Notes
to Consolidated Financial Statements
December
31, 2019
(Audited)
Note
1 – Summary of Significant Accounting Policies
Organization,
Ownership and Business
Prior
to May 31, 2018, American International Holdings Corp. (“AMIH” or the “Company”) was a 93.2% owned subsidiary
of American International Industries, Inc. (“American” or “AMIN”) (OTCBB: AMIN). Effective May 31, 2018,
the Company issued 10,100,000 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%. No one individual or entity
owns at least 50% of the outstanding shares of the Company. 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 18,000,000 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. 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 becoming
a wholly-owned subsidiary of the Company.
Principles
of Consolidation
The
consolidated financial statements include the accounts of AMIH and its wholly-owned subsidiaries: VISSIA McKinney, LLC (f/k/a
Novopelle Diamond, LLC), VISSIA Waterway, Inc. (f/k/a Novopelle Waterway, Inc.), Legend Nutrition, Inc. and Capitol City Solutions
USA, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.
Reclassifications
Certain
reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications
have been applied consistently to the periods presented.
Cash
Equivalents
Highly
liquid investments with original maturities of three months or less are considered cash equivalents. There are no cash equivalents
at December 31, 2019 and December 31, 2018.
The
Company maintains the majority of its cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit
Insurance Corporation (“FDIC”) up to $250,000 per commercial bank. From time to time, cash in deposit accounts may
exceed the FDIC limits, the excess would be at risk of loss for purposes of the statement of cash flows.
Inventory
Inventory
consists of finished goods purchased, which are valued at the lower of cost or market value, with cost being determined on the
first-in, first-out method. The Company periodically reviews historical sales activity to determine potentially obsolete items
and also evaluates the impact of any anticipated changes in future demand. Total Value of Finished goods inventory as of December
31, 2019 was $16,484. No allowance was necessary as of December 31, 2019. The Company had no inventory as of December 31, 2018.
Net
Loss Per Common Share
We
compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method
and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period
is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is anti-dilutive. There were no dilutive securities for the year ended
December 31, 2019.
Property,
Plant, Equipment, Depreciation, Amortization and Long-Lived Assets
Long-lived
assets include:
Property,
Plant and Equipment – Assets acquired in the normal course of business are recorded at original cost and may be adjusted
for any additional significant improvements after purchase. We depreciate the cost evenly over the assets’ estimated useful
lives from the date on which they become fully operational and after taking into account their estimated residual values:
|
|
Depreciable
life
|
|
Residual
value
|
|
Machinery
and Equipment
|
|
5 years
|
|
|
0
|
%
|
Furniture and fixture
|
|
7 years
|
|
|
0
|
%
|
Computer and software
|
|
3 years
|
|
|
0
|
%
|
Upon
retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts,
with any resultant gain or loss being recognized as a component of other income or expense.
Identifiable
intangible assets – These assets are recorded at acquisition cost. Intangible assets with finite lives are amortized evenly
over their estimated useful lives.
At
least annually, we review all long-lived assets for impairment. When necessary, we record changes for impairments of long-lived
assets for the amount by which the present value of future cash flows, or some other fair value measure, is less than the carrying
value of these assets.
If
the carrying amount of a reporting unit exceeds its fair value, we measure the possible goodwill impairment based upon an allocation
of the estimate of fair value of the reporting unit to all of the underlying assets and liabilities of the reporting unit, including
any previously unrecognized intangible assets (Step Two Analysis). The excess of the fair value of a reporting unit over the amounts
assigned to its assets and liabilities (“carrying amount”) is the implied fair value of goodwill.
Goodwill
and indefinite-lived brands are not amortized, but are evaluated for impairment annually or when indicators of a potential impairment
are present. Our impairment testing of goodwill is performed separately from our impairment testing of indefinite-lived intangibles.
The annual evaluation for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate
assumptions and internal projections of expected future cash flows and operating plans. The Company believe such assumptions are
also comparable to those that would be used by other marketplace participants.
Fair
value of financial instruments
The
Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with
FASB Accounting Standards Codification No. 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect
to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the
market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii)
the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief
description of those three levels:
Level
1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level
2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar
assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not
active.
Level
3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.
Our
financial instruments include cash, inventories, prepayment and deposits, accounts payable, accrued liabilities, accrued interest
payable, accrued compensation, convertible note payable, loans payable, derivative liabilities and billing in excess of costs
and estimated earnings.
The
carrying values of the Company’s cash, inventories, prepayment and deposits, accounts payable, accrued liabilities, accrued
interest payable, accrued compensation, convertible note payable, short-term loans payable, derivative liabilities and billing
in excess of costs and estimated earnings approximate their fair value due to their short-term nature.
The
Company’s convertible note payable are measured at amortized cost.
The
derivative liabilities are stated at their fair value as a level 3 measurement. The Company used the Lattice Model to determine
the fair values of these derivative liabilities. See Note 8 and Note 9 for the Company’s assumptions used in determining
the fair value of these financial instruments.
