNESS
HEALTHCARE CORPORATION
CONDENSED
STATEMENTS OF OPERATIONS
For
the Three and Six Months ended June 30, 2019 and 2018
(unaudited)
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive compensation
|
|
|
102,000
|
|
|
|
102,000
|
|
|
|
204,000
|
|
|
|
204,000
|
|
General and administrative
|
|
|
324,858
|
|
|
|
290,748
|
|
|
|
575,352
|
|
|
|
487,438
|
|
Professional fees
|
|
|
534,980
|
|
|
|
440,326
|
|
|
|
1,249,141
|
|
|
|
952,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
961,838
|
|
|
|
833,074
|
|
|
|
2,028,493
|
|
|
|
1,644,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(961,838
|
)
|
|
|
(833,074
|
)
|
|
|
(2,028,493
|
)
|
|
|
(1,644,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
6
|
|
|
|
-
|
|
|
|
17
|
|
|
|
-
|
|
Foreign exchange rate
|
|
|
-
|
|
|
|
692
|
|
|
|
-
|
|
|
|
8,091
|
|
Gain (loss) on derivative liability
|
|
|
(61,431
|
)
|
|
|
(116,275
|
)
|
|
|
617,967
|
|
|
|
393,477
|
|
Gain (loss) on extinguishment of debt
|
|
|
-
|
|
|
|
(43,131
|
)
|
|
|
-
|
|
|
|
(43,131
|
)
|
Interest expense
|
|
|
(742,047
|
)
|
|
|
(139,891
|
)
|
|
|
(1,693,272
|
)
|
|
|
(319,800
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss before Income Taxes
|
|
|
(1,765,310
|
)
|
|
|
(1,131,679
|
)
|
|
|
(3,103,781
|
)
|
|
|
(1,605,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
-
|
|
|
|
(1,627
|
)
|
|
|
-
|
|
|
|
(1,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,765,310
|
)
|
|
$
|
(1,133,306
|
)
|
|
$
|
(3,103,781
|
)
|
|
$
|
(1,607,279
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
219,592,981
|
|
|
|
156,216,150
|
|
|
|
215,560,585
|
|
|
|
151,077,846
|
|
Diluted
|
|
|
219,592,981
|
|
|
|
156,216,150
|
|
|
|
215,560,585
|
|
|
|
151,077,846
|
|
The
accompanying notes are an integral part of these condensed financial statements
eWELLNESS
HEALTHCARE CORPORATION
RECONCILIATION
OF STOCKHOLDERS’ DEFICIT
THREE
AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(unaudited)
|
|
Preferred Shares
|
|
|
Common Shares
|
|
|
Shares to be
|
|
|
Additional
Paid in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Issued
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
206,406,951
|
|
|
$
|
206,407
|
|
|
$
|
-
|
|
|
$
|
17,213,838
|
|
|
$
|
(21,401,234
|
)
|
|
$
|
(3,980,989
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,000
|
|
|
|
-
|
|
|
|
54,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
5,097,255
|
|
|
|
5,098
|
|
|
|
-
|
|
|
|
342,389
|
|
|
|
-
|
|
|
|
347,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shars issued for financing costs
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
114,000
|
|
|
|
-
|
|
|
|
115,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for prepaid services
|
|
|
-
|
|
|
|
-
|
|
|
|
3,510,870
|
|
|
|
3,511
|
|
|
|
-
|
|
|
|
402,239
|
|
|
|
-
|
|
|
|
405,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
1,324,560
|
|
|
|
1,325
|
|
|
|
-
|
|
|
|
180,224
|
|
|
|
-
|
|
|
|
181,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
492,340
|
|
|
|
-
|
|
|
|
492,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,338,471
|
)
|
|
|
(1,338,471
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
217,339,636
|
|
|
$
|
217,341
|
|
|
$
|
-
|
|
|
$
|
18,799,030
|
|
|
$
|
(22,739,705
|
)
|
|
$
|
(3,723,334
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,000
|
|
|
|
-
|
|
|
|
54,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to officers, directors and cosultants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
1,181,433
|
|
|
|
1,181
|
|
|
|
-
|
|
|
|
52,574
|
|
|
|
-
|
|
|
|
53,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
800,000
|
|
|
|
800
|
|
|
|
-
|
|
|
|
58,300
|
|
|
|
-
|
|
|
|
59,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shars issued for financing costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for prepaid services
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
500
|
|
|
|
-
|
|
|
|
52,500
|
|
|
|
-
|
|
|
|
53,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
1,650,435
|
|
|
|
1,650
|
|
|
|
-
|
|
|
|
156,434
|
|
|
|
-
|
|
|
|
158,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
70,987
|
|
|
|
-
|
|
|
|
70,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,765,310
|
)
|
|
|
(1,765,310
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
221,471,504
|
|
|
$
|
221,472
|
|
|
$
|
-
|
|
|
$
|
19,243,825
|
|
|
$
|
(24,505,015
|
)
|
|
$
|
(5,039,718
|
)
|
|
|
Preferred Shares
|
|
|
Common Shares
|
|
|
Shares to be
|
|
|
Additional
Paid in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Issued
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
142,352,406
|
|
|
$
|
142,352
|
|
|
$
|
-
|
|
|
$
|
13,178,131
|
|
|
$
|
(16,949,772
|
)
|
|
$
|
(3,629,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,500
|
|
|
|
-
|
|
|
|
55,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
108,594
|
|
|
|
-
|
|
|
|
108,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
3,945,407
|
|
|
|
3,945
|
|
|
|
-
|
|
|
|
209,347
|
|
|
|
-
|
|
|
|
213,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for prepaid services
|
|
|
-
|
|
|
|
-
|
|
|
|
800,000
|
|
|
|
800
|
|
|
|
-
|
|
|
|
103,200
|
|
|
|
-
|
|
|
|
104,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219,525
|
|
|
|
|
|
|
|
219,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
1,350,000
|
|
|
|
1,350
|
|
|
|
-
|
|
|
|
137,250
|
|
|
|
-
|
|
|
|
138,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(473,973
|
)
|
|
|
(473,973
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
148,447,813
|
|
|
$
|
148,447
|
|
|
$
|
-
|
|
|
$
|
14,011,547
|
|
|
$
|
(17,423,745
|
)
|
|
$
|
(3,263,751
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
55,500
|
|
|
|
-
|
|
|
|
55,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
108,594
|
|
|
|
-
|
|
|
|
108,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
13,708,947
|
|
|
|
13,710
|
|
|
|
|
|
|
|
622,996
|
|
|
|
-
|
|
|
|
636,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for prepaid services
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500,000
|
|
|
|
1,500
|
|
|
|
|
|
|
|
103,500
|
|
|
|
-
|
|
|
|
105,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for contributions
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
69,000
|
|
|
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
154,388
|
|
|
|
|
|
|
|
154,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
1,200,000
|
|
|
|
1,200
|
|
|
|
14,800
|
|
|
|
96,100
|
|
|
|
-
|
|
|
|
112,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,133,306
|
)
|
|
|
(1,133,306
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
165,856,760
|
|
|
$
|
165,857
|
|
|
$
|
14,800
|
|
|
$
|
15,221,625
|
|
|
$
|
(18,557,051
|
)
|
|
$
|
(3,154,769
|
)
|
The
accompanying notes are an integral part of these condensed financial statements
eWELLNESS
HEALTHCARE CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
For
the Six Months Ended June 30, 2019 and 2018
(unaudited)
|
|
For Six Months Ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,103,781
|
)
|
|
$
|
(1,607,279
|
)
|
Adjustments to reconcile net loss to net cash used in
operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
2,840
|
|
|
|
2,996
|
|
Contributed services
|
|
|
108,000
|
|
|
|
111,000
|
|
Shares issued for consulting services
|
|
|
339,633
|
|
|
|
250,700
|
|
Shares issued for financing costs
|
|
|
115,000
|
|
|
|
-
|
|
Shares issued for contribution
|
|
|
-
|
|
|
|
70,000
|
|
Options expense
|
|
|
-
|
|
|
|
217,188
|
|
Amortization of debt discount to interest expense
|
|
|
1,401,501
|
|
|
|
239,710
|
|
Amortization of prepaids
|
|
|
335,486
|
|
|
|
126,992
|
|
Foreign currency exchange
|
|
|
-
|
|
|
|
8,091
|
|
Gain on derivative liability
|
|
|
(617,967
|
)
|
|
|
(393,477
|
)
|
Loss on extinguishment of
debt
|
|
|
-
|
|
|
|
43,131
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
(37,628
|
)
|
|
|
90,265
|
|
Accounts payable and accrued expenses
|
|
|
83,297
|
|
|
|
38,572
|
|
Accounts payable - related party
|
|
|
(9,981
|
)
|
|
|
213,241
|
|
Accrued expenses - related party
|
|
|
(13,560
|
)
|
|
|
7,172
|
|
Accrued compensation
|
|
|
(43,279
|
)
|
|
|
49,591
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(1,440,439
|
)
|
|
|
(532,107
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(541
|
)
|
|
|
(4,937
|
)
|
Net cash used in investing activities
|
|
|
(541
|
)
|
|
|
(4,937
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
59,100
|
|
|
|
-
|
|
Issuance of convertible debt
|
|
|
1,968,900
|
|
|
|
594,800
|
|
Payment on debt
|
|
|
(639,550
|
)
|
|
|
(1,005
|
)
|
Debt issuance costs
|
|
|
(248,150
|
)
|
|
|
(54,550
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
1,140,300
|
|
|
|
539,245
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
(300,680
|
)
|
|
|
2,201
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
|
383,335
|
|
|
|
6,882
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
82,655
|
|
|
$
|
9,083
|
|
|
|
|
|
|
|
|
|
|
Supplemental Information:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Taxes
|
|
$
|
1,856
|
|
|
$
|
1,267
|
|
Interest Expense
|
|
$
|
275,814
|
|
|
$
|
-
|
|
Non cash items:
|
|
|
|
|
|
|
|
|
Derivative liability and debt discount issued with new notes
|
|
$
|
1,769,048
|
|
|
$
|
219,526
|
|
Shares issued for debt conversion
|
|
$
|
401,242
|
|
|
$
|
569,998
|
|
Shares issued for prepaids
|
|
$
|
458,750
|
|
|
$
|
209,000
|
|
The
accompanying notes are an integral part of these condensed financial statements
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
Note
1. The Company
The
Company and Nature of Business
eWellness
Healthcare Corporation (the “eWellness”, “Company”, “we”, “us”, “our”)
was incorporated in the State of Nevada on April 7, 2011. The Company has generated no revenues to date.
