Notes
to Consolidated Financial Statements
Six
Months Ended June 30, 2022
(Unaudited)
Note
1 - Basis of Presentation
The
accompanying unaudited condensed financial statements of American International Holdings Corp. (“AMIH” or the “Company”)
have been prepared in accordance with the generally accepted accounting principles in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information
or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant
to the applicable rules and regulations for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Annual Report on Form 10-K for the year
ended December 31, 2021. The interim results for the three and six months ended June 30, 2022 are not necessarily indicative of the results
to be expected for the year ending December 31, 2022 or for any future interim periods.
Impact
of COVID-19 Pandemic on Consolidated Financial Statements. The outbreak of the 2019 novel coronavirus disease (“COVID-19”),
which was declared a global pandemic by the World Health Organization on March 11, 2020, and the related responses by public health and
governmental authorities to contain and combat its outbreak and spread has severely impacted the U.S. and world economies, the market
for health spa services, nutrition supplements and our other business offerings during the end of the first quarter of 2020, and continuing
through the end of 2020 and into 2021. Government mandated ‘stay-at-home’ and similar orders have to date, and may in the
future, prevent us from operating. In late 2020, we made the decision to discontinue operations of our VISSIA Waterway, Inc. (“VISSIA
Waterway”) and VISSIA McKinney (“VISSA McKinney”) MedSpa locations due to declines in customers and issues staffing
such facilities, each as a result of the pandemic. Additionally, our Legend Nutrition store saw a deep decline in sales due to social
distancing orders and decreases in customers who were willing to venture out to brick-and-mortar establishments during 2020. Legend Nutrition’s
lease was up January 31, 2021, and the Company chose to not renew the lease, closed the store, and will not continue in this line of
business moving forward. We also decided to cease offering construction services around July 2021.
As
of the date of this Report, our operations are limited, and consist mainly of ZipDoctor, Inc., Life Guru, Inc., and EPIQ Scripts, LLC.
Moving
forward, economic recessions, including those brought on by the continued COVID-19 outbreak may have a negative effect on the demand
for our services and our operating results. Any prolonged disruption to our operations or work force availability is likely to have a
significant adverse effect on our results of operations, cash flows and ability to meet continuing debt service requirements. All of
the above may be exacerbated in the future as the COVID-19 outbreak and the governmental responses thereto continues.
Effective
on May 12, 2022, the Company affected a 1-for-60 reverse stock split of its issued and outstanding common stock by the filing of a Certificate
of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada (filed on May 6, 2022 and effective
on May 12, 2022)(the “Reverse Stock Split”). The Reverse Stock Split has been retroactively reflected throughout this Report.
Also on May 6, 2022, a Second Amended and Restated designation of the Company’s Series A Preferred Stock was filed and became effective
with the Secretary of State of Nevada, whereby, among other things, a 1,000-for-1 forward stock split of the outstanding Series A Preferred
Stock of the Company was effected, which has also been retroactively reflected throughout this Report.
Note
2 - Organization, Ownership and Business
Prior
to May 31, 2018, the Company was a 93.2% owned subsidiary of American International Industries, Inc. (“American” or
“AMIN”) (OTCQB: AMIN). Effective May 31, 2018, the Company issued 168,333 shares of restricted common stock. As a
result of the issuance of the common shares, a change in control occurred. American International Industries, Inc. ownership decreased
from 93.2% to 6.4%. Effective April 12, 2019, the Company changed its business focus to the services of medical spas.
On
April 12, 2019, the Company entered into a Share Exchange Agreement (the “Agreement”) with Novopelle Diamond, LLC
(“Novopelle”) and all three members of Novopelle, pursuant to which the Company issued 300,000 shares of the Company
common stock to the members (three individuals) of Novopelle Diamond, LLC (“Novopelle”), a Texas limited company,
to acquire 100% of the membership interests of Novopelle. The issuance of these shares represents a change in control of the Company.
Concurrent with the issuance, Jacob Cohen, Esteban Alexander and Alan Hernandez, representing the three former members of Novopelle,
were elected to the board of directors and to the office of Chief Executive Officer, Chief Operating Officer and Chief Marketing officer
of the Company, respectively (provided that Mr. Alexander and Mr. Hernandez no longer serve as officers or directors of the Company).
Everett Bassie and Charles Zeller resigned as board members of the Company. This transaction was treated as a reverse acquisition for
accounting purposes, with the Company remaining the parent company and Novopelle (which has since been renamed VISSIA McKinney, LLC)
becoming a wholly-owned subsidiary of the Company.
On
April 28, 2020, the Company incorporated a wholly-owned subsidiary, ZipDoctor, Inc. (“ZipDoctor”) in the State of
Texas. ZipDoctor plans to provide its customers with unlimited, 24/7 access to board certified physicians and licensed mental and behavioral
health counselors and therapists via a newly developed, monthly subscription based online telemedicine platform. ZipDoctor was launched
in August 2020 and has generated nominal revenues through the quarter ended June 30, 2022.
On
May 15, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with Global Career Networks Inc,
a Delaware corporation (the “GCN”), the sole owner of Life Guru, Inc., a Delaware corporation (“Life Guru”).
Pursuant to the SPA, the Company acquired a 51% interest in Life Guru from GCN. As consideration for the purchase of the 51% ownership
interest in Life Guru, the Company issued to GCN 500,000 shares of its then newly designated Series B Convertible Preferred Stock, which
had an agreed upon value of $500,000 ($1.00 per share), and agreed to issue GCN up to an additional 1,500,000 shares of Series B Convertible
Preferred Stock (with an agreed upon value of $1,500,000) upon reaching certain milestones, of which 500,000 shares of Series B Convertible
Preferred Stock were issued and which other 1,000,000 shares of contingently issuable shares are no longer issuable.
On
October 23, 2020, the Company incorporated a wholly-owned subsidiary, EPIQ MD, Inc. (“EPIQ MD”) in the state of Nevada. EPIQ
MD is a direct-to-consumer, telemedicine and healthcare company targeting Americans who are uninsured or underinsured. The EPIQ MD service
offering is a convergence of primary care telemedicine, preventative care services and wellness programs – under the EPIQ MD brand
and on a single platform. EPIQ MD markets and sells its services direct to end-use consumers, as well as through business-to-business
(B2B) efforts, by focusing on employers in the targeted industries. We divested our interest in EPIC MD in July 2022, as discussed below.
