As
filed with the Securities and Exchange Commission on January 28, 2021
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMERICAN
INTERNATIONAL HOLDINGS CORP.
(Exact
name of registrant as specified in its charter)
Nevada
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8000
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88-0225318
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
Number)
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3990
Vitruvian Way, Suite 1152
Addison,
Texas 75001
(972)
803-5337
(Address, including zip code, and telephone number,
including
area code, of registrant’s principal executive offices)
Jacob
D. Cohen
Chief Executive Officer
American International Holdings Corp.
3990 Vitruvian Way, Suite 1152
Addison,
Texas 75001
(972)
803-5337
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service of process)
Copies
To:
David
M. Loev, Esq.
John
S. Gillies, Esq.
The
Loev Law Firm, PC
6300
West Loop South, Suite 280
Bellaire,
Texas 77401
Telephone:
(713) 524-4110
Facsimile:
(713) 524-4122
Email:
dloev@loevlaw.com; john@loevlaw.com
Approximate
date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box: [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2
of the Exchange Act.
Large
accelerated filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [X]
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Smaller
reporting company [X]
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Emerging
growth company [ ]
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. [ ]
CALCULATION
OF REGISTRATION FEE
Title of Each Class of
Securities to be Registered
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Amount to be
Registered(1)
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Proposed Maximum
Offering
Price
Per Share
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Proposed Maximum
Aggregate
Offering
Price
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Amount of
Registration
Fee
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Common Stock, $0.0001 par value per share
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8,000,000 shares
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(2)
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$
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0.3333
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(4)
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$
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2,800,000
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$
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305.48
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Common Stock, $0.0001 par value per share
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6,750,000 shares
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(5)
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$
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0.3333
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(4)
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$
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2,362,500
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$
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257.75
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Total
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14,750,000 shares
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$
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0.3333
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$
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5,162,500
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$
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563.23
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(1)
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Pursuant
to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this Registration Statement
shall also cover any additional shares of the Registrant’s common stock that become issuable by reason of any stock
split, stock dividends, recapitalization, or other similar transactions.
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(2)
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Represents
up to 8,000,000 shares of common stock of the Registrant which may be issued, upon conversion of principal, accrued interest,
and late charges, owed by the Registrant pursuant to those certain 6% Original Issue Discount Senior Secured Convertible Promissory
Notes in the aggregate principal amount of $850,000, which were sold by the Registrant on January 6, 2021, at the option of
the holders thereof. The notes are convertible into shares of the Registrant’s common stock at any time, at a rate equal
to the lesser of (i) $0.50 per share and (ii) 75% of the lowest daily volume-weighted average price (VWAP) of the Registrant’s
common stock during the seven consecutive trading days prior to the delivery of a conversion notice (the “Market
Price”), but not less than 75% of the VWAP on January 6, 2021 ($0.40 per share, making the floor price $0.30 per
share). However, if while any 6% Convertible Notes are outstanding and the daily VWAP on any of seven consecutive trading
days is less than the applicable floor price(s), such floor price(s) are reduced (but not increased) to 75% of the VWAP on
the seventh trading day, as such the maximum number of shares of common stock issuable upon conversion of the notes is equal
to the amount of principal, interest and late charges owed by the Registrant under such notes (currently approximately $850,000),
divided by the par value of the Company’s common stock (the lowest legal conversion price), $0.0001 per share.
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(3)
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Represents
shares of common stock of the Registrant issuable upon exercise of Common Stock Purchase Warrants to purchase (a) 2,250,000
shares of common stock exercisable at $0.20 per share; (b) 2,250,000 shares of common stock exercisable at $0.35 per share;
and (c) 2,250,000 shares of common stock exercisable at $0.50 per share, which were granted by the Company on January 6, 2021.
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(4)
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Estimated
in accordance with Rule 457(c) of the Securities Act solely for purposes of calculating the registration fee. The Proposed
Maximum Offering Price Per Share and the Proposed Maximum Aggregate Offering Price are based on the average of the $0.39 (high)
and $0.30 (low) sale price of the Registrant’s common stock as reported on the OTCQB Market on January 26, 2021, which
date is within five business days prior to filing this Registration Statement.
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The
registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on
such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 28, 2021
AMERICAN
INTERNATIONAL HOLDINGS CORP.