eWellness
is the first physical therapy telehealth company to offer insurance reimbursable real-time distance monitored treatments. Our
business model is to license our PHZIO (“PHZIO”) platform to any physical therapy (“PT”) clinic in the
U.S. and or have large-scale employers use our PHZIO platform as a fully PT monitored corporate wellness program. The Company’s
PHZIO home physical therapy exercise platform has been designed to disrupt the $30 billion physical therapy and the $8 billion
corporate wellness industries. PHZIO re-defines the way physical therapy can be delivered. PHZIO is the first real-time remote
monitored 1-to-many physical therapy platform for home use. Due to the real-time patient monitoring feature, the PHZIO platform
is insurance reimbursable by payers such as: Anthem Blue Cross and Blue Shield.
Note
2. Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting
principles for interim financial statements. Accordingly, they omit or condense notes and certain other information normally included
in financial statements prepared in accordance with U.S. generally accepted accounting principles. The accounting policies followed
for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Financial Statements
included in our Annual Report on Form 10-K for the year ended December 31, 2018. In the opinion of management, all adjustments
necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments
are of a normal recurring nature. The results of operations for the six months ended June 30, 2019 are not necessarily indicative
of the results that can be expected for the fiscal year ending December 31, 2019. The unaudited condensed financial statements
should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for
the year ended December 31, 2018.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ
materially from these good faith estimates and judgments.
Going
Concern
For
the six months ended June 30, 2019, the Company had no revenues. The Company has an accumulated loss of $24,505,015. In view of
these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s
ability to continue operations is dependent upon the Company’s ability to raise additional capital and to ultimately achieve
sustainable revenues and profitable operations, of which there can be no guarantee. The Company intends to finance its future
development activities and its working capital needs largely from the sale of public equity securities with some additional funding
from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient
to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability
and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company
be unable to continue as a going concern.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
Fair
Value of Financial Instruments
As
of June 30, 2019, the Company had the following assets and liabilities measured at fair value on a recurring basis.
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative Liability
|
|
$
|
1,807,796
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,807,796
|
|
Total Liabilities measured at fair value
|
|
$
|
1,807,796
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,807,796
|
|
As
of December 31, 2018, the Company had the following assets and liabilities measured at fair value on a recurring basis.
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative Liability
|
|
$
|
1,584,102
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,584,102
|
|
Total Liabilities measured at fair value
|
|
$
|
1,584,102
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,584,102
|
|
Note
3. Related Party Transactions
In
November 2016, the Company signed an agreement with a programming company (“PC”) within which one of the Company’s
directors and Chief Technical Officer is the Chief Marketing Officer. The agreement is for additional features to be programmed
for the launch of the PHIZIO platform. The Company is to pay a monthly base fee of $100,000 for the development and compensation
for the Company’s CEO and CTO. Following payment of the initial $100,000, the Company is obligated to only pay $50,000 monthly
until the PC has successfully signed and collected the first monthly service fee for 100 physical therapy clinics to use the PHIZIO
platform. The agreement establishes that the Company is indebted to the PC for $225,000 for past programming services. For this
amount, the Company issued 25,280,899 common shares at a value of $0.0089 per share on April 1, 2017. The PC will also have the
right to appoint 40% of the directors. At the end of June 30, 2019, the Company had a payable of $672,832 due to this company.
Throughout
the six months ended June 30, 2019, the officers and directors of the Company incurred business expenses on behalf of the Company.
The amounts payable to the officers as of June 30, 2019 and December 31, 2018 were $7,516 and $3,076, respectively. There were
no expenses due to the board members, but the Company has accrued directors’ fees of $193,000 and $211,000 at June 30, 2019
and December 31, 2018, respectively. Because the Company is not yet profitable the officers have agreed to defer compensation.
The Company had accrued executive compensation of $1,070,191 and $1,113,470 at June 30, 2019 and December 31, 2018 respectively.
Note
4. Convertible Notes Payable
Six
Months Ended June 30, 2019
On
January 29, 2019 and February 22, 2019, the Company received the third and fourth tranches of funds relating to a note executed
on July 13, 2018. The two tranches were $60,000 and $30,000 respectively. During the six months ending June 30, 2019, the Company
accrued interest of $1,057.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
On January 8, 2019,
the Company executed two 8% Convertible Promissory Notes payable to two institutional investors in
the principal amount of $308,000 each. Each note, which is due on January 8, 2020, has an original issue discount of $28,000
and transaction costs of $10,000. The convertible notes convert into common stock of the Company at a conversion
price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days
prior to the conversion date. During the six months ended June 30, 2019, the Company accrued interest of $11,679 for each note.
On
January 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal
amount of $114,000. The note, which is due on October 30, 2019, has an original issue discount of $11,000 and transaction costs
of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70%
average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the six
months ended June 30, 2019, the Company accrued interest of $6,409.
On
January 29, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal
amount of $58,300. The note, which is due on November 15, 2019, has an original issue discount of $5,300 and transaction costs
of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70%
average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the six
months ended June 30, 2019, the Company accrued interest of $3,469.
On
March 18, 2019, the Company executed a Securities Purchase Agreement for Convertible Debentures to an institutional investor in
the principal amount of $365,000 to be funded in six tranches: $65,000 at signing, $100,000 forty-five (45) days after the signing
date and $200,000 forty-five (45) days after the second closing date. The debentures, which are payable on March 18, 2022, have
a 10% original issue discount and a commitment fee of $5,000 payable with the signing debenture. The debentures convert into common
stock of the Company at a conversion price equal to the lesser of (i) $.12 or (ii) seventy percent (70%) of the lowest traded
price (as reported by Bloomberg LP) of the common stock for the ten (10) trading days prior to the conversion date. The first
tranche of $65,000 was received on March 21, 2019. As of June 30, 2019, the second and third tranche payments have not been
received.
On
March 18, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $47,300. The note, which is payable on January 30, 2020, has an original issue discount of $4,300 and transaction costs of
$3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the
lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion
date. During the six months ended June 30, 2019, the Company accrued interest of $1,617.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
On
March 21, 2019, the Company executed a 3% Convertible Promissory Note payable to an institutional investor in the principal amount
of $360,000. The note, which is payable twelve (12) months after each tranche is funded, has an original issue discount of $60,000.
The original issue discount will be prorated with each tranche paid. The first tranche of $60,000 is due at signing date. The
convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the lesser of (i)
lowest trading price or (ii) the lowest closing bid price on the OTCQB during the twenty-five (25) trading day period ending on
the last complete trading day prior to the conversion date. The first tranche was received on March 29, 2019. During the six months
ended June 30, 2019, the Company accrued interest of $459.
On
March 21, 2019, the Company executed a 12% Convertible Promissory Note to an institutional investor in the principal amount of
$1,500,000 to be funded over two tranches of $750,000 each; the first tranche to be funded on signing. The note, which is due
and payable six (6) months after the funding date of each tranche, has an original issue discount of 10%. The Company issued 3,260,870
shares of restricted common stock on the closing date. These are deemed returnable shares which the investor must return if the
Company repays the note prior to the maturity date. In addition, the Company will issue 1,000,000 shares of restricted common
stock as a commitment fee. The convertible note converts into common stock of the Company at a conversion price that shall be
equal to 75% of the lowest trading price during the thirty (30) day trading period ending on the last complete trading day prior
to the conversion date. The first tranche of $750,000 was received on March 25, 2019. During the six months ended June 30, 2019,
the Company accrued interest of $24,904.
On
April 1, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $58,300. The note, which is payable on February 15, 2020, has an original issue discount of $5,300 and transaction costs of
$3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the
lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion
date. During the six months ended June 30, 2019, the Company accrued interest of $1,744.
On
May 6, 2019, the Company executed a convertible note conversion period extension agreement on a note dated October 28, 2018, within
which the period of conversion by note holder was extended to May 27, 2019. The Company paid $16,031 to note holder for this extension
agreement. On May 28, 2019, the Company executed a second extension agreement on this note within which the period of conversion
by note holder was extended to June 11, 2019. The Company paid $16,105 to note holder for this extension agreement.
On
May 13, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $110,000. The note, which is due on February 13, 2020, has an original issue discount of $10,000 and transactions costs
of $3,000. The convertible note converts into common stock of the Company at conversion price that shall be equal to the 65% of
the lowest closing price for the twenty (20) trading days prior to the conversion date. During the six months ended June 30, 2019,
the Company accrued interest of $1,736.