On
October 7, 2021, the Company incorporated a wholly-owned subsidiary, Mangoceuticals, Inc. (“Mangoceuticals”) in the state
of Texas with the intent of focusing on developing, marketing and selling a variety of men’s wellness products and services via
a telemedicine platform. In June 2022, as discussed below, we divested our interest in Mangoceuticals.
On
January 24, 2022, the Company formed EPIQ Scripts, LLC (“EPIQ Scripts”) in the state of Texas. EPIQ Scripts has been
established with the intent of operating as a close-door online mail order pharmacy with a specific target and vision to obtain licenses
in all 50 states across the U.S., of which only a license in the state of Texas has been obtained as of the date of this Report.
EPIQ Scripts also plans to seek to become accredited with the most respected and highly recognized authorities in the industry, such
as Utilization Review Accreditation Commission (URAC), Legit Script, Accreditation Commission for Health Care (ACHC), and National Association
of Boards of Pharmacy (NABP) Digital Pharmacy. EPIQ Scripts also intends to obtain in-network contracts with all major Pharmacy Benefit
Managers (PBM) and insurance payors.
The
unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: VISSIA McKinney, LLC
(f/k/a Novopelle Diamond, LLC), VISSIA Waterway, Inc. (f/k/a Novopelle Waterway, Inc.), Novopelle Tyler, Inc., Legend Nutrition, Inc.,
Capitol City Solutions USA, Inc., EPIQ MD, Inc. (which interest was disposed subsequent to June 30, 2022), ZipDoctor, Inc., Mangoceuticals,
Inc. (through June 16, 2022) and its majority-owned subsidiary, Life Guru, Inc and EPIQ Scripts, LLC. All significant intercompany transactions
and balances have been eliminated in consolidation.
On
June 16, 2022, Company entered into and closed the transactions contemplated by a Stock Purchase Agreement (the “SPA”), with
Cohen Enterprises, Inc. (“Cohen Enterprises”), which entity is owned and controlled by Jacob D. Cohen, the Chief Executive
Officer, President and member of the Board of Directors of the Company. Pursuant to the SPA, which was approved by the Board of Directors
(with Mr. Cohen abstaining) and the Audit Committee of the Board of Directors, the Company sold 8,000,000 shares of the outstanding common
stock of Mangoceuticals, which represented 80% of the then outstanding shares of common stock of Mangoceuticals, to Cohen Enterprises
in consideration for $90,000, which was approximately the same amount that had been advanced to Mangoceuticals from the Company through
the date of the SPA ($89,200). Cohen Enterprises also acquired the right to be repaid the $90,000 advanced from the Company to Mangoceuticals,
from Mangoceuticals, pursuant to the terms of the SPA. As a result of the closing of the SPA, Cohen Enterprises owns 90% of Mangoceuticals
(with the remaining 10% of Mangoceuticals being owned by an unrelated third party), and the Company has completely divested its interest
in Mangoceuticals.
On
July 7, 2022, the Company entered into a June 30, 2022 Equity Interest Purchase Agreement (the “Purchase Agreement”), with
Alejandro Rodriguez and Pan-American Communications Services, S.A. (collectively, the “Buyers”) and our then wholly-owned
subsidiary, EPIQ MD. Pursuant to the Purchase Agreement, the Company sold 5,000,000 shares of common stock of EPIQ MD (the “Purchased
Shares”), representing 100% of the then outstanding common stock of EPIQ MD, to the Buyers for an aggregate of $300,000, consisting
of $150,000 of cash paid at closing and a $150,000 secured promissory note entered into on June 30, 2022 (the “Note”). The
transactions contemplated by the Purchase Agreement closed on July 7, 2022 and effective as of June 30, 2022.
Note
3 - Recently Issued Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other
standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes
that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial
position or results of operations upon adoption.
In
December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”. This standard
simplifies the accounting for income taxes. This standard is effective for fiscal years beginning after December 15, 2020, including
interim periods within those fiscal years. Early adoption is permitted for all entities. The Company adopted ASU 2019-12 effective on
January 1, 2021, and it did not have an effect on the Company’s consolidated financial statements.
In
August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”).
ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible
instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims
to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15,
2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2020-06 on its financial statements.
Note 4 – Other Receivable
On
July 7, 2022, Company, entered into a June 30, 2022 Equity Interest Purchase Agreement (the “Purchase Agreement”), with Alejandro
Rodriguez and Pan-American Communications Services, S.A. (collectively, the “Buyers”) and our then wholly-owned subsidiary,
EPIQ MD. Pursuant to the Purchase Agreement, the Company sold 5,000,000 shares of common stock of EPIQ MD (the “Purchased Shares”),
representing 100% of the then outstanding common stock of EPIQ MD, to the Buyers for an aggregate of $300,000, consisting of $150,000
of cash paid at closing and a $150,000 secured promissory note entered into on June 30, 2022 (the “ Note”).
The transactions contemplated by the Purchase Agreement closed on July 7, 2022 and effective as of June 30, 2022. The principal amount
of $150,000 secured promissory notes matures on September 30 ,2022. No interest is accrued if principal amount is paid by the maturity
date. In the event of default, the interest will be accrued at 18% per annum.
As
of June 30, 2022, the outstanding other receivable was $300,000. Cash payment of $150,000 was received on July 7, 2022.
Note
5 – Property and Equipment
Property
and equipment from continuing operations were as follows on June 30, 2022, and December 31, 2021:
Schedule of Property and Equipment
| | |
June
30, 2022 | |
December
31, 2021 |
| Leasehold
improvement | |
| | | |
| | |
| Equipment | |
| 18,328 | | |
| - | |
| Furniture
& fixtures | |
| 26,388 | | |
| - | |
| Gross
property and equipment | |
| 44,716 | | |
| - | |
| Less
accumulated depreciation and amortization | |
| (2,462 | ) | |
| - | |
| Net
property and equipment | |
$ | 42,254 | | |
$ | - | |
Property
and equipment from discontinued operations were as follows on June 30, 2022, and December 31, 2021:
Schedule of Property and Equipment
| | |
June
30, 2022 | |
December
31, 2021 |
| Leasehold
improvement | |
| 4,262 | | |
| 4,262 | |
| Furniture
& fixtures | |
| 18,830 | | |
| 18,830 | |
| Equipment | |
| - | | |
| - | |
| Gross
property and equipment | |
| 23,091 | | |
| 23,092 | |
| Less
accumulated depreciation and amortization | |
| (11,164 | ) | |
| (8,823 | ) |
| Net
property and equipment | |
$ | 11,927 | | |
$ | 14,269 | |
Depreciation
and amortization expense from continuing operations for the six months ended June 30, 2022, and 2021 was $2,462 and $2,242, respectively.