Convertible
note payable
The
Company accounts for convertible note payable in accordance with the FASB Accounting Standards Codification No. 815, Derivatives
and Hedging, since the conversion feature is not indexed to the Company’s stock and can’t be classified in equity.
The Company allocates the proceeds received from convertible note payable between the liability component and conversion feature
component. The conversion feature that is considered embedded derivative liabilities has been recorded at their fair value as
its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The
Company has also recorded the resulting discount on debt related to the conversion feature and is amortizing the discount using
the effective interest rate method over the life of the debt instruments.
Derivative
liabilities
The
Company accounts for derivative liabilities in accordance with the FASB Accounting Standards Codification No. 815, Derivatives
and Hedging (“ASC 815”). ASC 815 requires companies to recognize all derivative liabilities in the balance sheet at
fair value, and marks it to market at each reporting date with the resulting gains or losses shown in the Statement of Operations.
Management’s
Estimates and Assumptions
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these
estimates.
Concentration
and Risks
The
Company’s operations are subject to risks including financial, operational, regulatory and other risks including the potential
risk of business failure.
For
the year ended December 31, 2019, 89.7% of the Company’s revenues were derived from two major customers in connection with
the construction contracts.
Revenue
Recognition
The
Company recognizes revenue in according with Accounting Standards Codification (ASC) Topic 606. The underlying principle is that
the Company recognize revenue to depict the transfer of promised goods and services to customers in an amount that they expect
to be entitled to in the exchange for goods and services provided. A five-step process has been designed for the individual or
pools of contracts to keep financial statements focused on this principle.
Revenues
from fixed-price and cost-plus contracts are recognized on the percentage of completion method, whereby revenues on long-term
contracts are recorded on the basis of the Company’s estimates of the percentage of completion of contracts based on the
ratio of actual cost incurred to total estimated costs. This cost-to-cost method is used because management considers it to be
the best available measure of progress on these contacts. Revenues from cost-plus-fee contracts are recognized on the basis of
costs incurred during the period plus the fee earned, measured on the cost-to-cost method.
Revenues
from time-and-material and rate chart contracts are recognized currently as work is performed.
Revenues
from maintenance service contracts are recognized on a straight-line basis over the life of the contract once the Company has
an agreement, service has begun, the price is fixed or determinable and collectability is reasonably assumed.
Cost
of revenues include all direct material, sub-contractor, labor and certain other direct costs, as well as those indirect costs
related to contract performance, such as indirect labor and fringe benefits. Selling, general, and administrative costs are charged
to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions and estimated profitability may result in revisions to cost and income,
which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from
job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes
in estimates in the current period. Claims for additional contract revenue are recognized when realization of the claim is probable
and the amount can be reasonably determined.
The
asset, “cost and estimated earnings in excess of billings on uncompleted contract” represents revenues recognized
in excess of amounts billed, which was $0 as of December 31, 2019. The liability, “billings in excess of costs and estimated
earnings on uncompleted contracts,” represents billings in excess of revenues recognized, which was $1,657,998 as of December
31, 2019.
Stock
based compensation
The
Company recognizes compensation costs to employees under FASB Accounting Standards Codification 718 “Compensation - Stock
Compensation” (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period
during which employees are required to provide services. Share based compensation arrangements include stock options and warrants.
As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized
over the respective vesting periods of the option grant.
On
July 27, 2018, the inception date, the Company adopted ASU No. 2018-07 “Compensation - Stock Compensation (Topic 718): Improvements
to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation
(which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods
or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.
Income Taxes
The Company is a taxable entity and recognizes
deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets
and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change.
A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized.
Related
Parties
The
Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure
of related party transactions.
Pursuant
to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity
securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15,
to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and
profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management
of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management
or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its
own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting
parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The
consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements,
expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated
in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall
include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which
no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other
information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar
amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the
method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the
date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. A material related party
transaction has been identified in Note 9 in the financial statements.
Recently
Issued Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the 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
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under ASU No. 2016-2, an entity is required
to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements.
ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors
are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial
statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, the Company adopted
this standard on January 1, 2019 using the modified retrospective method. The new standard provides a number of optional practical
expedients in transition. The Company elected the package of practical expedients’, which permitted the Company not to reassess
under the new standard its prior conclusions about lease identification, lease classification and initial direct costs; and all
of the new standard’s available transition practical expedients.
On
adoption, the Company recognized a right of use asset of $355,540, operating lease liabilities of $363,108, based on the present
value of the remaining minimum rental payments under current leasing standards for its existing operating lease.
The
new standard also provides practical expedients for a company’s ongoing accounting. The Company elected the short-term lease
recognition exemption for its leases. For those leases with a lease term of 12 months or less, the Company will not recognize
ROU assets or lease liabilities.