Year
Ended December 31, 2018
In
January 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $110,000. During the year ended December 31, 2018, the note, which was due on October 12, 2018, and accrued interest totaling
$4,489 was fully converted into 2,412,827 shares of common stock at a price of $.04745 per share.
In
January 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $91,300. During the year ended December 31, 2018, the note, which was due on October 30, 2018, and accrued interest totaling
$4,980 was fully converted into 1,630,799 shares of common stock at prices ranging from $.0583 to $.0603.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
In
February 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $63,800. During year ended December 31, 2018, the note, which was due on November 30, 2018, and accrued interest totaling $3,480
was fully converted into 1,309,799 shares of common stock at prices ranging from $.0487 to $.0532.
In
March 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $77,000. As of June 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from
the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. During the year ended December 31, 2018, the
note, which was due on December 5, 2018, and accrued interest totaling $5,928 was fully converted into 2,402,436 shares of common
stock at a price of $.036.
In
March 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $72,450. During the year ended December 31, 2018, the note, which was due on December 30, 2018, and accrued interest totaling
$3,780 was fully converted into 1,877,796 shares of common stock at prices ranging from $.0393 to $.0437.
In
May 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $125,000. During the year ended December 31, 2018, the note, which is due on May 10, 2019, and accrued interest totaling $415
was fully converted into 1,626,268 shares of common stock at prices ranging from $.0628 to $.1032. At the year ended December
31, 2018, the Company is still liable for $5,288 of accrued interest that has not yet been converted.
In
May 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $51,750. During the year ended December 31, 2018, the note, which is due on March 1, 2019, and accrued interest of $2,700 was
fully converted into 658,722 shares of common stock at prices ranging from $.081 and $.085.
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $56,500. The note, which is due on April 17, 2019, has an original issue discount of $6,500. The convertible notes convert
into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest
per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 100,000 shares
of common stock valued at $8,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized
interest expense of $2,991.
In
July 2018, the Company executed an 3% Convertible Promissory Note payable to an institutional investor in the principal amount
of $180,000 for funding in six tranches. The note, which is due twelve months from the date of each individual tranche, has an
original issue discount of $10,000 per tranche. The convertible notes convert into common stock of the Company at conversion price
that shall be equal to 75% of the market price which is lowest trading price during the twenty (20) trading day period ending
on the last complete trading day prior to the conversion date. The trading price is the lesser of: (i) lowest traded price or
(ii) the lowest closing bid price on the OTCQB. The first tranche of $60,000 was received in the month of July and second tranche
of $30,000 was received in the month of August. During the year ended December 31, 2018, the Company recognized interest expense
of $1,102.
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $28,250. The note, which is due on April 17, 2019, has an original issue discount of $3,250. The convertible notes convert
into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest
per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 50,000 shares
of common stock valued at $4,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized
interest expense of $1,495.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID
from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. The note, which is due on April 5, 2019,
has an original issue discount of $7,000. The convertible notes convert into common stock of the Company at conversion price that
shall be equal to the lesser of: (i) $0.06 or (ii) 75% of the lowest per share trading price for the ten (10) trading days before
the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,870.
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $60,950. The note, which is due on April 30, 2019, has an original issue discount of $7,950. The convertible notes convert
into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion
price which is 75% of the average of the lowest (2) VWAP for the ten (10) trading day period ending on the latest compete trading
day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $3,647.
In
August 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $58,300. The note, which is due on June 15, 2019, has an original issue discount of $5,300. The convertible notes convert
into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion
price which is 75% of the average of the two (2) lowest VWAP for the ten (10) trading day period ending on the latest compete
trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of
$2,338.
In
October 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $47,300. The note, which is due on July 15, 2019, has an original issue discount of $7,300. The convertible notes convert
into common stock of the Company at conversion price that shall be equal to the variable conversion price which is 70% of the
average of the two (2) lowest VWAP for the ten(10) trading day period ending on the latest compete trading day prior to the conversion
date. During the year ended December 31, 2018, the Company recognized interest expense of $1,291.
In
October 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $165,000. The note, which is due on October 12, 2019, has an original issue discount of $15,000. The convertible notes
convert into common stock of the Company at conversion price that shall be equal to 65% of the lowest per share closing price
during the fifteen (15) trading days immediately preceding the date of the notice of conversion. The first tranche of $110,000
was received in the month of October and the second tranche of $55,000 was received in the month of November. During the year
ended December 31, 2018, the Company recognized interest expense of $2,594.
In October 2018, the
Company executed two 8% Convertible Promissory Notes payable to two institutional investors, each
in the principal amount of $308,000. Each note, which is due on October 29, 2019, has an original issue discount
of $33,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70%
of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During
the year ended December 31, 2018, the Company recognized interest expense of $4,118 for each note.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
In
November 2018, a Back-End note executed in May 2018 with an institutional investor was funded. The Back-End note is an 8% Convertible
Promissory Note payable in the principal amount of $125,000. The note, which is due on May 10, 2019, has an original issue
discount of $10,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to
72% of the lowest VWAP for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common
stock can commence following the 180
th
calendar day after the Original Issue Date. During the year ended December 31,
2018, the Company recognized interest expense of $1,123.
Note
5. Equity Transactions
Preferred
Stock
The
total number of shares of preferred stock which the Company shall have authority to issue is 20,000,000 shares with a par value
of $0.001 per share. During the six months ended June 30, 2019, the Company authorized the issuance of 1,000,000 shares of preferred
stock to officers, directors and consultants as deferred compensation. The shares are eligible for conversion after 24 months
into 40 shares of common stock per each preferred share. The value of the issued shares was calculated on the basis of 40 shares
per preferred share at the common share value on the date of issuance. The deferred compensation value of the shares will vest
monthly at 1/24
th
of the calculated value of $3,000,000 and requisite expense or reduction of accrued compensation
will be recorded. At the recording of the requisite expense, the corresponding number of preferred shares will be recorded as
being issued.
Common Stock
Six
Months Ended June 30, 2019
On
February 7, 2019, the Company executed an amendment to a contract executed on April 8, 2018 for twelve months for consulting services.
The Company issued 250,000 shares of common stock at the signing of the contract valued at $30,500 that is being amortized over
the life of the contract.
On
March 22, 2019, the Company issued 3,260,870 shares of common stock to an institutional investor as part of a promissory note.
These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $375,000
which was recorded as prepaid until the six-month maturity has passed. The Company also issued 1,000,000 shares of common stock
to the institutional investor as a commitment fee. The value of these shares is $115,000.
On
April 2, 2019, the Company issued 800,000 shares of common stock pursuant to a capital call notice in relation to an Equity Purchase
Agreement dated June 18, 2018. The capital call totaled $59,100.
On
May 17, 2019, the Company executed a contract for three months for consulting services. The Company issued 500,000 shares of common
stock at the signing of the contract valued at $53,000 that is being amortized over the life of the contract. At the end of the
three months, the Company is to issue another 500,000 shares of common stock.
During
the six months ended June 30, 2019, the Company issued 2,974,995 shares of common stock to consultants for services rendered in
accordance to consulting agreements. The value of these shares is $339,633.
During
the six months ended June 30, 2019, the Company issued 6,278,688 shares of common stock for debt conversion totaling $401,242
which includes $380,250 principal, $18,992 accrued interest and $2,000 due diligence fee.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
Six
Months Ended June 30, 2018
In
January 2018, the Board of Directors approved the extension of an Advisory Agreement dated February 15, 2015 for one year. The
Company issued 800,000 shares of common stock as compensation with a value of $104,000. This value is being amortized over the
life of the contract.
During
the six months ended June 30, 2018, the Company agreed to issue a total of 200,000 shares of common stock for consulting services
at a value of $14,800. At the end of June 30, 2018, these shares had not yet been issued and are recorded in Shares to be Issued.
During the six months ended June 30, 2018, the Company issued a total of 13,654,354 shares of common stock
per debt conversion of convertible notes. The total of the debt conversion was $569,998 which includes $19,776 of accrued interest.
During
the six months ended June 30, 2018, the Company issued 2,550,000 shares of common stock for marketing and consulting services
valued at $235,900.
During
the six months ended June 30, 2018, the Company issued 4,000,000 shares of common stock for settlement of a complaint filed in
the United States Federal District Count (see Footnote 4). The debt settled totaled $236,868 which includes $56,817 of accrued
interest.
In
June 2018, the Company entered into a consulting agreement within which the Company agreed to issue 125,000 shares of common stock
per month beginning in July 2018 and 1,500,000 shares of common stock upon signing of the agreement. The 1,500,000 shares of common
stock were issued with a value of $105,000 which is being amortized over the life of the contract.
In
June 2018, the Company executed an Equity Purchase Agreement with an institutional investor within which the investor agrees to
purchase up to $1,500,000 of the Company’s common stock, par value $0.001. As an inducement to the investor to enter into
the agreement, the Company issued 1,000,000 restricted shares of common stock to the investor valued at $70,000.
In
January 2018, the Board of Directors agreed to form a new eWellness Healthcare Corporation 2018 Equity Incentive Plan (“Plan”).