14,750,000
Shares of Common Stock
This
prospectus relates to the resale by the selling stockholders named herein of up to 14,750,000 shares of common stock, par value
$0.0001 per share, which we refer to as common stock, of American International Holdings Corp., which we refer to as us, we, the
Company, the Registrant or American International, consisting of (i) up to 8,000,000 shares of common stock issuable upon conversion
of the principal, accrued interest, and late charges, from time to time, under those certain 6% Original Issue Discount Senior
Secured Convertible Promissory Notes (the “6% Convertible Notes”), in an aggregate principal amount of $850,000,
issued by the Company to the selling stockholders on January 6, 2021 (the “First Tranche Notes”); and (b) up
to 6,750,000 shares of the Company’s common stock issuable upon exercise of those certain Common Stock Purchase Warrants
dated January 6, 2021, which were granted to the selling stockholders on the same date (the “Warrants”).
The
shares of common stock being offered by the selling stockholders (which term includes their respective donees, pledgees, transferees,
or other successors-in-interest) have been issued pursuant to a private offering transaction which closed on January 6, 2021,
which transaction, which 6% Convertible Notes, and which Warrants, are described in greater detail under “Securities Purchase Agreement”, beginning on page 26. The selling stockholders are described in greater detail under “Selling Stockholders”,
beginning on page 36.
The
shares of common stock described in this prospectus may be offered for sale from time to time by the selling stockholders named
herein. The selling stockholders may offer and sell the shares in a variety of transactions as described under the heading “Plan of Distribution” beginning on page 34, including transactions on any stock exchange, market or facility on which our common
stock may be traded, in privately negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices
related to such market prices or at negotiated prices. We have no basis for estimating either the number of shares of our common
stock that will ultimately be sold by the selling stockholders or the prices at which such shares will be sold.
We
are not selling any securities covered by this prospectus and will not receive any of the proceeds from the sale of such shares
by the selling stockholders. However, to the extent that the Warrants are exercised for cash, we will receive the payment of the
exercise price in connection with such exercise (see also “Use of Proceeds” on page 29 below). We are bearing all
of the expenses in connection with the registration of the shares of common stock, but all selling and other expenses incurred
by the selling stockholders, including commissions and discounts, if any, attributable to the sale or disposition of the shares
will be borne by them.
The
selling stockholders and intermediaries through whom such securities are sold may be deemed “underwriters”
within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the securities
offered hereby, and any profits realized or commissions received may be deemed underwriting compensation.
A
current prospectus must be in effect at the time of the sale of the shares of common stock discussed above and each selling stockholder
or dealer selling the common stock is required to deliver a current prospectus upon the sale. The selling stockholders will be
responsible for any commissions or discounts due to brokers or dealers. We will pay all of the other offering expenses.
In
addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 of the Securities Act may be sold
under Rule 144 rather than pursuant to this prospectus.
Our
common stock is considered a “penny stock”, and subject to the requirements of Rule 15g-9, promulgated under
the Exchange Act of 1934, as amended. “Penny stock” is generally defined as any equity security not traded
on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend
low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice
requirements, including a requirement that they make an individualized written suitability determination for the purchaser and
receive the purchaser’s consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act
of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.
The
required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining
the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities
and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose
restrictions on transferring “penny stocks” and as a result, investors in the common stock may have their ability
to sell their shares of the common stock impaired.
Our
common stock is quoted on the OTCQB Market under the symbol “AMIH”. The closing price for our common stock
on January 26, 2021, was $0.333 per share.
Investing
in our securities involves risks. You should carefully consider the “risk factors” beginning on page 9 of this prospectus
and set forth in the documents incorporated by reference herein before making any decision to invest in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is , 2021.
TABLE
OF CONTENTS
About
This Prospectus
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”
or the “Commission”). This prospectus relates to the resale by the selling stockholders listed in this prospectus
of up to 14,750,000 shares of our common stock. We will not receive any proceeds from the resale of any of the shares by the selling
stockholders. However, to the extent that the Warrants are exercised for cash, we will receive the payment of the exercise price
in connection with such exercise (see also “Use of Proceeds” on page 29 below). We have agreed to pay for the expenses
related to the registration of the shares being offered by the selling stockholders.
You
should read this prospectus, together with additional information described under “Where You Can Find More Information”,
beginning on page 74, before making an investment decision.
This
prospectus does not contain all the information provided in the registration statement we filed with the SEC. For further information
about us or our securities offered hereby, you should refer to that registration statement, which you can obtain from the SEC
as described below under “Where You Can Find More Information”, beginning on page 74.