In
July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480);
Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II)
Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain
Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” to simply the accounting for certain instruments
with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument
is indexed to its own stock, for purposes of determining liability or equity classification. Further, companies that provide earnings
per share (“EPS”) data will adjust the basic EPS calculation for the effect of the feature when triggered and will
also recognize the effect of the trigger within equity. The standard is effective for public companies for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company adopted this new
standard on January 1, 2019 and did not have a material impact on the Company’s consolidated financial statements.
In
August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820).” This standard modifies disclosure
requirements related to fair value measurement and is effective for all entities for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Implementation on a prospective or retrospective
basis varies by specific disclosure requirement. The standard also allows for early adoption of any removed or modified disclosures
upon issuance while delaying adoption of the additional disclosures until their effective date. The Company is currently assessing
the impact of adopting this standard on its consolidated financial statements.
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 is currently assessing the
impact of adopting this standard on its consolidated financial statements.
In
June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718)”: Improvements to Nonemployee
Share-Based Payment Accounting. This ASU was issued to expend the scope of Topic 718 to include share-based payment transactions
for acquiring goods and services from nonemployees. Previously, these awards were recorded at the fair value of consideration
received or the fair value of the equity instruments issued and were measured at the earlier of the commitment date of the date
performance was completed. The amendments in this ASU require nonemployee share-based payment awards to be measured at the grant-date
fair value of the equity instrument. ASU 2018-07 was effective for fiscal years, including interim periods within those fiscal
years beginning after December 15, 2018. The Company adopted ASU 2018-07 effective on October 1, 2019 and it did not have a material
impact on the Company’s consolidated financial statements.
Note
2 – Property and Equipment
Property
and equipment was as follows at December 31, 2019 and December 31, 2018:
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
Leasehold improvements
|
|
$
|
102,264
|
|
|
$
|
85,016
|
|
Furniture & fixtures
|
|
|
23,115
|
|
|
|
1,462
|
|
Equipment
|
|
|
49,180
|
|
|
|
-
|
|
|
|
|
174,559
|
|
|
|
86,478
|
|
Less accumulated
depreciation and amortization
|
|
|
19,744
|
|
|
|
-
|
|
Net property
and equipment
|
|
$
|
154,815
|
|
|
$
|
86,478
|
|
Depreciation
and amortization expense for the years ended December 31, 2019 and 2018 was $19,744 and $0, respectively.
The
Company incurred long-term debt in the amount of $37,027 during the year ended December 31, 2019 to purchase equipment used in
its operations. The Company did not have such long-term debt during the year ended December 31, 2018.
Note
3 – Asset Purchase Agreement
On
October 18, 2019, Legend Nutrition, Inc. (“Legend”), a wholly owned subsidiary of the Company entered into an Asset
Purchase Agreement with David Morales (the “Asset Purchase Agreement”) to acquire all of the assets associated with
and related to a retail vitamin, supplements and nutrition store located in Mckinney, TX previously doing business as “Ideal
Nutrition”. Pursuant to the Asset Purchase Agreement, Legend purchased a variety of assets including software, contracts,
bank and merchant accounts, products, inventory, computers, security systems and other intellectual properties (the “Assets”).
For consideration of the Assets, Legend issued to Mr. Morales a promissory note in the amount of Seventy-Five Thousand US Dollars
($75,000) bearing an interest rate of five percent (5%) per annum and with a maturity date of one year (the “Promissory
Note”).
|
|
Fair Value
|
|
|
|
|
|
|
Prepaid rent (3 months)
|
|
$
|
10,000
|
|
Inventory
|
|
|
17,811
|
|
Property and equipment, net
|
|
|
17,500
|
|
Goodwill
|
|
|
29,689
|
|
Total
|
|
$
|
75,000
|
|
Note
4 – Goodwill
As
of December 31, 2019, the Company had goodwill of $29,689 in connection with the acquisition of the assets associated with and
related to a retail vitamin, supplements and nutrition store located in Mckinney, TX, see Note 3.
Goodwill
is not amortized, but is evaluated for impairment annually or when indicators of a potential impairment are present. The annual
evaluation for impairment of goodwill is based on valuation models that incorporate assumptions and internal projections of expected
future cash flows and operating plans. The Company believes such assumptions are also comparable to those that would be used by
other marketplace participants. The Company determined no impairment adjustment was necessary for the periods presented.
Note
5 – Licensing Agreement
On
June 27th, 2019, the Company executed an exclusive license agreement with Novo MedSpa Addison Corp (“Novo Medspa”)
providing the Company with the exclusive rights to the Novopelle brand and to establish new Novopelle branded MedSpa locations
on a worldwide basis (the “Exclusive License”). In consideration for the Exclusive License, the Company paid Novo
MedSpa a one-time cash payment of $40,000 and issued to Novo MedSpa 250,000 shares of the Company’s common stock. The 250,000
shares of the Company’s common stock were valued at $0.10 per share or $25,000.
During
the fourth quarter of 2019, the Company opened a new MedSpa location and paid Novo MedSpa a one-time cash payment of $30,000 as
new location fee pursuant to the exclusive license agreement.