The Plan shall be for 20,000,000 shares of common stock that will be placed in a 10b5-1 Sales Plan that will be registered under
an S-8 Registration Statement. Under the sales plan, each recipient will open an account with Garden State Securities (“GSS”)
for management of all sales of shares issued under the Plan. Quarterly limitations are placed on the number of shares that can
be sold. The Company initially allocated 17,400,000 shares to officers, directors and consultants. As of June 30, 2018, no shares
were issued.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
Stock
Options
The
following is a summary of the status of all Company’s stock options as of June 30, 2019 and changes during the six months
ended on that date:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Number
of Stock
|
|
|
Average
Exercise
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Price
|
|
|
Life
(yrs)
|
|
|
Value
|
|
Outstanding
at December 31, 2018
|
|
|
2,850,000
|
|
|
$
|
0.80
|
|
|
|
2.2
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Outstanding
at June 30, 2019
|
|
|
2,850,000
|
|
|
|
0.80
|
|
|
|
1.6
|
|
|
$
|
-
|
|
Options
exercisable at June 30, 2019
|
|
|
2,850,000
|
|
|
$
|
0.80
|
|
|
|
1.6
|
|
|
$
|
-
|
|
The
Company recognized stock option expense of $0 and $217,188 for the six months ended June 30, 2019 and 2018, respectively.
Warrants
In
March 2018, the Board of Directors, at the request and with the approval of the investors, determined that it was in the best
interests of the Company and the Investors, based upon market price and relatively limited liquidity of the shares of common stock
that the Company revised the expiration date and exercise price for 417,429 unexercised warrants granted on April 9, 2015. The
original expiration date of April 9, 2018 was extended to April 9, 2019. During the six months ended June 30, 2019, these warrants
expired.
The
following is a summary of the status of the Company’s warrants as of June 30, 2019 and changes during the six months ended
on that date:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Average
Exercise
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
|
Warrants
|
|
|
Price
|
|
|
Life (yrs.)
|
|
|
Value
|
|
Outstanding at December 31, 2018
|
|
|
3,778,179
|
|
|
$
|
0.48
|
|
|
|
1.4
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
477,429
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding at June 30, 2019
|
|
|
3,300,750
|
|
|
$
|
0.52
|
|
|
|
1.2
|
|
|
$
|
53,735
|
|
Warrants exercisable at June 30, 2019
|
|
|
3,300,750
|
|
|
$
|
0.52
|
|
|
|
1.2
|
|
|
$
|
53,725
|
|
Note
6. Commitments, Contingencies
The
Company may be subject to lawsuits, administrative proceedings, regulatory reviews or investigations associated with its business
and other matters arising in the normal conduct of its business. The following is a description of an uncertainty that is considered
other than ordinary, routine and incidental to the business.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
The
closing of the Initial Exchange Agreement with Private Co. was conditioned upon certain, limited customary representations and
warranties, as well as, among other things, our compliance with Rule 419 (“Rule 419”) of Regulation C under the Securities
Act of 1933, as amended (the “Securities Act”) and the consent of our shareholders as required under Rule 419. Accordingly,
we conducted a “Blank Check” offering subject to Rule 419 (the “Rule 419 Offering”) and filed a Registration
Statement on Form S-1 to register the shares of such offering; the Registration Statement was declared effective on September
14, 2012. We used 10% of the subscription proceeds as permitted under Rule 419 and the amount remaining in the escrow trust as
of the date of the closing of the Share Exchange was $90,000 (the “Trust Account Balance”).
Rule
419 required that the Share Exchange occur on or before March 18, 2014, but due to normal negotiations regarding the transactions
and the parties’ efforts to satisfy all the closing conditions, the Share Exchange did not close on such date. Accordingly,
after numerous discussions with management of both parties, they entered into an Amended and Restated Share Exchange Agreement
(the “Share Exchange Agreement”) to reflect a revised business combination structure, pursuant to which we would:
(i) file a registration statement on Form 8-A (“Form 8A”) to register our common stock pursuant to Section 12(g) of
the Exchange Act, which we did on May 1, 2014 and (ii) seek to convert the participants of the Rule 419 Offering into participants
of a similarly termed private offering (the “Converted Offering”), to be conducted pursuant to Regulation D, as promulgated
under the Securities Act.
Fifty-two
persons participated in the Rule 419 Offering and each of them gave the Company his/her/its consent to use his/her/its escrowed
funds to purchase shares of the Company’s restricted common stock in the Converted Offering (the “Consent”)
rather than have their funds returned. To avoid further administrative work for the investors, we believe that we took reasonable
steps to inform investors of the situation and provided them with an appropriate opportunity to maintain their investment in the
Company, if they so choose, or have their funds physically returned. Management believed the steps it took constituted a constructive
return of the funds and therefore met the requirements of Rule 419.
However,
pursuant to Rule 419(e)(2)(iv), “funds held in the escrow or trust account shall be returned by first class mail or equally
prompt means to the purchaser within five business days [if the related acquisition transaction does not occur by a date that
is 18 months after the effective date of the related registration statement].” As set forth above, rather than physically
return the funds, we sought consent from the investors of the Rule 419 Offering to direct their escrowed funds to the Company
to instead purchase shares in the Converted Offering. The consent document (which was essentially a form of rescission) was given
to the investors along with a private placement memorandum describing the Converted Offering and stated that any investor who
elected not to participate in the Converted Offering would get 90% of their funds physically returned. Pursuant to Rule 419(b)(2)(vi),
a blank check company is entitled to use 10% of the proceed/escrowed funds; therefore, if a return of funds is required, only
90% of the proceed/escrowed funds need be returned. The Company received $100,000 proceeds and used $10,000 as per Rule 419(b)(2)(vi);
therefore, only $90,000 was subject to possible return.
As
disclosed therein, we filed the amendments to the initial Form 8-K in response to comments from the SEC regarding the Form 8-K
and many of those comments pertain to an alleged violation of Rule 419. The Company continued to provide the SEC with information
and analysis as to why it believes it did not violate Rule 419 but was unable to satisfy the SEC’s concerns. Comments and
communications indicate that Rule 419 requires a physical return of funds if a 419 offering cannot be completed because a business
combination was not consummated within the required time frame; constructive return is not permitted.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
Because
of these communications and past comments, we are disclosing that we did not comply with the requirements of Rule 419, which required
us to physically return the funds previously submitted to escrow pursuant to the Rule 419 Offering. Because of our failure to
comply with Rule 419, the SEC may bring an enforcement action or commence litigation against us for failure to strictly comply
with Rule 419. If any claims or actions were to be brought against us relating to our lack of compliance with Rule 419, we could
be subject to penalties (including criminal penalties), required to pay fines, make damages payments or settlement payments. In
addition, any claims or actions could force us to expend significant financial resources to defend ourselves, could divert the
attention of our management from our core business and could harm our reputation.
Ultimately,
the SEC determined to terminate its review of the Initial Form 8-K and related amendments, rather than provide us with additional
opportunities to address their concerns and therefore, we did not clear their comments. It is not possible at this time to predict
whether or when the SEC may initiate any proceedings, when this issue may be resolved or what, if any, penalties or other remedies
may be imposed, and whether any such penalties or remedies would have a material adverse effect on our consolidated financial
position, results of operations, or cash flows. Litigation and enforcement actions are inherently unpredictable, the outcome of
any potential lawsuit or action is subject to significant uncertainties and, therefore, determining currently the likelihood of
a loss, any SEC enforcement action and/or the measurement of the amount of any loss is complex. Consequently, we are unable to
estimate the range of reasonably possible loss. Our assessment is based on an estimate and assumption that has been deemed reasonable
by management, but the assessment process relies heavily on an estimate and assumption that may prove to be incomplete or inaccurate,
and unanticipated events and circumstances may occur that might cause us to change that estimate and assumption. Considering the
uncertainty of this issue and while Management evaluates the best and most appropriate way to resolve same, management determined
to create a reserve on the Company’s Balance Sheet for the $90,000 that was subject to the Consent.
From
time to time the Company may become a party to litigation matters involving claims against the Company. Except as may be outlined
above, the Company believes that there are no current matters that would have a material effect on the Company’s financial
position or results of operations.
Note
7. Derivative Valuation
The
Company evaluated the convertible debentures and associated warrants in accordance with ASC Topic 815, “Derivatives and
Hedging,” and determined that the conversion feature of the convertible promissory notes was not afforded the exemption
for conventional convertible instruments due to their variable conversion rates. The notes have no explicit limit on the number
of shares issuable, so they did not meet the conditions set forth in current accounting standards for equity classification. Therefore,
these have been characterized as derivative instruments. We elected to recognize the notes under ASU paragraph 815-15-25-4, whereby
there would be a separation into a host contract and derivative instrument. We elected to initially and subsequently measure the
notes and warrants in their entirety at fair value, with changes in fair value recognized in earnings.
The
debt discount is amortized over the life of the note and recognized as interest expense. For the six months ended June 30, 2019
and 2018, the Company amortized the debt discount of $1,401,501 and $239,710, respectively.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
During
the six months ended June 30, 2019, the Company had the following activity in the derivative liability account:
|
|
Notes
|
|
|
Warrants
|
|
|
Total
|
|
Derivative liability at December 31, 2018
|
|
$
|
1,402,721
|
|
|
$
|
181,381
|
|
|
$
|
1,584,102
|
|
Addition of new conversion option derivatives
|
|
|
1,769,048
|
|
|
|
-
|
|
|
|
1,769,048
|
|
Conversion of note derivatives
|
|
|
(612,346
|
)
|
|
|
-
|
|
|
|
(612,346
|
)
|
Change in fair value
|
|
|
(826,107
|
)
|
|
|
(106,901
|
)
|
|
|
(933,008
|
)
|
Derivative liability at June 30, 2019
|
|
$
|
1,733,316
|
|
|
$
|
74,480
|
|
|
$
|
1,807,796
|
|
For
purposes of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model.