You
should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent information, you should not rely on it. This
prospectus is not an offer to sell or the solicitation of an offer to buy any securities other than the securities to which it
relates and is not an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom
it is unlawful to make an offer or solicitation in that jurisdiction.
We
will disclose any material changes in our affairs in a post-effective amendment to the registration statement of which this prospectus
is a part, or a prospectus supplement. We do not imply or represent by delivering this prospectus that American International
Holdings Corp., or its business, financial condition or results of operations, are unchanged after the date on the front of this
prospectus is correct at any time after such date, provided that we will amend or supplement this prospectus to disclose any material
events which occur after the date of such prospectus to the extent required by applicable law.
Persons
outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions
relating to, the offering of the securities and the distribution of this prospectus outside of the United States.
Our
logo and some of our trademarks and tradenames are used in this prospectus. This prospectus also includes trademarks, tradenames
and service marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to
in this prospectus may appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service
marks are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or
the rights of the applicable licensors if any, nor that respective owners to other intellectual property rights will not assert,
to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’
trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
The
market data and certain other statistical information used throughout this prospectus are based on independent industry publications,
reports by market research firms or other independent sources that we believe to be reliable sources. Industry publications and
third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to
be reliable, although they do not guarantee the accuracy or completeness of such information. We are responsible for all of the
disclosure contained in this prospectus, and we believe these industry publications and third-party research, surveys and studies
are reliable. While we are not aware of any misstatements regarding any third-party information presented in this prospectus,
their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties,
and are subject to change based on various factors, including those discussed under the section entitled “Risk Factors”
beginning on page 9 of this prospectus. These and other factors could cause our future performance to differ materially from our
assumptions and estimates. Some market and other data included herein, as well as the data of competitors as they relate to American
International Holdings Corp., is also based on our good faith estimates.
Unless
the context otherwise requires, references in this prospectus to:
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“we,”
“us,” “our,” the “Registrant”, the “Company,”
and “American International”, refer to American International Holdings Corp. and its subsidiaries;
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“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended;
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“SEC”
or the “Commission” refers to the United States Securities and Exchange Commission; and
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“Securities
Act” refers to the Securities Act of 1933, as amended. All dollar amounts in this prospectus are in U.S. dollars
unless otherwise stated. You should read the entire prospectus before making an investment decision to purchase our securities.
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Cautionary
Statement Regarding Forward-Looking Statements
This
prospectus, each prospectus supplement and the information incorporated by reference in this prospectus and each prospectus supplement
contain certain statements that constitute “forward-looking statements” within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act. The words “believe,” “may,”
“will,” “potentially,” “estimate,” “continue,” “anticipate,”
“intend,” “could,” “would,” “project,” “plan,”
“expect” and the negative and plural forms of these words and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying such statements. Those statements appear in this prospectus,
any accompanying prospectus supplement and the documents incorporated herein and therein by reference, particularly in the sections
titled “Prospectus Summary” and “Risk Factors,” and include statements regarding the intent, belief or current
expectations of the Company and management that are subject to known and unknown risks, uncertainties and assumptions.
This
prospectus, any prospectus supplement and the information incorporated by reference in this prospectus and any prospectus supplement
also contain statements that are based on the current expectations of our Company and management. You are cautioned that any such
forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results
may differ materially from those projected in the forward-looking statements as a result of various factors.
Because
forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified,
you should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in
the forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in
the forward-looking statements. Except as required by applicable law, including the securities laws of the United States and the
rules and regulations of the SEC, we do not plan to publicly update or revise any forward-looking statements contained herein
after we distribute this prospectus, whether as a result of any new information, future events or otherwise.
You
should also consider carefully the statements under “Risk Factors” and other sections of this prospectus, which address
additional facts that could cause our actual results to differ from those set forth in the forward-looking statements. We caution
investors not to place significant reliance on the forward-looking statements contained in this prospectus.
Prospectus
Summary
The
following summary highlights material information found in more detail elsewhere in the prospectus. It does not contain all of
the information you should consider. As such, before you decide to buy our common stock, in addition to the following summary,
we urge you to carefully read the entire prospectus, especially the risks of investing in our common stock as discussed under
“Risk Factors.”
About
American International Holdings Corp.