Note
6 – 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 December 31, 2019, the Company had 2 leasing agreements subject to ASC 842.
Location
1 – VISSIA Mckinney, LLC
On
January 1, 2019, the Company recognized an operating right-of-use asset in the amount $287,206 and an operating lease liability
in the amount of $294,774 in connection with Location 1. The lease term is eighty-four (84) months and expires in November 2025.
The
following is a schedule, by year, of maturities of lease liabilities as of December 31, 2019:
2020
|
|
|
54,066
|
|
2021
|
|
|
54,951
|
|
2022
|
|
|
55,854
|
|
2023
|
|
|
56,776
|
|
2024
|
|
|
57,715
|
|
2025
|
|
|
53,828
|
|
Total undiscounted cash flows
|
|
|
333,190
|
|
Less imputed
interest (8%)
|
|
|
(85,291
|
)
|
Present value
of lease liability
|
|
$
|
247,899
|
|
Total
rental expense related to this location for the year ended December 31, 2019 was $52,528.
The
operating lease right-of-use asset net balance at December 31, 2019 related to this location was $234,678.
Location
2 – Legend Nutrition, Inc.
On
January 1, 2019, the Company recognized an operating right-of-use asset in the amount $68,334 and an operating lease liability
in the amount of $68,334 in connection with Location 2. The lease term is twenty-four (24) months and expires in December 2020.
The
following is a schedule, by year, of maturities of lease liabilities as of December 31, 2019:
2020
|
|
|
37,085
|
|
Total undiscounted cash flows
|
|
|
37,085
|
|
Less imputed
interest (8%)
|
|
|
(4,281
|
)
|
Present value
of lease liability
|
|
$
|
32,804
|
|
Total
rental expense related to this location for the year ended December 31, 2019 was $37,085.
The
operating lease right-of-use asset net balance at December 31, 2019 related to this location was $32,804.
Note
7 – Accrued Compensation for Related Parties
At
December 31, 2019, accrued compensation represents compensation for the Company’s executive officers from April 12, 2019
to December 31, 2019 in the amount of $193,500, less $135,000 that was paid.
On
October 1, 2019, the Company entered into an Employment Agreement with Jesse L. Dickens, Jr. to serve as the Chief Executive Officer
of the Company’s newly formed wholly owned subsidiary, Capitol City Solutions USA, Inc. (“CCS”) (the “Employment
Agreement”). Pursuant to the Employment Agreement, Mr. Dickens will receive an annual base salary of $120,000 which shall
receive an equity grant in the amount of one million (1,000,000) shares of the Company’s common stock (the “Equity
Shares”) pursuant to a vesting period of one-year, of which two-hundred and fifty thousand (250,000) shares were issued
to Mr. Dickens at the signing of the Employment Agreement and the remaining shares issuable as follows: 250,000 shares on January
1, 2020, 250,000 shares on April 1, 2020, and 250,000 shares on July 1, 2020.
On
October 18, 2019, Legend Nutrition entered into an Employment Agreement with Michael Ladner to serve as its Chief Executive Officer
(the “Ladner Employment Agreement”). Pursuant to the Ladner Employment Agreement, Mr. Ladner will receive an annual
base salary of $60,000 per annum which shall increase to $100,000 per annum starting January 1, 2020 through October 18, 2021.
In addition, Mr. Ladner is eligible to receive cash performance bonuses equal to five percent (5%) of the net profits generated
by each Legend Nutrition store location while the Mr. Ladner is employed by Legend. Further, Mr. Ladner may participate in equity
incentive programs as determined by the Company from time to time. The Ladner Employment Agreement has a two-year term, provided,
however, after the end of the term, the agreement will automatically renew for successive one-year terms.
Note
8 – Notes Payable
Notes
payable represents the following at December 31, 2019:
Note payable to a related party dated May 17, 2019 for $30,000, with interest at 5% per annum and due on April 30, 2020. The Note is unsecured and is currently past due.
|
|
$
|
30,000
|
(1)
|
|
|
|
|
|
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 a convertible promissory note. The Note holder has the rights to convert all or any portion of the principal amount and accrued interest due on the Note into the shares issued in the Offering Statement at the offering price.
|
|
|
40,000
|
(2)
|
|
|
|
|
|
Note payable to a financial group dated August 26, 2019 for $75,000, with interest at 12% per annum and due on August 26, 2020. The Note is a convertible promissory note in the event of default. The Note holder has the rights to convert all or any portion of the principal amount and accrued interest due on the Note into the shares of the Company at the price equal to 50% of the lowest trading price on the primary trading market on which the Company’s Common Stock is quoted for the last ten (20) trading days immediately prior to but not including the Conversion Date.
|
|
|
75,000
|
(3)
|
|
|
|
|
|
Note payable to an unrelated party dated October 15, 2019 for $75,000, with interest at 10% per annum and due on July 15, 2020. The Note is a convertible promissory note. The Note holder has the rights to convert all of any portion of the principal amount and accrued interest due on the Note into the shares issued in the Offering Statement at the offering price. Furthermore, the Company issued 10,000 shares of the Company’s common stock to the unrelated party investor as further consideration to enter into the loan with the Company.