The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
Stock
price at valuation date
|
|
$
|
.08-.10
|
|
Exercise
price of warrants
|
|
$
|
.25
|
|
Conversion
rate of convertible debt
|
|
$
|
.445
|
|
Risk
free interest rate
|
|
|
1.71%-2.42
|
%
|
Stock
volatility factor
|
|
|
102.5%-183.4
|
%
|
Years
to Maturity
|
|
|
.20
– 2.72
|
|
Expected
dividend yield
|
|
|
None
|
|
Note
8. Subsequent Events
On
July 5, 2019, the Company signed an amendment to a convertible note issued on March 21, 2019 revising the conversion price from
75% to 65% of the lowest trading price during the thirty (30) trading days prior to the conversion date.
On
July 8, 2019, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of authorizing the increase
in the number of authorized shares of Common Stock from four hundred million (400,000,000) shares of Common Stock to nine hundred
million (900,000,000) shares of Common Stock (the “Authorized Common Stock Share Increase”). On July 9, 2019, the
Company filed Articles of Amendment to the Company’s Articles of Incorporation to implement the Authorized Common Stock
Share Increase with the State of Nevada.
On
July 8, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within
which the period of conversion by note holder was extended to August 9, 2019. The Company paid $21,560 to note holder for this
extension agreement.
On
July 8, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $114,000. The note, which is due on October 30, 2019, has an original issue discount of $11,000 and transaction costs of $3,000.
The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% average of
the two lowest per share trading prices for the ten (10) trading days prior to the conversion date.
On
July 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $113,000. The note, which is due on July 9, 2020, has an original issue discount of $10,000 and transaction costs of $3,000.
The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of
the lowest per share trading prices for the twenty (20) trading days prior to the conversion date.
On
July 9, 2019, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $235,000. The note, which is due on July 11, 2020, has an original issue discount of $25,200 and transaction costs of $10,000.
The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of
the lowest per share trading prices for the twenty (20) trading days prior to the conversion date.
eWellness
Healthcare Corporation
Notes
to Condensed Financial Statements
June
30, 2019
(unaudited)
On
July 10, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within
which the period of conversion by note holder was extended to August 10, 2019. The Company paid $22,410 to note holder for this
extension agreement.
On
July 11, 2019, the Company received the second tranche of $350,000 pursuant to the note dated March 21, 2019. This tranche had
a $35,000 debt discount and $5,000 transaction costs. The interest rate on this tranche is 12%, the same as on the original note.
The Company issued 2,692,307 shares of restricted common stock on the closing date. These are deemed returnable shares which the
investor must return if the Company repays the note prior to the maturity date of January 11, 2020.
On
July 11, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $250,000. The note, which is due on April 19, 2020, has an original issue discount of $37,500 and transaction costs of $5,000.
The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of
the lowest per share trading prices for the twenty-five (25) trading days prior to the conversion date.
On
July 12, 2019, the Company prepaid three convertible promissory notes, one dated January 1 and two dated January 29, 2019 totaling
$335,809. This included $232,300 principal, $10,131 accrued interest and $93,378 prepayment penalties.
On
July 30, 2019, the Company executed two 12% Convertible Promissory Notes payable to two institutional investors in the principal
amount of $38,500 each. Each note, which is due on April 30, 2020, has an original issue discount of $3,500 and transaction costs
of $1,500. The convertible notes convert into common stock of the Company at a conversion price that shall be equal to the 65%
average of the lowest per share trading prices for the twenty (20) trading days prior to the conversion date.
From July 1 until
the filing of this report, the Company issued 599,998 shares of common stock per consulting agreements valued at $42,122.
From July 1 until
the filing of this report, the Company issued 3,478,099 shares of common stock for convertible debt conversion totaling
$148,636 which includes $141,000 principal and $7,636 accrued interest.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING
STATEMENTS
This
Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in Item 2 of Part I of this report include forward-looking statements. These forward-looking statements are
based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause
actual results to differ materially from expectations. In some cases, you can identify forward-looking statements by terminology
such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue”
or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully,
because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking”
information. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements,
including but not limited to: variability of our future revenues and financial performance; risks associated with product development
and technological changes; the acceptance of our products in the marketplace by potential future customers; general economic conditions.
You should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business,
results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities
could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of
the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.
The
following discussion and analysis of financial condition and results of operations relates to the operations and financial condition
reported in the financial statements of eWellness Healthcare Corporation for the six months ended June 30, 2019 and 2018 and should
be read in conjunction with such financial statements and related notes included in this report and the Company’s Annual
Report on Form 10-K for the year ended December 31, 2018.
THE
COMPANY
Overview
eWellness
Healthcare (“Company”) s the first physical therapy telehealth company to offer insurance reimbursable real-time distance
monitored treatments through its PHZIO telehealth platform. eWellness plans to generate revenue from Third Party Healthcare Administrators
(“TPA”) employers, PTs and corporate wellness through healthcare provider agreements. Our PHZIO platform is anticipated
to transform the access, cost and quality dynamics of physical therapy (“PT”) delivery for the market participants.
eWellness further believes any patient, employer, health plan or healthcare professional interested in a better approach to PT
is a potential PHZIO platform user. We have signed 5 partnership and healthcare provider agreements to date, that are anticipated
to begin generating revenue during the third quarter of 2019.
The
Company has developed a new operating structure so that we can operate in 48 states. The below noted chart illustrates the Company’s
new operational structure that provides for three individual professional operating companies in California, New Jersey and most
importantly Florida. With our Florida Professional Association (PA), we are able to provision our telehealth services in 46 states,
(excluding: California, Delaware, Kansas and New Jersey). Thus, we formed two additional professional companies in California
and New Jersey. Eventually, we will form entities in Delaware and Kansas when the need arises. Each professional company has executed
a revocable operating agreement with the Company. These agreements are required by each individual state and states that Darwin
Fogt, MPT, the Company’s CEO, is the sole shareholder, officer and director of each of the operating companies. All accounting
services are supplied to these operating companies by the Company’s accounting team.
Our
PHZIO platform has been developed to significantly support us in becoming the leader in the new industry of digital telehealth
physical therapy (“dPT”). Our focus is to highlight that many of all future PT treatments can be accomplished with
a smart phone. This new digital adoption will lower patient treatment costs, expand patient treatment access and improve patient
compliance. Our PHZIO platform allows patients and PT’s to cut the cord from the old-school, wait in line, brick and mortar
clinical experience to an immediate response digital, in-home PT experience. 80% of all PT assessments and treatments can now
be done on a patient’s smart phone in the privacy of their own home. Digital PT is clearly the next upgrade the industry
needs to make.
Our
PHZIO platform completely disrupts the current in-clinic business model of the $30 billion PT industry and the $8 billion corporate
wellness industries. Innovators in other industries have solved access, cost and quality inefficiencies through the implementation
of technology platforms and business models that deliver products and services on-demand and create new economies by connecting
and empowering both consumers and businesses. We have taken the same approach to solving the pervasive access, cost and quality
challenges facing the current access to PT clinics. eWellness’ underlying technology platform is complex, deeply integrated
and purpose-built over the past four years for the evolving PT marketplace. eWellness’ PHZIO platform is highly scalable
and can support substantial growth of third-party licensees. eWellness’ PHZIO platform provides for broad interconnectivity
between PT practitioners and their patients, uniquely positioning the Company as a focal point in the rapidly evolving PT industry
to introduce innovative, technology- based solutions, such as remote patient monitoring, post-discharge treatment plan adherence
and in-home care.
PHZIO
re-defines the way PT can be delivered. PHZIO is the first real-time remote monitored one-to-many PT platform for home use. Due
to the real-time patient monitoring feature, the PHZIO platform is insurance reimbursable by payers such as Anthem Blue Cross
and Blue Shield.
Los
Angeles Sales & Marketing Office:
The Company opened its first sales and marketing office in Playa Vista, California in
May 2017 to accelerate the adoption of PHZIO and the other new digital telehealth tools to patients, physicians and PT’s
in California. The company has also hired sales and marketing professional consultants to manage the new silos of business development.
eWellness
will initially rollout these new telehealth solutions within California, New Jersey, Georgia, Tennessee, Arizona and Canada, with
plans to expand nationally over the next twelve months. With these new telehealth tools, eWellness will engage with the “At-Home”
Physical Therapy treatment market. This market involves physical therapy practitioners treating patients in their home instead
of a clinic. The “At-Home” market model when combined with PHZIO offers patients and practitioners a means to receive
and deliver PT services without having to leave work during normal business hours. Patients can receive physical therapy services
at almost any hour of the day. A model that is not currently employed within traditional clinical settings.
The
Company has created a strong path to initial revenue generation and substantial sales growth through executing on our Workers
Compensation Sales Funnel. Our Workman’s Compensation Sales Funnel currently includes 101 companies. Starting in the Summer
of 2018 we pivoted our sales process to focus on the workman’s compensation PT industry. We are pitching to 12 separate
industry silos of potential business within the 101 workman’s compensation sales funnel prospects. Multiple agreements are
anticipated to be executed from our workman’s compensation sales funnel through 2019 and beyond.
Plan
of Operations
Based
upon a business marketing pivot during the summer of 2018, our current business model is to provision our PHZIO platform to any
customer of workers compensation third party administrators (TPA’s), physical therapy clinic in the U.S. and or have large-scale
employers use our digital PHZIO platform as a workers’ compensation physical therapy program. We have created a strong path
to lowering the spending on workman’s compensation claims through the utilization of our PHZIO digital PT treatment platform.