Depreciation and amortization expense from discontinued operations for the three months ended June 30, 2022, and 2021 was $2,342 and
$8,588, respectively.
Note
6 – Other assets
On
May 15, 2020, the Company executed a securities purchase agreement with Global Career Networks Inc, a Delaware corporation (the “Seller”),
the sole owner of Life Guru, pursuant to which the Company purchased from the Seller, a 51% interest in the capital stock of Life Guru,
representing an aggregate of 2,040 shares of Life Guru’s common stock. Life Guru owns and operates the LifeGuru.me website which
is currently in development and is anticipated to be fully launched in the fourth quarter of 2022. In consideration for the purchase,
the Company agreed to issue the Seller 500,000 shares of the Company’s Series B Preferred Stock at closing, which occurred on May
15, 2020. Up to an additional 1,500,000 Series B Preferred Stock shares were to be issuable to the Seller upon Life Guru meeting certain
milestones, provided that such milestones are met prior to the earlier of (i) one (1) year after closing; and (ii) thirty (30) days after
the Company has provided the Seller written notice of a breach by the Seller of any provision of the SPA, which breach has not been reasonably
cured within such thirty (30) day period (such earlier date of (i) and (ii), the “Milestone Termination Date”):
(a)
500,000 Series B Preferred Stock shares upon completion of the fully operational LifeGuru.me website;
(b)
500,000 Series B Preferred Stock shares upon such time as 300 coaches have signed up at LifeGuru.me; and
(c)
500,000 Series B Preferred Stock shares upon such time as 1,000 coaches have signed up at LifeGuru.me.
The
fair value of 500,000 shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $605,488,
which equaled the market price per common share on the grant multiplied by the equivalent number of common shares which would be issuable
upon conversion of Series B Preferred Stock.
The
Company did not recognize any liabilities related to the milestone shares due to the uncertainty surrounding such milestones.
The
51% owned subsidiary is a consolidated entity which requires the presentation of noncontrolling interest in the consolidated statements
of operations for the six months ended June 30, 2022. As there was minimal activity for the entity as of June 30, 2022, minimal assets
and liabilities and, no noncontrolling interest were presented at the period ended June 30, 2022. Since the asset is not substantiating
a future cash flow, the Company determined an impairment adjustment was necessary for the periods presented. Investment in Life Guru
of $605,488 was impaired in full during the fourth quarter of 2020.
During
the first quarter of 2021, the Company issued 500,000 Series B Preferred Stock shares for reaching the second milestone (milestone (b)).
The fair value of 500,000 shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $601,852,
which equaled the market price per common share on the grant multiplied by the equivalent number of common shares which would be issuable
upon conversion of Series B Preferred Stock. This amount was expensed as in process research and development.
Since
more than one year has elapsed since closing, the right of the Seller to earn the milestone shares set forth in (a) and (b) above has
expired.
Note
7 – Capital lease
On
June 17, 2020, the Company entered into an agreement with a vendor to purchase equipment used in its spa operations. Pursuant to the
agreement, the Company agreed to pay a total amount of $44,722 in 24 installments, or $1,819 per month plus tax. The outstanding balance
of this capital lease was $34,987 as of December 31, 2020. Due to the discontinued operation, the Company returned equipment in the first
quarter of 2021. The Company impaired $1,455 to bring the asset down to the value of the liability. As of December 31, 2021, the Company
was released from the capital lease with an outstanding balance of $0.
On
July 14, 2020, the Company entered into an agreement with a vendor to purchase equipment used in its spa operations. Pursuant to the
agreement, the Company agreed to pay a total amount of $44,722 in 24 installments, or $1,819 per month plus tax. The outstanding balance
of this capital lease was $31,457 as of December 31, 2020. Due to the discontinued operation, the Company returned equipment in the first
quarter of 2021. The Company impaired $5,991 to bring the asset down to the value of the liability. As of December 31, 2021, the Company
was released from the capital lease with an outstanding balance of $0.
Note
8 – Operating Right-of-Use Lease Liability
On
January 1, 2019, the Company adopted Accounting Standards Update No. 2016-2, Leases (Topic 842), as amended, which supersedes the lease
accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding
right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosure surrounding the amount, timing and uncertainty of cash
flows arising from leasing arrangements.
As
of June 30, 2021, the Company had one leasing agreement subject to Accounting Standards Codification (ASC) 842.
Location
1 – EPIQ Scripts, LLC
On
February 15, 2022, the Company recognized an operating right-of-use asset in the amount of $69,439 and an operating lease liability
in the amount of $69,439 in connection with Location 1. The lease term is seventeen (17) months and expires in July 2023.
The
following is a schedule, by year, of maturities of lease liabilities as of June 30, 2022:
Schedule
of Maturities of Lease Liabilities
| | |
| | |
| 2022 | |
| 24,640 | |
| 2023 | |
| 28,747 | |
| Total
undiscounted cash flow | |
| 53,387 | |
| Less
imputed interest (8%) | |
| (4,077 | ) |
| Present
value of lease liabilities | |
$ | 49,310 | |
The
operating lease right-of-use asset net balance at June 30, 2022 related to this location was $49,310.
Note
9 – Accrued Compensation for Related Parties
At
June 30, 2022, accrued compensation was $100,000, representing $50,000 owed to Jacob Cohen, the Company’s CEO and $25,000 owed
to each of Alan Hernandez and Esteban Alexander, the Company’s former officers and directors.