|
|
|
75,000
|
(4)
|
|
|
|
|
|
Note payable of $78,750 to an unrelated party dated October 28, 2019 for cash of $75,000, with interest at 10% per annum and due on October 28, 2020. The Note is a convertible promissory note. The conversion price is equal to the lesser of (i) the price per share of Common Stock sold to investors in the Offering Statement, or (ii) a variable conversion Price” equal to 60% multiplied by the lowest Trading Price for the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date, representing a discount rate of 40%.
|
|
|
78,750
|
(5)
|
|
|
|
|
|
Note payable of $78,750 to an unrelated party dated October 28, 2019 for cash of $75,000, with interest at 10% per annum and due on October 28, 2020. The Note is a convertible promissory note. The conversion price equals the lesser of (i) the price per share of Common Stock sold to investors in the Offering Statement, or (ii) a variable conversion Price” equal to 60% multiplied by the lowest Trading Price for the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date, representing a discount rate of 40%.
|
|
|
78,750
|
(6)
|
|
|
|
|
|
Note payable of $78,750 to an unrelated party dated October 28, 2019 for cash of $75,000, with interest at 10% per annum and due on October 28, 2020. The Note is a convertible promissory note. The conversion price shall equal the lesser of (i) the price per share of Common Stock sold to investors in the Offering Statement, or (ii) a variable conversion Price” equal to 60% multiplied by the lowest Trading Price for the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date, representing a discount rate of 40%.
|
|
|
78,750
|
(7)
|
|
|
|
|
|
On October 18, 2019, Legend Nutrition, Inc. (“Legend”), a wholly owned subsidiary of the Company entered into an Asset Purchase Agreement with David Morales to acquire all of the assets associated with and related to a retail vitamin, supplements and nutrition store located in Mckinney, TX and currently identified and doing business as “Ideal Nutrition.” Pursuant to the Asset Purchase Agreement, Legend purchased a variety of assets including software, contracts, bank and merchant accounts, products, inventory, computers, security systems and other intellectual properties (the “Assets”). Legend is continuing to operate the business as Ideal Nutrition and intends to officially rebrand as Legend Nutrition in the upcoming months. For consideration of the Assets, Legend issued to Mr. Morales a promissory note in the amount of $75,000 bearing an interest rate of five percent (5%) per annum and with a maturity date of one year.
|
|
|
75,000
|
|
Less: partial repayment
|
|
|
(6,500
|
)
|
|
|
|
68,500
|
(8)
|
|
|
$
|
524,750
|
|
Less: unamortized discount
|
|
|
(282,144
|
)
|
Total
|
|
$
|
242,606
|
|
Convertible notes
|
|
$
|
144,106
|
|
Non-convertible notes
|
|
$
|
98,500
|
|
Note
9 – Loans to Related Parties
As
of December 31, 2019, AMIH had a 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.
|
|
$
|
13,473
|
|
|
|
|
|
|
Note
payable to a related party dated June 21, 2019 for $40,000, with interest at 8% per annum and due on June 21, 2020. The promissory
note is unsecured. Furthermore, the Company issued 50,000 shares of the Company’s common stock to the related party
investor as further consideration to enter into the loan with the Company. The Company issued 50,000 shares of common stock
valued at $0.10 per share, or $5,000, based on recent sales of common stock to the third party, which was accounted for a
discount on the note. This Note has been repaid in full as of the date of this Report.
|
|
|
40,000
|
|
|
|
|
|
|
Note
payable to a related party dated September 9, 2019 for $100,000, with interest at 8% per annum and due on September 9, 2020.
The promissory note is unsecured. Furthermore, the Company issued 100,000 shares of the Company’s common stock to the
related party investor as further consideration to enter into the loan with the Company. The Company issued 100,000 shares
of common stock valued at $1.00 per share, or $100,000, based on the market price on the date of issuance, which was accounted
for a discount on the note.
|
|
|
100,000
|
|
|
|
|
|
|
During
the year ended December 31, 2019, two of the Company officers and board members, loaned the Company $25,521. During the year
ended December 31, 2019, the Company repaid $110,724 of loans to the two officers/board members. The Company incurred $8,995
on imputed interest expense on related party borrowing during the year ended December 31, 2019. Outstanding loan balances
to these related parties was $35,879 at December 31, 2019.
|
|
|
35,879
|
|
|
|
|
|
|
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 5,900,000 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
5,900,000 shares of common stock. 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 accrued $25,216 of interest on these notes during the year ended December
31, 2019.
|
|
|
350,000
|
|
|
|
|
|
|
The
Company incurred long term debt in the amount of $37,027 during the six months ended September 30, 2019 to purchase equipment
used in its operations. The total purchase price was $37,027, with the Company making a down payment in the amount of $3,000.