PreHabPT.
Any individuals covered by EPS and/or LW, who are seeking non-emergency orthopedic surgery shall first receive a concierge
online consultation, in-home or in-office PT therapy evaluation and will be prescribed a four to eight-week prehabpt.com exercise
program prior to any surgery. Another in-home or in-office PT evaluation will be made following surgery and a treatment plan will
be initiated. PreHabPT is up to an eight-week physician to patient pre-surgical (Prehab) digital therapeutic exercise treatment
system for patients that anticipate having total join replacement (knee, hip and or shoulder) or back surgeries.
PurePT.
PurePT is a patient and independent PT digital treatment platform for connecting new patients to PT’s that are seeking
to be treated with our PHZIO treatment system. Patient program assessments can be made in the privacy of a patient’s home
or office. PurePT connects new patients to PT’s, particularly in states that have direct access rules where patient’s
insurance will reimburse for treatment without requiring a physician’s prescription. PurePT puts the patient first.
PHZIO
Comprehensive Wellness Program
Any EPS and/or LW insureds may, after an in-home or in-office PT assessment, enroll in a 6-month
comprehensive wellness program. The top line wellness goals of our PHZIO wellness exercise program is to graduate at least 60%
of inducted patients through our 6-month program. Patients should expect to experience an average of a 20% reduction in BMI, a
two-inch reduction in waist size, weight loss of at least 10 pounds, significant overall improvement in balance, coordination,
flexibility, strength and lumbopelvic stability. Patients also should score better on Functional Outcomes Scales (Oswestry and
LEFS) which indicates improved functional activity levels due to reduced low back, knee and hip pain.
The
Company’s PHZIO home PT exercise platform has been designed to disrupt the $30 billion PT and the $8 billion corporate wellness
industries. PHZIO re-defines the way PT can be delivered. PHZIO is the first real-time remote monitored one-to-many PT platform
for home use. Due to the real-time patient monitoring feature, the PHZIO platform is insurance reimbursable by payers such as
Anthem Blue Cross and Blue Shield.
The
PHZIO Solution: A New PT Delivery System
|
●
|
SaaS
technology platform solution for providers bundling rehabilitation services and employer wellness programs: PTs can evaluate
and screen patients and calculate joint angles using drawing tool
|
|
|
|
|
●
|
First
real-time remote monitored one-to-many PT treatment platform for home use;
|
|
|
|
|
●
|
Ability
for PTs to observe multiple patients simultaneously in real-time;
|
|
|
|
|
●
|
Solves
what has been a structural problem and limitation in post-acute care practice growth.
|
|
|
|
|
●
|
PT
practices can experience 20% higher adherence and compliance rates versus industry standards; and
|
|
|
|
|
●
|
Tracking
to 30% increase in net income for a PT practice.
|
Our
initial PHZIO platform enables employees or patients to engage with live or on-demand video based physical therapy telemedicine
treatments from their home or office. Following a physician’s exam and prescription for physical therapy to treat back,
knee or hip pain, a patient can be examined by a physical therapist and if found appropriate inducted in the Company’s PHZIO
program that includes a progressive 6-month telemedicine exercise program (including monthly in-clinic checkups). All PHZIO treatments
are monitored by a licensed therapist that sees everything the patient is doing while providing their professional guidance and
feedback in real-time. This ensures treatment compliance by the patient, maintains the safety and integrity of the prescribed
exercises, tracks patient metrics and captures pre-and post-treatment evaluation data. PHZIO unlocks a host of potential for revolutionizing
patient treatment models and directly links back to the established brick and mortar physical therapy clinic. This unique model
enables any physical therapy practice to be able to execute more patient care while utilizing their same resources and creates
more value than was ever before possible.
Our
PHZIO platform, which includes design, testing, exercise intervention, follow-up, and exercise demonstration, has been developed
by accomplished Los Angeles based physical therapist Darwin Fogt. Mr. Fogt has extensive experience and education working with
diverse populations from professional athletes to morbidly obese. He understands the most beneficial exercise prescription to
achieve optimal results and has had enormous success in motivating all patient types to stay consistent in working toward their
goals. Additionally, his methods have proven effective and safe as he demonstrates exercises with attention to proper form to
avoid injury. Mr. Fogt has established himself as a national leader in his field and has successfully implemented progressive
solutions to delivering physical therapy: he has consulted with and been published by numerous national publications including
Runner’s World, Men’s Health, Men’s Journal, and various Physical Therapy specific magazines; his 13 plus years
of experience include rehabilitating the general population, as well as professional athletes, Olympic gold medalists, and celebrities.
He has bridged the gap between physical therapy and fitness by opening Evolution Fitness, which uses licensed physical therapists
to teach high intensity circuit training fitness classes. He also founded one of the first exclusive prenatal and postnatal physical
therapy clinic in the country. Mr. Fogt is a leader in advancing the profession to incorporate research-based methods and focus
on, not only rehabilitation but also wellness, functional fitness, performance, and prevention. He can recognize that the national
healthcare structure (federal and private insurance) is moving toward a model of prevention and that the physical therapy profession
will take a larger role in providing wellness services to patients.
Innovators
in other industries have solved access, cost and quality inefficiencies through the implementation of technology platforms and
business models that deliver products and services on-demand and create new economies by connecting and empowering both consumers
and businesses. We have taken the same approach to solving the pervasive access, cost and quality challenges facing the current
access to physical therapy clinics.
Our
underlying technology platform is complex, deeply integrated and purpose-built over the six years for the evolving physical therapy
marketplace. Our PHZIO platform is highly scalable and can support substantial growth of third-party licensees. Our PHZIO platform
provides for broad interconnectivity between PT practitioners and their patients and, we believe, uniquely positions us as a focal
point in the rapidly evolving PT industry to introduce innovative, technology-based solutions, such as remote patient monitoring,
post-discharge treatment plan adherence and in-home care.
We
plan to generate revenue from third-party PT and corporate wellness licensees on a contractually recurring per PHZIO session fee
basis. Our PHZIO platform is anticipated to transform the access, cost and quality dynamics of physical therapy delivery for all
the market participants. We further believe any patient, employer, health plan or healthcare professional interested in a better
approach to physical therapy is a potential PHZIO platform user.
Before
even launching, we have received a high indication of interest in our service. We think the demand is warranted but recognize,
that in the preliminary stages of our services, we may experience bottlenecks in our ability to meet the demand for the service.
Under this type of environment, it is critical to maintain awareness of the Company’s operational budget goals and how they
are being met in our attempts to address demand. Regardless of our growth pace, it is critical to shareholder value that we are
mindful of our operational spending.
Our
PHZIO platform enables patients to engage with live or on-demand video-based PT telemedicine treatments from their home or office.
Following a physician’s exam and prescription for PT to treat back, knee or hip pain, a patient can be examined by a PT
and, if found appropriate, inducted into the Company’s PHZIO program that includes a progressive 6-month telemedicine exercise
program (including monthly in-clinic check-ups). All PHZIO treatments are monitored by a licensed therapist that sees everything
the patient is doing while providing professional guidance and feedback in real-time. This ensures treatment compliance by the
patient, maintains the safety and integrity of the prescribed exercises, tracks patient metrics and captures pre-and post-treatment
evaluation data. PHZIO unlocks a host of potential for revolutionizing patient treatment models and directly links back to the
established brick and mortar PT clinic. This unique model enables any PT practice to be able to execute more patient care while
utilizing their same resources and creates more value than was ever before possible.
Our
underlying technology platform is complex, deeply integrated and purpose-built for the evolving PT marketplace. Our PHZIO platform
is highly scalable and can support substantial growth of third-party licensees. Our PHZIO platform provides for broad interconnectivity
between PT practitioners and their patients and, we believe, uniquely positions us as a focal point in the rapidly evolving PT
industry to introduce innovative, technology-based solutions, such as remote patient monitoring, post-discharge treatment plan
adherence and in-home care.
Background
on our PHZIO Technology
The
Company’s Chief Technology Officer (“CTO”), Curtis Hollister, oversees the operational aspects of the PHZIO
platform via a team located in Ottawa, Canada. The below noted chart contains information on our PHZIO System.
IP
and Licensing
We
have licensed our telemedicine platform from Bistromatics Inc., a company owned by our CTO, for perpetuity for any telemedicine
application in any market worldwide. The below noted chart highlights what we have built to date.
Results
of Operations of eWellness for the three and six months ended June 30, 2019 vs. 2018
REVENUES
:
eWellness has reported $0 revenues from operations for the three or six months ended June 30, 2019 and 2018. We anticipate the
beginning of revenue generation by the fourth quarter of 2019.
OPERATING
EXPENSES
: Total operating expenses increased to $2,028,493 for the six months ended June 30, 2019 from $1,644,289 for the
six months June 30, 2018. The increase is a result of an increased number of shares of common stock issued to consultants and
for financing fees offset by a decrease in stock option expenses. Total operating expenses increased to $961,838 for the three
months ended June 30, 2019 from $833,074 for the three months ended June 30, 2018. The increase is a result of an increased number
of shares of common stock issued to consultants and for financing fees offset by a decrease in stock option expenses.
NET
LOSS
: The Company incurred a net loss of $3,103,781 for the six months ended June 30, 2019, compared with a net loss of $1,607,279
for the six months ended June 30, 2018, which reflects an increase of $1,496,502. The increase is from increased operating expenses
(outlined above) of $384,204, increase in interest expense of $1,373,472 offset by an increase in gain on derivative liability
on convertible debt and warrants of $224,490. For the three months ended June 30, 2019, the Company incurred a loss of $1,765,310
compared with the loss of $1,133,306 for the three months ended June 30, 2018. The increase is from increased operating expenses
(outlined above) of $128,764, increase in interest expense of $602,156 offset by a reduction in the loss on derivative liability
on convertible debt and warrants of $54,844.