Note
10 – Notes Payable
Notes
payable represents the following at June 30, 2022:
Schedule of Notes
Payable
| | |
| | |
| | |
| 40,000 | |
| Note
payable to an individual dated July 8, 2019 for $40,000, with interest at 8% per annum and due on July 8, 2020. The Note is currently
past due. | |
| 40,000 | |
| | |
| | |
| Note
payable dated July 7, 2020 for $50,000, with interest at 5% per annum and due on July 7, 2021. The Note is unsecured. The Note is
currently past due. | |
$ | 50,000 | |
| | |
| | |
| Note
payable of $53,000 dated August 5, 2020 for cash of $53,000, with interest at 8% per annum and due on November 5, 2021. The annual
interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the
lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion
date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $70,736 was paid during
the six months ended June 30, 2021. | |
| 53,000 | |
| Less:
Repayment | |
| (53,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $105,000 dated August 11, 2020 for cash of $100,000, net of original issue discount of $5,000, with one-time interest
charge of 8% payable and due on May 11, 2021. The outstanding balance of the Note will be increase by 135% if in default. The Note
is a convertible promissory note. The conversion price equals the lower of $30 per share (as adjusted for the reverse stock split)
or 60% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior
to the conversion date, representing a discount rate of 40%. The note and accrued interest totaling $111,466 was settled by the issuance
of 11,813 post-reverse split common shares of the Company and $50,000 in cash. The note and accrued interest were converted at $9.68
per share (as adjusted for the reverse stock split) and settled with additional shares valued at $27 (as adjusted for the reverse
stock split) per share. Accordingly, the Company recorded a loss on loan settlement of $58,059 during the six months ended June 30,
2021. | |
$ | 105,000 | |
| Less:
Repayment | |
| (105,000 | ) |
| | |
| - | |
| Note
payable of $53,000 dated September 14, 2020 for cash of $53,000, with interest at 8% per annum and due on December 14, 2021. The
annual interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61%
of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the
conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $70,736 was paid
during the six months ended June 30, 2021. | |
$ | 53,000 | |
| Less:
Repayment | |
| (53,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable to an unrelated party dated September 11, 2020 for $4,000, with no interest and due on demand. | |
$ | 4,000 | |
| | |
| | |
| Note
payable to an unrelated party dated September 16, 2020 for $5,000, with no interest and due on demand. | |
$ | 5,000 | |
| | |
| | |
| Note
payable of $56,750 dated October 12, 2020, for cash of $52,750, with interest at 8% per annum and due on October 12, 2021. The annual
interest rate will increase to 24% if in default. The Note is a convertible promissory note. The conversion price equals the lesser
of $3.00 per share or 60% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading
day period prior to the conversion date, representing a discount rate of 40%. The Note and accrued interest totaling $56,750 was
converted into 12,682 post-reverse split common shares of the Company within the terms of the note during the six months ended June
30, 2021. | |
$ | 56,750 | |
| Less:
Repayment | |
| (56,750 | ) |
| | |
| - | |
| Note
payable of $138,00 dated November 13, 2020 for cash of $138,000, with interest at 8% per annum and due on November 13, 2021. The
annual interest rate will increase to 18% if it is in default. The Note is a convertible promissory note. The conversion price equals
61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to
the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $183,483
was paid during the six months ended June 30, 2021. | |
$ | 138,000 | |
| Less:
Repayment | |
| (138,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $83,500 dated December 2, 2020 for cash of $83,500, with interest at 8% per annum and due on March 2, 2022. The annual
interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the
lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion
date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $104,527 was paid during
the six months ended June 30, 2021. | |
$ | 83,500 | |
| Less:
Repayment | |
| (83,500 | ) |
| | |
| - | |
| Note
payable of $425,000 dated January 6, 2021 for cash of $400,000, with interest at 6% per annum and due on January 7, 2022. The annual
interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser
of $3.00 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period
prior to the conversion date, representing a discount rate of 25%. The note and accrued interest totaling $437,359 was converted
into 42,500 post-reverse stock split common shares of the Company within the terms of the note during the six months ended June 30,
2021. | |
$ | 425,000 | |
| Less:
Conversion | |
| (425,000 | ) |
| | |
| - | |
| Note
payable of $425,000 dated January 6, 2021 for cash of $400,000, with interest at 6% per annum and due on January 7, 2022. The annual
interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser
of $3.00 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period
prior to the conversion date, representing a discount rate of 25%. The note and accrued interest totaling $437,297 was converted
into 53,675 post-reverse stock split common shares of the Company within the terms of the note during the six months ended June 30,
2021. | |
$ | 425,000 | |
| Less:
Conversion | |
| (425,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual
interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser
of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the common
stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. The Note is currently
past due. | |
$ | 300,000 | |
| | |
| | |
| Note
payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual
interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lesser
of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the common
stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A partial conversion
of the Note and accrued interest totaling $195,226 was converted into 70,103 post-reverse stock split common shares of the Company
within the terms of the note during the six months ended June 30, 2022. The Note is currently past due. | |
$ | 300,000 | |
| Less:
Conversion | |
| (165,000 | ) |
| | |
| 135,000 | |
| | |
| | |
| Note
payable of $265,958 dated June 24, 2021 for cash of $250,000, with interest at 6% per annum and due on June 24, 2022. The annual
interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor
of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the common
stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A partial conversion
of note totalling $185,630 was converted into 61,150 post-reverse stock split common shares of the Company within the terms of the
note during the six months ended June 30, 2022. The Note is currently past due. | |
$ | 265,958 | |
| Less:
Conversion | |
| (185,630 | ) |
| | |
| 80,328 | |
| Note
payable of $271,958 dated June 24, 2021 for cash of $256,000, with interest at 6% per annum and due on June 24, 2022. The annual
interest rate will increase to 15% if it is in default. The Note is a convertible promissory note. The conversion price equals the
lesser of $14.62 (as adjusted for the reverse stock split) or 75% of the lowest daily volume weighted average price (VWAP) for the
common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A partial
conversion of the note and accrued interest totalling $186,600 was converted into 470,248 post-reverse stock split shares of the Company
within the terms of the note during the six months ended June 30, 2022. The Note is currently past due. | |
$ | 271,958 | |
| Less:
Conversion | |
| (176,704 | ) |
| | |
| 95,254 | |
| | |
| | |
| On
September 24, 2021, the Company had a short-term advance payable in the amount of $50,000
to an unrelated party, with no interest and due on demand. The short-term advance was paid in full on December 1, 2021. | |
$ | 50,000 | |
| Less:
Repayment | |
$ | (50,000 | ) |
| | |
| - | |
| Note
payable of $750,000 dated November 22, 2021 for cash of $750,000, with interest at 10% per annum and due on June 24, 2022. The annual
interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note.