The note is due in monthly payments of $1,258.50, including interest at 8%, due in September 2021.
|
|
|
26,753
|
|
|
|
|
|
|
|
|
$
|
566,105
|
|
Less:
unamortized discount
|
|
|
(69,126
|
)
|
|
|
|
496,979
|
|
Short-term
loans payable
|
|
$
|
133,854
|
|
Long-term
loans payable
|
|
$
|
363,125
|
|
The
maturities of long-term debt is as follows:
Year
|
|
|
Amounts
|
|
2021
|
|
|
363,125
|
|
Total
|
|
$
|
363,125
|
|
Note
10 – 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 $311,250, represents 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 issuance, conversion and the year ended December 31, 2019 as set forth in the table
below.
Initial derivative liabilities
at issuance
|
|
$
|
311,250
|
|
Conversion
|
|
|
-
|
|
Mark to market
changes
|
|
|
147,495
|
|
Derivative liabilities as of December
31, 2019
|
|
$
|
458,745
|
|
As
of December 31, 2019, the Company had derivative liabilities of $458,745, and recorded changes in derivative liabilities in amount
of $147,495 during the year ended December 31, 2019.
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 161% through 231% 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.
|
Note
11 – Billing in Excess of Costs and Estimated Earnings
The
Company has two long-term contracts in progress at December 31, 2019. Work has started on the long-term contracts that will have
costs and earnings in the following periods:
Job
|
|
Normandy
|
|
|
Gateway Village
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Contract Revenues
|
|
|
640,998
|
|
|
|
6,692,266
|
|
|
|
|
|
Estimated cost of goods sold (COGS)
|
|
|
578,118
|
|
|
|
4,725,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Gross Profit
|
|
|
62,880
|
|
|
|
1,966,354
|
|
|
|
|
|
Gross Margin
|
|
|
10
|
%
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COGS in 2019
|
|
|
199,482
|
|
|
|
1,444,397
|
|
|
$
|
1,643,879
|
|
Total actual COGS
|
|
|
199,482
|
|
|
|
1,444,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of completion
|
|
|
35
|
%
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - POC
|
|
|
220,886
|
|
|
|
1,496,680
|
|
|
|
|
|
less: previously recognized
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
recognized in 2019
|
|
|
220,886
|
|
|
|
1,496,680
|
|
|
$
|
1,717,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill to Date
|
|
$
|
302,999
|
|
|
$
|
3,072,565
|
|
|
$
|
3,375,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billing in excess of costs and estimated earnings
|
|
$
|
82,113
|
|
|
$
|
1,575,885
|
|
|
$
|
1,657,998
|
|
Contract
assets represent revenue recognized in excess of amounts billed and include unbilled receivables (typically for cost reimbursable
contracts), which was $0 as of December 31, 2019. Unbilled receivables, which represent an unconditional right to payment subject
only to the passage of time, are reclassified to accounts receivable when they are billed under the terms of the contract. Contract
liabilities represent amounts billed to clients in excess of revenue recognized to date, which was $1,657,998 as of December 31,
2019. The company recognized revenue of $1,717,566 during the year ended December 31, 2019. The company anticipates that substantially
all incurred cost associated with contract assets as of December 31, 2019 will be billed and collected within one year.
Note 12 – Income Taxes
The Company has current net operating loss
carryforwards in excess of $692,653 as of December 31, 2019, to offset future taxable income, which expire beginning 2029.
Deferred taxes are determined based on
the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted
tax rates, which will be in effect when these differences reverse. The components of deferred income tax assets are as follows:
2019
|
Deferred Tax Asset:
|
|
|
|
|
Net Operating Loss
|
|
|
143,878
|
|
Valuation Allowance
|
|
|
(143,878
|
)
|
Net Deferred Asset
|
|
|
-
|
|
At December 31, 2019, the Company provided
a 100% valuation allowance for the deferred tax asset because it could not be determined whether it was more likely than not that
the deferred tax asset/(liability) would be realized.
Note
13 – Capital Stock
The
Company is authorized to issue up to 5,000,000 shares of preferred stock, $ 0.0001 par value, of which 3 shares were designated
as Series A Preferred Stock and 2,000,000 were designated as Series B Preferred stock.
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 the fully conversion 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, for the five trading days immediately
preceding the date the notice of conversion is received, subject to the limit as 4.999% of the Company’s outstanding shares
of common stock. The holders of Series B Preferred Stock have no voting rights.
As
of December 31, 2019 and 2018, there was no preferred stock issued and outstanding.
The
Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, of which 27,208,356 shares are issued
and outstanding (outstanding shares includes 1,650,410 treasury shares) at December 31, 2019 and 18,000,000 at December 31, 2018.
As
part of the 10,933,356 shares before the reverse merger, the Company issued 3,800,000 shares of common stock to Robert Holden
for future services as the Company CEO and Director on May 31, 2018 to pursue a digital marketing business under the name of Digital
Marketing Interactive. As a result of the resignation of Mr. Holden on August 19, 2018, the Company no longer anticipates operating
under the d/b/a Digital Marketing Interactive and/or maintaining a business focus in digital marketing moving forward. The Company
has taken legal action to recover the 3,800,000 shares of stock issued to Mr. Holden, which action is currently pending.