Liquidity
and Capital Resources
As
of June 30, 2019, we had negative working capital of $5,056,505 compared to negative working capital of $4,006,081 as of December
31, 2018. The negative working capital decrease is because of an increase in prepaid expenses, convertible debt (net of discount)
and derivative liability. Cash used in operations was $1,440,439 and $532,107 for the six months ended June 30, 2019 and
2018, respectively. The increase in cash used in operations is a result of the increased net loss, increase in derivative liability
and changes in operating assets and liabilities. Cash used in investing activities was $541 and $4,937 for the six months ended
June 30, 2019 and 2018, respectively. Cash flows provided by financing activities were $1,140,300 and $539,245 for the six months
ended June 30, 2019 and 2018, respectively. The increase resulted from issuance of convertible debt (net of debt issuance costs)
of $1,720,750 and issuance of shares of common stock for cash totaling $59,100 reduced by $639,550 payment of debt. The cash
balance as of June 30, 2019 was $82,655.
We
are seeking financing in the form of equity capital to provide the necessary working capital. Our ability to meet our obligations
and continue to operate as a going concern is highly dependent on our ability to obtain additional financing. We cannot predict
whether this additional financing will be in the form of equity or debt or be in another form. We may not be able to obtain the
necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, we may be unable to implement
our current plans which circumstances would have a material adverse effect on our business, prospects, financial conditions and
results of operations.
Contingencies
The
Company may be subject to lawsuits, administrative proceedings, regulatory reviews or investigations associated with its business
and other matters arising in the normal conduct of its business. The following is a description of an uncertainty that is considered
other than ordinary, routine and incidental to the business.
The
closing of the Initial Exchange Agreement with Private Co. was conditioned upon certain, limited customary representations and
warranties, as well as, among other things, our compliance with Rule 419 (“Rule 419”) of Regulation C under the Securities
Act of 1933, as amended (the “Securities Act”) and the consent of our shareholders as required under Rule 419. Accordingly,
we conducted a “Blank Check” offering subject to Rule 419 (the “Rule 419 Offering”) and filed a Registration
Statement on Form S-1 to register the shares of such offering; the Registration Statement was declared effective on September
14, 2012. We used 10% of the subscription proceeds as permitted under Rule 419 and the amount remaining in the escrow trust as
of the date of the closing of the Share Exchange was $90,000 (the “Trust Account Balance”).
Rule
419 required that the Share Exchange occur on or before March 18, 2014, but due to normal negotiations regarding the transactions
and the parties’ efforts to satisfy all the closing conditions, the Share Exchange did not close on such date. Accordingly,
after numerous discussions with management of both parties, they entered into an Amended and Restated Share Exchange Agreement
(the “Share Exchange Agreement”) to reflect a revised business combination structure, pursuant to which we would:
(i) file a registration statement on Form 8-A (“Form 8A”) to register our common stock pursuant to Section 12(g) of
the Exchange Act, which we did on May 1, 2014 and (ii) seek to convert the participants of the Rule 419 Offering into participants
of a similarly termed private offering (the “Converted Offering”), to be conducted pursuant to Regulation D, as promulgated
under the Securities Act.
Fifty-two
persons participated in the Rule 419 Offering and each of them gave the Company his/her/its consent to use his/her/its escrowed
funds to purchase shares of the Company’s restricted common stock in the Converted Offering (the “Consent”)
rather than have their funds returned. To avoid further administrative work for the investors, we believe that we took reasonable
steps to inform investors of the situation and provided them with an appropriate opportunity to maintain their investment in the
Company, if they so choose, or have their funds physically returned. Management believed the steps it took constituted a constructive
return of the funds and therefore met the requirements of Rule 419.
However,
pursuant to Rule 419(e)(2)(iv), “funds held in the escrow or trust account shall be returned by first class mail or equally
prompt means to the purchaser within five business days [if the related acquisition transaction does not occur by a date that
is 18 months after the effective date of the related registration statement].” As set forth above, rather than physically
return the funds, we sought consent from the investors of the Rule 419 Offering to direct their escrowed funds to the Company
to instead purchase shares in the Converted Offering. The consent document was given to the investors along with a private placement
memorandum describing the Converted Offering and stated that any investor who elected not to participate in the Converted Offering
would get 90% of their funds physically returned. Pursuant to Rule 419(b)(2)(vi), a blank check company is entitled to use 10%
of the proceed/escrowed funds; therefore, if a return of funds is required, only 90% of the proceed/escrowed funds need be returned.
The Company received $100,000 proceeds and used $10,000 as per Rule 419(b)(2)(vi); therefore, only $90,000 was subject to possible
return.
As
disclosed in the prior amendments to the Initial Form 8-K, we have filed the prior amendments in response to comments from the
SEC regarding the Form 8-K and many of those comments pertain to the Company’s potential violation of Rule 419. Although
the Company has continued to provide the SEC with information and analysis as to why it believes it did not violate Rule 419,
based upon latest communications with the persons reviewing the Form 8-K, they do not agree with the assessments the Company presented
to them. Comments and communications indicate that Rule 419 requires a physical return of funds if a 419 offering cannot be completed
because a business combination was not consummated within the required time frame; constructive return is not permitted.
Because
of these communications and past comments, we are disclosing that we did not comply with the requirements of Rule 419, which required
us to physically return the funds previously submitted to escrow pursuant to the Rule 419 Offering. Because of our failure to
comply with Rule 419, the SEC may bring an enforcement action or commence litigation against us for failure to strictly comply
with Rule 419. If any claims or actions were to be brought against us relating to our lack of compliance with Rule 419, we could
be subject to penalties (including criminal penalties), required to pay fines, make damages payments or settlement payments. In
addition, any claims or actions could force us to expend significant financial resources to defend ourselves, could divert the
attention of our management from our core business and could harm our reputation.
Ultimately,
the SEC determined to terminate its review of the Initial Form 8-K and related amendments, rather than provide us with additional
opportunities to address their concerns and therefore, we did not clear their comments. It is not possible now to predict whether
or when the SEC may initiate any proceedings, when this issue may be resolved or what, if any, penalties or other remedies may
be imposed, and whether any such penalties or remedies would have a material adverse effect on our consolidated financial position,
results of operations, or cash flows. Litigation and enforcement actions are inherently unpredictable, the outcome of any potential
lawsuit or action is subject to significant uncertainties and, therefore, determining now the likelihood of a loss, any SEC enforcement
action and/or the measurement of the amount of any loss is complex. Consequently, we are unable to estimate the range of reasonably
possible loss. Our assessment is based on an estimate and assumption that has been deemed reasonable by management, but the assessment
process relies heavily on an estimate and assumption that may prove to be incomplete or inaccurate, and unanticipated events and
circumstances may occur that might cause us to change that estimate and assumption. Considering the uncertainty of this issue
and while Management evaluates the best and most appropriate way to resolve same, management determined to create a reserve on
the Company’s Balance Sheet for the $90,000 that was subject to the Consent.
Capital
Expenditure Plan
During
the six months ended June 30, 2019, we raised $1,968,900, less $248,150 for debt issuance costs in equity and debt capital and
$59,100 for issuance of shares of common stock for cash. We may require up to an additional $1.6 million in capital during the
next 12 months to fully implement our business plan and fund our operations. Our plan is to utilize the equity capital that we
raise, together with anticipated cash flow from operations, to fund a very significant investment in sales and marketing, concentration
principally on advertising and incentivizing existing customers for the introduction of new customers, among other strategies.
However, there can be no assurance that: (i) we will continue to be successful in raising equity capital in sufficient amounts
and/or at terms and conditions satisfactory to the Company; or (ii) we will generate sufficient revenues from operations, to fulfill
our plan of operations. Our revenues are expected to come from our PHZIO platform services. As a result, we will continue to incur
operating losses unless and until we are able to generate sufficient cash flow to meet our operating expenses and fund our planned
sales and market efforts. There can be no assurance that the market will adopt our portal or that we will generate sufficient
cash flow to fund our enhanced sales and marketing plan. In the event that we are not able to successfully: (i) raise equity capital
and/or debt financing; or (ii) market and significantly increase the number of portal users and revenues from such users, our
financial condition and results of operations will be materially and adversely affected and we will either have to delay or curtail
our plan for funding our sales and marketing efforts.”
Off-Balance
Sheet Arrangements
As
of June 30, 2019 and December 31, 2018, respectively, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)
of Regulation S-K promulgated under the Securities Act of 1934.
Contractual
Obligations and Commitments
Six
Months Ended June 30, 2019
On
January 29, 2019 and February 22, 2019, the Company received the third and fourth tranches of funds relating to a note executed
on July 13, 2018. The two tranches were $60,000 and $30,000 respectively. During the six months ending June 30, 2019, the Company
accrued interest of $1,057.
On January 8, 2019,
the Company executed two 8% Convertible Promissory Notes payable to two institutional investors in
the principal amount of $308,000 each. Each note, which is due on January 8, 2020, has an original issue discount
of $28,000 and transaction costs of $10,000. The convertible notes convert into common stock of the Company at conversion
price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days
prior to the conversion date. During the six months ended June 30, 2019, the Company accrued interest of $11,679 for each note.