The conversion price equals the lesser of $4.50 (as adjusted for the reverse stock split) or 80% of the offering price per share
of Common Stock at which the Company offers shares of Common Stock in a public offering which results in the Common Stock being uplisted
on a national stock exchange or Nasdaq, that occurs within 220 days from the date the Notes are issued, which date has passed (an
“Uplist Offering”). A partial conversion of the accrued interest totaling $16,170 was converted into 1,349 post-reverse
stock split shares of the Company within the terms of the Note during the six months ended June 30, 2022. The Note is currently past
due. | |
$ | 750,000 | |
| | |
| | |
| Note
payable of $500,000 dated November 30, 2021 for cash of $500,000, with interest at 10% per annum and due on November 30, 2022. The
annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory
note. The conversion price equals the lesser of $4.50 (as adjusted for the reverse stock split) or 80% of the offering price per
share of Common Stock at which the Uplist Offering is made. | |
$ | 500,000 | |
| | |
| | |
| Note
payable of $250,000 dated December 1, 2021 for cash of $250,000, with interest at 10% per annum and due on December 1, 2022. The
annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory
note. The conversion price equals the lesser of 4.50 (as adjusted for the reverse stock split) or 80% of the offering price per share
of Common Stock at which the Uplist Offering is made. | |
$ | 250,000 | |
| | |
| | |
| Note
payable of $500,000 dated December 2, 2021 for cash of $500,000, with interest at 10% per annum and due on December 2, 2022. The
annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory
note. The conversion price equals the lesser of $4.50 (as adjusted for the reverse stock split) or 80% of the offering price per
share of Common Stock at which the Uplist Offering is made. | |
$ | 500,000 | |
| | |
| | |
| As
of June 30, 2022 the Company had a short-term Advance payable in amount of $20,000 to a unrelated party, with no interest which is
due on demand. | |
$ | 20,000 | |
| | |
| | |
| Note
payable of $137,500 dated May 13, 2022 for cash of $128,450, with interest at 6% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $9,050 which are to be
amortized over the term of the note and derivative liabilities of $55,323. The annual interest
rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price
equals 75% of the lowest daily VWAP of the Common Stock during the seven (7) consecutive trading day period prior to conversion. | |
$ | 137,500 | |
| | |
| | |
| Note
payable of $88,775 dated June 16, 2022 for cash of $85,775, with interest at 6% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $3,000 which are to be
amortized over the term of the note and derivative liabilities of $38,713. The annual interest
rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price
equals 75% of the lowest daily VWAP of the Common Stock during the seven (7) consecutive trading day period prior to conversion. | |
$ | 88,775 | |
| | |
| | |
| Total | |
$ | 2,955,857 | |
| Less:
unamortized discount | |
| (1,425,221 | ) |
| Total | |
$ | 1,530,636 | |
| Short
term convertible notes, net of discount of $1,425,221 | |
$ | 1,451,636 | |
| Long-term
convertible notes, net of discount of $0 | |
$ | - | |
| Short-term
non-convertible notes – continuing operations | |
$ | 75,000 | |
| Short-term
non-convertible notes – discontinued operations | |
$ | 4,000 | |
| Short-term
non-convertible notes – discontinued operations | |
$ | 4,000 | |
| Long-term
non-convertible notes | |
$ | 0 | |
Note
11 – Loans from Related Parties
Schedule of Loans from Related Parties
| | |
| | |
| On
April 12, 2019, the Company entered into individual share exchange agreements and promissory notes with each of Daniel Dror, Winfred
Fields and former Directors Everett Bassie and Charles Zeller (the “AMIH Shareholders”), whereby the AMIH Shareholders
agreed to cancel and exchange a total of 98,334 post-reverse stock split shares of their AMIH common stock. The Company issued individual
promissory notes with an aggregate principal amount of $350,000 (the “Promissory Notes”) for cancellation of the
98,334 post-reverse stock split common shares. The Promissory Notes have a term of two years and accrue interest at the rate of 10%
per annum until paid in full by the Company. The Company recorded interest of $7,506 on these notes during the year ended December
31, 2020. The accrued interest on these notes was $18,982 as of December 31, 2020. The Note and accrued interest totaling $ 280,108
was settled by the issuance of 57,942 post-reverse stock split common shares of the Company. The shares were valued at $18.60 and
$16.20 (as adjusted for the reverse stock split) per share based on the market price at the settlement date. Accordingly, the Company
recorded a loss on loan settlement of $758,601 during the year ended December 31, 2020. | |
$ | 350,000 | |
| Less:
Conversion | |
| (240,000 | ) |
| Loans
from related parties, gross | |
| 110,000 | |
| Short-term
note payable in the amount of $13,473 to Kemah Development Texas, LP, a company owned by Dror Family Trust, a related party. The Company had settled this note payable of $13,473 and accrued interest
of $2,633 with a payment of $2,000 in cash on May 23, 2022. | |
| 0 | |
| | |
| | |
| As
of June 30, 2022, outstanding loan balances payable to the Company’s CEO and board member, Jacob Cohen, were $0 with no interest
and due on demand | |
| 50 | |
| Loans from related
parties, before conversion or payment | |
| 50 | |
| Less:
payment | |
| (50 | ) |
| Loans
from related parties, gross | |
| - | |
| | |
| | |
| Loans
from related parties, gross | |
$ | 110,000 | |
| Less:
unamortized discount | |
| 0 | |
| Total | |
$ | 110,000 | |
| Long-term
loan from related parties | |
$ | - | |
| Short-term
loan from related parties – continuing operations | |
$ | 110,000 | |
| Short-term
loan from related parties – discontinued operations | |
$ | - | |
Note
12 – Derivative Liabilities
Notes
that are convertible at a discount to market are considered embedded derivatives.
Under
Financial Accounting Standard Board (“FASB”), U.S. GAAP, Accounting Standards Codification, “Derivatives
and Hedging”, ASC Topic 815 (“ASC 815”) requires that all derivative financial instruments be recorded on
the balance sheet at fair value. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where
market prices are not readily available, fair values are determined using market-based pricing models incorporating readily observable
market data and requiring judgment and estimates.