On
April 12, 2019, the Company issued 18,000,000 shares of common stock for the acquisition Novopelle.
On
April 12, 2019, the Company entered into four exchange agreements with current shareholders to cancel 5,900,000 shares of common
stock in exchange for four long-term notes totaling $350,000. As of December 31, 2019, 4,250,000 shares were returned to Treasury
for cancellation, and 1,650,000 shares were cancelled in 2020.
On
May 3, 2019, the Company issued 100,000 shares of the Company’s common stock to a non-related third-party investor in exchange
for $10,000 in cash.
On
June 21, 2019, the Company issued 50,000 shares of common stock as part consideration of a loan agreement. The shares were valued
at $0.10 per share or $5,000 based on recent sales of common stock to the third party.
On
June 24, 2019, the issued 250,000 shares of the Company’s common stock as part consideration of an exclusive licensing agreement.
The shares were valued at $0.10 per share or $25,000 based on recent sales of common stock to the third party.
On
August 23, 2019, the Company issued 100,000 shares of the Company’s common stock in consideration for consulting services.
The shares were valued at $1.50 per share or $150,000 based on the market price on the date of issuance.
On
September 9, 2019, the Company issued 100,000 shares of common stock as part consideration of a loan agreement. The shares were
valued at $1.00 per share or $100,000 based on the market price on the date of issuance.
On
October 11, 2019, the Company issued 10,000 shares of common stock as part consideration of a loan agreement. The shares were
valued at $1.16 per share or $11,600 based on the market price on the date of issuance.
As
of December 31, 2019, the Company recorded common stock payable in the amount of $25,000 for an agreement to issue shares of common
stock that was not issued as of December 31, 2019.
On
July 5, 2019, our Board of Directors adopted and approved our 2019 Stock Option and Incentive Plan (the “Plan”).
The Plan is intended to promote the interests of our Company by providing eligible person with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Company as an incentive for them to remain in the service of
the Company. The maximum number of shares available to be issued under the Plan is currently 10,000,000 shares, subject to adjustments
for any stock splits, stock dividends or other specified adjustments which may take place in the future. The Company issued
a total of 1,915,000 shares to eligible persons under the Plan and recorded a total $2,141,790 as Stock Based Compensation
against these issuances for the year ended December 31, 2019 based on the market price on the date of issuance.
Note
14 – Going Concern
These
consolidated financial statements have been prepared assuming that 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 of $3,212,248 for the year ended December 31, 2019,
an accumulated deficit of $3,219,768. 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 – Uncertainties
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 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 that certain 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 courts 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 650,000 of the 750,000 shares the Company’s common stock that Mr. Fields 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”). 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
100,000 shares. Fields agreed in the Exchange Agreement that these shares would not become unrestricted until such time as 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 650,000 shares which were cancelled.
Note
16 – Subsequent Events
On January 3 2020, 1,650,000 shares were
cancelled in connection with the four exchanges agreements, dated April 12, 2019, pursuant to which 5,900,000 shares of common
stock shall be cancelled in exchange for four long-term notes totaling $350,000. 4,250,000 shares were returned to Treasury for
cancellation in 2019.
On January 10, 2020, the Company issued 250,000
shares of common stock as part of an employment agreement to Jesse J. Dickens, CEO of CCS. The shares were valued at $0.61 per
share or $152,500.
On
January 13, 2020, the Company issued 357,142 shares of common stock in connection with a Data Delivery and Ancillary Services
Agreement. The shares were valued at $0.70 per share or $250,000 of which $25,000 was allocated for ancillary services and $225,000
was allocated for the purchase of consumer records and data to be utilized for marketing purposes.
On
January 16, 2020, the Company issued 62,500 common shares to an investor in exchange for $25,000 in cash and $25,000 of principal
and interest due under that certain convertible promissory note between the Company and the investor dated August 26, 2019. The
Company received these funds on November 26, 2019 and the 62,500 shares were placed as shares payable to the investor as they
were not issued until January 16, 2020. The shares issued to the investor are part of the 10,000,000 Shares offered and registered
by the Company under its filed and effected Offering Statement.
On
January 24, 2020, the Company issued 400,000 shares of the Company’s common stock to eligible persons under the Plan. The
shares were valued at $0.30 per share or $120,000.
On
February 24, 2020, the Company entered into a Securities Purchase Agreement with Adar Alef, LLC, an accredited investor (“Adar
Alef”), pursuant to which the Company sold Adar Alef a convertible promissory note in the principal amount of $157,500,
representing a purchase price of $150,000 and an original issue discount of $7,500, in exchange for $150,000 in cash (the “Adar
Alef Note”). The Adar Alef Note accrues interest at a rate of 8% per annum and has a maturity date of February 24, 2021.