On
January 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal
amount of $114,000. The note, which is due on October 30, 2019, has an original issue discount of $11,000 and transaction costs
of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70%
average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the six
months ended June 30, 2019, the Company accrued interest of $6,409.
On
January 29, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal
amount of $58,300. The note, which is due on November 15, 2019, has an original issue discount of $5,300 and transaction costs
of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70%
average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the six
months ended June 30, 2019, the Company accrued interest of $3,469.
On
March 18, 2019, the Company executed a Securities Purchase Agreement for Convertible Debentures to an institutional investor in
the principal amount of $365,000 to be funded in six tranches: $65,000 at signing, $100,000 forty-five (45) days after the signing
date and $200,000 forty-five (45) days after the second closing date. The debentures, which are payable on March 18, 2022, have
a 10% original issue discount and a commitment fee of $5,000 payable with the signing debenture. The debentures convert into common
stock of the Company at a conversion price equal to the lesser of (i) $.12 or (ii) seventy percent (70%) of the lowest traded
price (as reported by Bloomberg LP) of the common stock for the ten (10) trading days prior to the conversion date. The first
tranche was received on March 21, 2019. As of June 30, 2019, the second and third tranche payments have not been received.
On
March 18, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $47,300. The note, which is payable on January 30, 2020, has an original issue discount of $4,300 and transaction costs of
$3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the
lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion
date. During the six months ended June 30, 2019, the Company accrued interest of $1,617.
On
March 21, 2019, the Company executed a 3% Convertible Promissory Note payable to an institutional investor in the principal amount
of $360,000. The note, which is payable twelve (12) months after each tranche is funded, has an original issue discount of $60,000.
The original issue discount will be prorated with each tranche paid. The first tranche of $60,000 is due at signing date. The
convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the lesser of (i)
lowest trading price or (ii) the lowest closing bid price on the OTCQB during the twenty-five (25) trading day period ending on
the last complete trading day prior to the conversion date. The first tranche was received on March 29, 2019. During the six months
ended June 30, 2019, the Company accrued interest of $459.
On
March 21, 2019, the Company executed a 12% Convertible Promissory Note to an institutional investor in the principal amount of
$1,500,000 to be funded over two tranches of $750,000 each; the first tranche to be funded on signing. The note, which is due
and payable six (6) months after the funding date of each tranche, has an original issue discount of 10%. The Company issued 3,260,870
shares of restricted common stock on the closing date. These are deemed returnable shares which the investor must return if the
Company repays the note prior to the maturity date. In addition, the Company will issue 1,000,000 shares of restricted common
stock as a commitment fee. The convertible note converts into common stock of the Company at a conversion price that shall be
equal to 75% of the lowest trading price during the thirty (30) day trading period ending on the last complete trading day prior
to the conversion date. The first tranche of $750,000 was received on March 25, 2019. During the six months ended June 30, 2019,
the Company accrued interest of $24,904.
On
April 1, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $58,300. The note, which is payable on February 15, 2020, has an original issue discount of $5,300 and transaction costs of
$3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the
lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion
date. During the six months ended June 30, 2019, the Company accrued interest of $1,744.
On
May 6, 2019, the Company executed a convertible note conversion period extension agreement on a note dated October 28, 2018, within
which the period of conversion by note holder was extended to May 27, 2019. The Company paid $16,031 to note holder for this extension
agreement. On May 28, 2019, the Company executed a second extension agreement on this note within which the period of conversion
by note holder was extended to June 11, 2019. The Company paid $16,105 to note holder for this extension agreement.
On
May 13, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $110,000. The note, which is due on February 13, 2020, has an original issue discount of $10,000 and transactions costs
of $3,000. The convertible note converts into common stock of the Company at conversion price that shall be equal to the 65% of
the lowest closing price for the twenty (20) trading days prior to the conversion date. During the six months ended June 30, 2019,
the Company accrued interest of $1,736.
Year
Ended December 31, 2018
In
January 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $110,000. During the year ended December 31, 2018, the note, which was due on October 12, 2018, and accrued interest totaling
$4,489 was fully converted into 2,412,827 shares of common stock at a price of $.04745 per share.
In
January 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $91,300. During the year ended December 31, 2018, the note, which was due on October 30, 2018, and accrued interest totaling
$4,980 was fully converted into 1,630,799 shares of common stock at prices ranging from $.0583 to $.0603.
In
February 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $63,800. During year ended December 31, 2018, the note, which was due on November 30, 2018, and accrued interest totaling $3,480
was fully converted into 1,309,799 shares of common stock at prices ranging from $.0487 to $.0532.
In
March 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $77,000. As of June 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from
the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. During the year ended December 31, 2018, the
note, which was due on December 5, 2018, and accrued interest totaling $5,928 was fully converted into 2,402,436 shares of common
stock at a price of $.036.
In
March 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $72,450. During the year ended December 31, 2018, the note, which was due on December 30, 2018, and accrued interest totaling
$3,780 was fully converted into 1,877,796 shares of common stock at prices ranging from $.0393 to $.0437.
In
May 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $125,000. During the year ended December 31, 2018, the note, which is due on May 10, 2019, and accrued interest totaling $415
was fully converted into 1,626,268 shares of common stock at prices ranging from $.0628 to $.1032. At the year ended December
31, 2018, the Company is still liable for $5,288 of accrued interest that has not yet been converted.
In
May 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $51,750. During the year ended December 31, 2018, the note, which is due on March 1, 2019, and accrued interest of $2,700 was
fully converted into 658,722 shares of common stock at prices ranging from $.081 and $.085.
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $56,500. The note, which is due on April 17, 2019 has an original issue discount of $6,500. The convertible notes convert into
common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per
share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 100,000 shares of
common stock valued at $8,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized
interest expense of $2,991.
In
July 2018, the Company executed an 3% Convertible Promissory Note payable to an institutional investor in the principal amount
of $180,000 for funding in six tranches. The note, which is due twelve months from the date of each individual tranche, has an
original issue discount of $10,000 per tranche. The convertible notes convert into common stock of the Company at conversion price
that shall be equal to 75% of the market price which is lowest trading price during the twenty (20) trading day period ending
on the last complete trading day prior to the conversion date. The trading price is the lesser of: (i) lowest traded price or
(ii) the lowest closing bid price on the OTCQB. The first tranche of $60,000 was received in the month of July and second tranche
of $30,000 was received in the month of August. During the year ended December 31, 2018, the Company recognized interest expense
of $1,102.
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $28,250. The note, which is due on April 17, 2019 has an original issue discount of $3,250. The convertible notes convert into
common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per
share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 50,000 shares of
common stock valued at $4,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized
interest expense of $1,495.
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID
from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. The note, which is due on April 5, 2019,
has an original issue discount of $7,000. The convertible notes convert into common stock of the Company at conversion price that
shall be equal to the lesser of: (i) $0.06 or (ii) 75% of the lowest per share trading price for the ten (10) trading days before
the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,870.
In
July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $60,950. The note, which is due on April 30, 2019 has an original issue discount of $7,950. The convertible notes convert into
common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price
which is 75% of the average of the lowest (2) VWAP for the ten (10) trading day period ending on the latest compete trading day
prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $3,647.
In
August 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $58,300. The note, which is due on June 15, 2019 has an original issue discount of $5,300. The convertible notes convert into
common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price
which is 75% of the average of the two (2) lowest VWAP for the ten (10) trading day period ending on the latest compete trading
day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $2,338.
In
October 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount
of $47,300. The note, which is due on July 15, 2019 has an original issue discount of $7,300. The convertible notes convert into
common stock of the Company at conversion price that shall be equal to the variable conversion price which is 70% of the average
of the two (2) lowest VWAP for the ten(10) trading day period ending on the latest compete trading day prior to the conversion
date. During the year ended December 31, 2018, the Company recognized interest expense of $1,291.
In
October 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount
of $165,000. The note, which is due on October 12, 2019 has an original issue discount of $15,000. The convertible notes convert
into common stock of the Company at conversion price that shall be equal to 65% of the lowest per share closing price during the
fifteen (15) trading days immediately preceding the date of the notice of conversion. The first tranche of $110,000 was received
in the month of October and the second tranche of $55,000 was received in the month of November. During the year ended December
31, 2018, the Company recognized interest expense of $2,594.
In October 2018,
the Company executed two 8% Convertible Promissory Notes payable to two institutional investors each in the principal amount of
$308,000. Each note, which is due on October 29, 2019, has an original issue discount of $33,000. The convertible notes convert
into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two (2) lowest per
share trading prices for the twenty (20) trading days prior to the conversion date. During the year ended December 31, 2018, the
Company recognized interest expense of $4,118 for each note.
In
November 2018, a Back-End note executed in May 2018 with an institutional investor was funded. The Back-End note is an 8% Convertible
Promissory Note payable in the principal amount of $125,000. The note, which is due on May 10, 2019, has an original issue
discount of $10,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to
72% of the lowest VWAP for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common
stock can commence following the 180
th
calendar day after the Original Issue Date. During the year ended December 31,
2018, the Company recognized interest expense of $1,123.
From
time to time the Company may become a party to litigation matters involving claims against the Company. Except as may be outlined
above, the Company believes that there are no current matters that would have a material effect on the Company’s financial
position or results of operations.
Critical
Accounting Policies
Please
refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual
Report on Form 10-K for the year ended December 31, 2018, for disclosures regarding the Company’s critical accounting policies
and estimates, as well as any updates further disclosed in our interim financial statements as described in this Form 10-Q.