The
Company’s convertible note has been evaluated with respect to the terms and conditions of the conversion features contained in
the note to determine whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company
determined that the conversion features contained in the notes totaled $1,575,083 and represent a freestanding derivative instrument
that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument
in the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument of
the convertible note was measured using the Lattice Model at the inception date of the note and will do so again on each subsequent balance
sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense
at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion.
The
Convertible Note derivatives were valued as of December 31, 2021, at issuance, at conversion and at June 30, 2022, as set forth in the
table below.
Schedule of Convertible Note Derivatives
| | |
| | |
| Derivative
liabilities as of December 31, 2021 | |
$ | 4,141,272 | |
| Derivative
liabilities, beginning | |
$ | 4,141,272 | |
| Initial
derivative liabilities at new note issuance | |
| 94,036 | |
| Initial
loss | |
| - | |
| Conversion | |
| (111,382 | ) |
| Mark
to market changes | |
| (2,489,189 | ) |
| Derivatives
liabilities as of June 30, 2022 | |
$ | 1,634,737 | |
As
of June 30, 2022, the Company had derivative liabilities of $1,634,737, and recorded changes in derivative liabilities in the amount
of $2,489,189 during the six months ended June 30, 2022.
The
following assumptions were used for the valuation of the derivative liability related to the Notes:
| |
- |
The
stock price would fluctuate with the Company’s projected volatility; |
| |
- |
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 116% through 206% at issuance, conversion, and quarters ends; |
| |
- |
The
Company would not redeem the notes; |
| |
- |
An
event of default adjusting the interest rate would occur initially 0% of the time for all notes with increases 1% per month to a
maximum of 10% with the corresponding penalty; |
| |
- |
The
Company would raise capital quarterly at market, which could trigger a reset event; and |
| |
- |
The
Holder would convert the note monthly if the Company was not in default. |
The
following assumptions were used for the valuation of the warrant derivative liability related to the Notes:
| |
- |
The
stock price would fluctuate with the Company’s projected volatility; |
| |
- |
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 166% through 166.9% at issuance, conversion, and quarters ends. |
| |
- |
The
Warrants with the fixed $12.00, $21.00, and $30.00 (each as adjusted for the reverse stock split) exercise prices are subject to
full ratchet reset provisions; |
| |
- |
The
Company would raise capital quarterly at market, which could trigger a reset event; |
| |
- |
The
cash flows are discounted to net present values using risk free rates; discount rates were based on risk free rates in effect based
on the remaining term; |
| |
- |
The
occurrence of a fundamental transaction by a public company was estimated at 2.5% after 2.5 years and 5% prior to maturity; and |
| |
- |
The
Holder would hold the warrant to maturity (5-year terms) at which point it could exercise the warrant if the warrant were in the
money. |
Note
13 – Capital Stock
Preferred
Stock
The
Company is authorized to issue up to 5,000,000 shares of preferred stock, $0.0001 par value, of which 1,000,000 shares were designated
as Series A Preferred Stock and 2,000,000 were designated as Series B Preferred stock, the balance of 2,000,000 shares of preferred stock
were undesignated as of June 30, 2022.
The
holders of Series A Preferred Stock have no dividend rights, liquidation preference and conversion rights. As long as any shares of Series
A Preferred Stock remain issued and outstanding, the holders of Series A Preferred Stock have the right to vote on all shareholder matters
equal to sixty percent (60%) of the total vote. At the option of the Company, Series A Preferred Stock is redeemable at $1.00 per share.
The
holders of Series B Preferred Stock have the same dividend rights as common stockholders on a fully converted basis, are entitled to
receive pari passu with any distribution of any of the assets of the Company to the holders of the Company’s common stock, but
not prior to any holders of senior securities. Each share of Series B Preferred Stock may be converted, at the option of the holder thereof,
into that number of shares of common stock of the Company as equals $1.00 divided by 90% of the average of the volume weighted average
prices (“VWAP”) of the Company’s common stock, for the five trading days immediately preceding the date the notice
of conversion is received, subject to the limit of 4.999% of the Company’s outstanding shares of common stock. The holders of Series
B Preferred Stock have no voting rights.
In
the first quarter of 2021, the Company issued 500,000 shares of Series B Preferred Shares to a third party for services related to research
and development. The shares were subsequently converted into 572 post-reverse stock split shares of common stock. The shares were valued
at $601,582.
The
Company has one million post-forward split shares of Series A Preferred Stock outstanding as of June 30, 2022 and December 31, 2021.
As of June 30, 2022, and December 31, 2021, no shares of Series B Preferred Stock were issued and outstanding.
Common
Stock
The
Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, of which 1,928,621 post-reverse stock split
shares were issued and outstanding as of June 30, 2022 and 1,407,418 post-reverse stock split common stock shares were issued and outstanding
at December 31, 2021.
During
the six months ended June 30, 2022, the Company issued 112,485 post-reverse stock split shares of the Company’s common stock in
consideration for services performed by employee, directors and non-employee consultants. The shares were valued at $101,124 based on
the market price on the date of agreement.
In
the first quarter of 2022, the Company issued 84,878 post-reverse stock split common shares to investors in exchange for $204,805 of
principal and accrued interest owed under the terms and conditions of convertible notes as issued.
In
the second quarter of 2022, the Company issued 301,866 common shares to investors in exchange for $69,476 of principal and accrued interest
owed under the terms and conditions of convertible notes as issued.
Note
14 – Going Concern
These
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the
realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As
reflected in the accompanying financial statements, the Company has a net loss from continuing operations of $26,904 for the six months
ended June 30, 2022, and net loss from continuing operations of $7,417,774 for the six months ended June 30, 2021, a loss from discontinued
operation of $2,272 and $12,004 for the six months ended June 30, 2022 and 2021, respectively, and an accumulated deficit of $20,685,942
as of June 30, 2022. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the
future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations
when they come due. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset
amounts or amounts and classifications of liabilities that might result from this uncertainty. There can be no assurance that the Company
will become commercially viable without additional financing, the availability, and terms of which are uncertain. If the Company cannot
secure necessary capital when needed on commercially reasonable terms, its business, condition (financial and otherwise) and commercial
viability may be harmed. Although management believes that it will be able to successfully execute its business plan, which includes
third party financing and the raising of capital to meet the Company’s future liquidity needs, there can be no assurances in this
regard. These matters raise substantial doubt about the Company’s ability to continue as a going concern.