The Company reimbursed a total of $7,500 of Adar Alef’s legal fees in connection with the sale of the note. The outstanding
balance of the Adar Alef Note is automatically reduced by $7,500 if, on the 6th monthly anniversary of the issuance date of the
Adar Alef Note, the closing price of the Company’s common stock is greater than $0.30 per share.
On
February 28, 2020, the Company issued 160,000 common shares to an investor in exchange for $50,000 in cash and $30,000 of principal
and interest due under that certain convertible promissory note between the Company and the investor dated August 26, 2019. The
shares issued to the investor are part of the 10,000,000 Shares offered and registered by the Company under its filed and effected
Offering Statement.
On
March 11, 2020, the Company issued 100,000 shares of the Company’s common stock to eligible persons under the Plan. The
shares were valued at $0.40 per share or $40,000.
On
April 1, 2020, the Company issued 40,000 common shares to an investor in exchange for $20,000 of principal and interest due under
that certain convertible promissory note between the Company and the investor dated October 10, 2019.
On
April 20, 2020, the Company entered into a Securities Purchase Agreement with Geneva Roth Remark Holdings, Inc., an accredited
investor (“Geneva Roth”), pursuant to which the Company sold Geneva Roth a convertible promissory note in the principal
amount of $88,000 (the “Geneva Roth Note #1”). The Geneva Roth Note #1 accrues interest at a rate of 8% per annum
(22% upon the occurrence of an event of default) and has a maturity date of April 20, 2021.
On
April 30, 2020, the Company entered into a Securities Purchase Agreement with FirstFire Global Opportunities Fund, LLC, an accredited
investor (“FirstFire”), pursuant to which the Company sold FirstFire a convertible promissory note in the principal
amount of $105,000, representing a purchase price of $100,000 and an original issue discount of $5,000 (the “FirstFire Note”).
The FirstFire Note accrues interest at a rate of 8% per annum (15% upon the occurrence of an event of default) and has a maturity
date of April 30, 2021.
On
May 13, 2020, the Company provided NMAC with its notice to terminate the License Agreement in pursuit of the Company’s desire
to establish and develop its own brand and have the flexibilities to offer additional products and services that are not currently
available at Novopelle branded locations. Effective on May 13, 2020 the License Agreement was terminated.
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 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.
On
May 19, 2020, the Company entered into a Securities Purchase Agreement with Geneva Roth, pursuant to which the Company sold Geneva
Roth a convertible promissory note in the principal amount of $53,000 (the “Geneva Roth Note #2”). The Geneva Roth
Note #2 accrues interest at a rate of 8% per annum (22% upon the occurrence of an event of default) and has a maturity date of
May 19, 2021.
On
May 20, 2020, the Company issued one share of its newly designated shares of Series A Preferred Stock to each of the three members
of its then Board of Directors, (1) Jacob D. Cohen, (2) Esteban Alexander and (3) Luis Alan Hernandez, in consideration for services
rendered to the Company as members of the Board of Directors. Such shares of Series A Preferred Stock vote in aggregate sixty
percent (60%) of the total vote on all shareholder matters, voting separately as a class. Notwithstanding such voting rights,
no change in control of the Company was deemed to have occurred in connection with the issuance since Messrs. Cohen, Alexander
and Hernandez, own in aggregate 68% of the Company’s outstanding common stock and therefore controlled the Company prior
to such issuance.
On
May 22, 2020, the Company issued 250,000 shares of common stock as part of an employment agreement to Jesse J. Dickens, CEO of
CCS. The shares were valued at $0.26 per share or $65,000.
On
May 22, 2020, the Company issued 3,000,000 shares of common stock to Jacob Cohen, the Company’s Director and CEO, as a bonus
for services rendered. The shares were valued at $0.26 per share or $780,000.
On
May 22, 2020, the Company issued 3,000,000 shares of common stock to Esteban Alexander, the Company’s Director and COO,
as a bonus for services rendered. The shares were valued at $0.26 per share or $780,000.
On
May 27, 2020, the Company issued 20,000 shares of the Company’s common stock to eligible persons under the Plan. The shares
were valued at $0.26 per share or $5,200.
On
June 2, 2020, the Company issued 2,083,333 shares of the Company’s common stock to GCN in connection with the conversion
of 500,000 shares of Series B Convertible Preferred stock. The shares were valued at $0.24 per share or $500,000.
On
June 4, 2020, the Company issued 50,000 common shares to an investor in exchange for $6,600 of principal and interest due under
that certain convertible promissory note between the Company and the investor dated October 28, 2019.
On
June 8, 2020, the Company issued 125,000 shares of the Company’s common stock to eligible persons under the Plan. The shares
were valued at $0.27 per share or $33,750.
Management
has evaluated all subsequent events from December 31, 2019 through the issuance date of the financial statements for subsequent
event disclosure consideration. No change to the financial statements for the year ended December 31, 2019 is deemed necessary
as a result of this evaluation.