Note
15 – Commitments and Contingencies
In
the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation,
if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm
its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on
our continued financial position, results of operations or cash flows.
Robert
Holden vs AMIH
On
October 14, 2019, Robert Holden, the Company’s former CEO, filed a Petition and Application for Temporary Restraining Order in
the District Court of Harris County, Texas, against the Company stating that the Company is blocking Mr. Holden’s legal right to
trade his shares in the open market and further attempting to stake his claim that he maintains his rights to the 3,800,000 shares he
received in connection with his acceptance as CEO of the Company on or around May 31, 2018. The Company is maintaining the position that
Mr. Holden does not have the right to those shares as he was in breach of his obligation to convey a digital marketing business to the
Company and subsequently resigned from the Company shortly thereafter, on or around August 15, 2018 and that he procured the shares through
fraud. On November 11, 2019, the Company issued a response with a Motion to Dismiss Under the Texas Citizen’s Participation Act
(TCPA) citing that any declaratory judgment and breach of contract claims be dismissed unless Mr. Holden can, through “clear
and specific evidence”, establish a prima facie case for each essential element of his claims.
After
an attempt to remand the case to federal court, the Company filed an amended notice of submission for its TCPA motion for submission
on May 18, 2020, whereby Holden failed to respond to the motion in a timely manner. On May 18, 2020, the Company filed a response in
support of its motion to dismiss under the TCPA, which was denied on June 3, 2020. Immediately thereafter, on June 4, 2020, the Company
filed a notice of accelerated interlocutory appeal to appeal the denial of the motion to dismiss under the TCPA and the trial court’s
failure to rule on the Company’s objection to the timeliness of Holden’s response. The outcome of this action, and the ultimate
outcome of the lawsuit is currently unknown at this time, provided that the Company intends to vehemently defend itself against the claims
made in the lawsuit.
AMIH
vs. Winfred Fields
On
November 11, 2019, the Company filed an original petition and jury demand against Winfred Fields, a shareholder, in the 458th Judicial
District Court of Fort Bend County seeking damages related to breach of contract and fraud related charges. The Company executed an exchange
agreement with Mr. Fields on or around April 12, 2019 whereby Mr. Fields was required to tender to the Company a total of 10,833 of the
12,500 shares of the Company’s common stock that Mr. Fields then owned (the “Exchanged Shares”) in exchange
for a promissory note with a maturity date of April 12, 2021 payable in the amount of $42,500 (the “Fields Note”)
(see also “Note 12 – Loans from Related Parties”). The Exchange Agreement required that Mr. Fields immediately return
the stock certificates for the Exchanged Shares to the Company or its designated agent for immediate cancellation and for Mr. Fields
to retain the remaining 1,667 shares. Mr. Fields agreed in the Exchange Agreement that these shares would not become unrestricted until
such time as Mr. Fields received an opinion of counsel satisfactory to the Company that the shares were not restricted for trade under
SEC regulations. After executing the Exchange Agreement, Mr. Fields—rather than return the Exchanged Shares or obtain said opinion
of counsel—attempted to deposit and trade the Exchanged Shares and the restricted shares, which was a direct violation of the Exchange
Agreement. The Company asserts that Mr. Fields knowingly, willingly and fraudulently attempted to deposit and trade the Exchanged Shares
and is seeking damages and equitable relief. Upon several attempts to serve Mr. Fields, service was perfected on or around February 3,
2020. On March 2, 2020, Mr. Fields filed a response generally denying all claims. On May 22, 2020, the Company filed its first request
for production and request for disclosure and discovery insisting that Mr. Fields produce all documentation related to the fraudulent
transaction and is awaiting a response to these requested discovery items. The outcome of this action is currently unknown at this time.
In November 2019, the Company recovered 10,834 shares from Mr. Fields which were cancelled in 2019.
Asher
Park, LLC vs. Novopelle Tyler
On
August 11, 2021, Asher Park, LLC (“Asher Park”) filed a petition against the Company and its subsidiary, Novopelle Tyler,
Inc. (“Novopelle Tyler”) in the 241st Judicial District Court of Smith County, Texas seeking to recover damages
in the amount of $66,651 against that commercial lease and commercial lease guaranty agreement that was signed between the parties on
or around January 8, 2020 to occupy retail premises located at 1058 Asher Way, Suite 100, in Tyler, Texas. As this commercial lease was
executed prior to the COVID-19 pandemic, and due to the uncertainty of the effects on retail establishments during the pandemic, Novopelle
Tyler never officially took possession of the retail premise. On September 23, 2021, the Company and Novopelle Tyler filed an Original
Answer and Affirmative Defense denying the allegations made by Asher Park.
On
January 26, 2022, Novopelle Tyler and the Company entered into a Settlement Agreement & Mutual Release with Asher Park whereby Novopelle
Tyler and the Company agreed to pay Asher Park a total of $35,000 in full and final settlement of all of the Asher Park’s claims.
Accordingly, Asher Park, in consideration for the execution of the Settlement Agreement dismissed the lawsuit against both Novopelle
Tyler and the Company.
Stanley
Tate d/b/a Triangle Cabinets vs. Capitol City Solutions USA, Inc.
On
September 10, 2021, Stanley Tate d/b/a Triangle Cabinets (“Tate”), a materials supplier and subcontractor that was hired
by the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against the Company, CCS, and CCS’s
construction client, PC Gateway, LLC (“PC Gateway”) in the 136th Judicial District Court of Jefferson County,
Texas seeking payment in the amount of $77,681 for services Tate claimed to provide CCS and PC Gateway. The Company and CCS were not
officially served until on or around October 21, 2021. On October 25, 2021, the Company and CCS filed an Original Answer denying the
allegations made by Tate as Tate had failed to provide the services in which they were hired to perform and demanding strict proof by
a preponderance of credible evidence.
On
December 29, 2021, Tate dismissed all claims against both the Company and CCS.
Capitol
City Solutions USA, Inc. vs. Peak Living, LLC and PC Gateway, LLC
On
November 1, 2021, the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against PC Gateway and Peak
Living, LLC (“Peak Living”) in the 58th Judicial District Court of Jefferson County Texas demanding the payment
of the final invoice as delivered to Peak Living in the amount of $2,069,908 representing the balance as owed to CCS for substantial
supplemental charges (including but not limited to dehumidifiers, various material cost and labor increases, code compliance costs, and
additional profit and overhead). Throughout the term of a project completed by CCS for Peak Living, Peak Living instructed CCS to perform
additional work beyond the original scope of the contracted agreement and fully understood that CCS expected to be compensated at the
fair market value for the additional labor and materials. In addition to seeking actual and statutory damages, CCS is seeking to recover
attorney’s fees, prejudgment and post judgment interest, costs of court and has further placed a constitutional lien on the PC
Gateway property, known as Gateway Village, located at 2825 12th Street, Beaumont, Texas, 77705 and which is the subject of the lawsuit.
Based on information received through the discovery process, CCS entered into a Settlement Agreement and Release on March 29, 2022, with
Peak Living whereby CCS agreed to dismiss Peak Living of all claims under the lawsuit.
Note
16 – Discontinued Operations
During
2021, the Company decided to discontinue the operation of its VISSIA McKinney, VISSIA Waterway, Legend Nutrition, Capitol City Solutions
USA, Inc. subsidiaries. VISSIA McKinney, VISSIA Waterway, Legend Nutrition, Capitol City Solutions USA, Inc. have been presented as discontinued
operations in the accompanying consolidated financial statements and are summarized below:
Schedule of Discontinued Operations
| | |
| | | |
| | |
| | |
Six
Months Ended June 30, |
| | |
2022 | |
2021 |
| Revenue | |
$ | - | | |
$ | 2,530 | |
| Cost
of revenue | |
| - | | |
| - | |
| Gross
profit | |
| - | | |
| 2,530 | |
| Operating
expenses | |
| (2,272 | ) | |
| (14,534 | ) |
| Loss
from operations | |
| (2,272 | ) | |
| (12,004 | ) |
| Other
income (expenses) | |
| - | | |
| - | |
| Net
loss | |
$ | (2,272 | ) | |
$ | (12,004 | ) |
| | |
As
of |
| | |
June
30, 2022 | |
December
31, 2021 |
| Assets
of discontinued operations - current | |
$ | - | | |
$ | - | |
| Assets
of discontinued operations - intangible | |
| - | | |
| - | |
| Assets
of discontinued operations - non-current | |
| 11,927 | | |
| 14,199 | |
| Net
liabilities of discontinued operations | |
$ | 4,948 | | |
$ | 112,199 | |
Note
17 – Disposition of subsidiaries
On
June 16, 2022 the Company entered into a Stock Purchase Agreement with Cohen Enterprises, Inc. (buyer) to sell buyer all shares of common
stock of Mangoceuticals, Inc. for $90,000 in cash paid at closing. Pursuant to the Stock Purchase Agreement, the disposition of Mangoceuticals,
Inc generated net cash proceed of $85,753, release of accounts payable and accrued expenses of $16,339 and resulted in a gain of $102,092.
This transaction is considered as a related party transactions in accordance with the ASC 850.
On
June 30, 2022 the Company entered into an agreement for Equity Interest Purchase of Epiq MD, Inc. with Alejandro Rodriguez and Pan-American
Communications Services S.A. (buyers) to sell buyers all of the issued and outstanding shares of common stock of Epiq MD, Inc. for an
aggregate amount of $300,000, consisting of $150,000 of cash paid at closing and a $150,000 secured promissory note. (Refer to Note 4
– Other Receivable) Pursuant to the Equity Interest Purchase Agreement, the disposition of Epiq MD, Inc generated net cash outflow
of $2,123, increase in other receivable of $300,000, loss on security deposit of $3,599, release of accounts payable and accrued expenses
of $28,484 and resulted in a gain of $322,762.
Note
18 – Subsequent Events
On
July 1 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $16,693 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note as issued to Mast Hill Fund, LP, dated November 22,
2021.
On
July 7, 2022, Company, entered into a June 30, 2022 Equity Interest Purchase Agreement (the “Purchase Agreement”), with Alejandro
Rodriguez and Pan-American Communications Services, S.A. (collectively, the “Buyers”) and our then wholly-owned subsidiary,
EPIQ MD. Pursuant to the Purchase Agreement, the Company sold 5,000,000 shares of common stock of EPIQ MD (the “Purchased Shares”),
representing 100% of the then outstanding common stock of EPIQ MD, to the Buyers for an aggregate of $300,000, consisting of $150,000
of cash paid at closing and a $150,000 secured promissory note entered into on June 30, 2022 (the “Note”). The transactions
contemplated by the Purchase Agreement closed on July 7, 2022 and effective as of June 30, 2022.
On
July 8, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $11,328 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note as issued to Mast Hill Fund, LP, dated November 22,
2021.
On
July 12, 2022, the Company issued 104,286 shares of common stock to a note holder in exchange for $9,855 of principal and interest owed
under the terms and conditions of that certain 6% convertible promissory note as issued to Quick Capital, LLC, dated June 24, 2021.
On
July 13, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $11,328 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note as issued to Mast Hill Fund, LP, dated November 22,
2021.
On
July 18, 2022, the Company issued 113,000 shares of common stock to a note holder in exchange for $15,820 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note as issued to Talos Victory Fund, LLC dated November
30, 2021.
On
July 21, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $11,328 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note as issued to Mast Hill Fund, LP, dated November 22,
2021.
On
August 4, 2022, the Company issued 124,378 shares of common stock to a note holder in exchange for $10,000 of principal and interest
owed under the terms and conditions of that certain 6% convertible promissory note as issued to Quick Capital, LLC, dated June 24, 2021.
On
August 9, 2022, the Company issued 80,920 shares of common stock to a note holder in exchange for $6,506 of principal and interest owed
under the terms and conditions of that certain 6% convertible promissory note as issued to Mast Hill Fund, LP, dated November 22, 2021.
On
August 9, 2022, the Company issued 135,000 shares of common stock to a note holder in exchange for $10,854 of accrued and unpaid interest
owed under the terms and conditions of that certain 10% convertible promissory note as issued to Talos Victory Fund, LLC dated November
30, 2021.