The
Company is headquartered in Addison, Texas and operates as a holding company dedicated to acquiring, managing and operating subsidiaries
in (a) the health, wellness, medical spa and auxiliary industries across the United States and abroad; (b) general contracting
and construction services; and (c) life coaching industry. The Company seeks opportunities to acquire and grow businesses that
possess strong brand values and that can generate long-term sustainable free cash flow and attractive returns in order to maximize
value for all stakeholders.
The
Company currently is the parent to seven wholly-owned subsidiaries and one majority owned subsidiary.
MEDICAL
SPA AND WELLNESS
The
Company currently owns three wholly-owned subsidiaries that are in the Medical Spa and Wellness Sector (collectively hereinafter
referred to as “MedSpa”, or “VISSIA”). They are:
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1.
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VISSIA
MCKINNEY, LLC (F/K/A NOVOPELLE DIAMOND, LLC) – 100% OWNED
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VISSIA
McKinney is a physician supervised, medical spa and wellness clinic that when operational offers a full menu of wellness services
including anti-aging, weight loss and skin rejuvenation treatments located at 5000 Collin McKinney Parkway, Suite 150, McKinney,
Texas 75070.
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2.
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VISSIA
WATERWAY, INC. (F/K/A NOVOPELLE WATERWAY, INC.) – 100% OWNED
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VISSIA
McKinney is a physician supervised, medical spa and wellness clinic that when operational offers a full menu of wellness services
including anti-aging, weight loss and skin rejuvenation treatments located at 25 Waterway, Suite 150, The Woodlands, Texas.
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3.
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NOVOPELLE
TYLER, INC. – 100% OWNED
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On
December 3, 2019, the Company formed and organized Novopelle Tyler, Inc. in the State of Texas with the plan to come to terms
on a retail location for a newly established Novopelle branded med spa to be located in Tyler, Texas. The Company no longer intends
to open this location and no activity has been performed under this entity to date.
*
* * * *
As
a result of COVID-19 and ‘stay-at-home’ and social distancing orders issued in McKinney and The Woodlands, Texas,
we had to close both of our then operational MedSpas, VISSIA McKinney and VISSIA Waterway, Inc., which were closed effective March
10, 2020, and which resulted in both the loss of income and the loss of most of our workforce, who had to be let go. VISSIA Waterway,
Inc. reopened effective June 21, 2020 and VISSIA McKinney reopened effective August 8, 2020. However, due to the termination of
employees associated with the shutdown we were forced to expend resources to attract, hire and train completely new staff for
preparation of the re-launchings. Notwithstanding the re-openings, customer traffic and demand at our VISSIA Waterway, Inc. and
VISSIA McKinney MedSpa locations failed to rebound to pre-closure levels due to COVID-19 and the pandemic’s effects on the
economy, and because we are unable to predict the length of the pandemic or ultimate outcome thereof, and further due to our limited
capital resources, effective on October 25, 2020, we made the decision to temporarily close both our VISSIA Waterway, Inc. and
VISSIA McKinney locations, which remain closed as of the date of this prospectus. We are currently seeking both financial and
operating partners to assist in the further management and operations of our VISSIA brand, to help fund the re-opening of our
spas and are also entertaining any and all purchase opportunities for such brand and spas as well.
VISSIA
Service Offerings
Our
VISSIA med spas are Texas based, physician-supervised medical spa & wellness clinics. When operational, VISSIA offers the
following products and services:
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Stem
Cell Therapy
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Acne
& Acne Scar Reduction
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Laser
Hair Removal
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Testosterone
Replacement Therapy
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PRP
Facial (Vampire Facial)
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Hair
Restoration
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Novo
Lipo (Body Contouring)
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Botox
& Fillers
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Laser
Vein Removal
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Facials
& Peels
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Cellulite
Reduction
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Weight
Loss Solutions
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Stretch
Mark Reduction
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IV
Therapies
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Medical
Spa Marketing Strategy
When
operational, VISSIA markets its products and services to both men and women that are conscience about fitness, health, wellness
and aesthetics.
When
operational, VISSIA deploys unique, proven marketing strategies through social media with both sponsored and paid advertisements
as well as the use of local brand ambassadors and influencers. VISSIA has also experienced a lot of success by placing marketing
materials in nearby retail establishments and utilizing cross marketing relationships with other vendors and retailers that market
to similar demographics.
CAPITOL
CITY SOLUTIONS, USA, INC. – 100% OWNED
On
September 17, 2019, the Company formed and organized Capitol City Solutions USA, Inc. (“CCS”) in the State
of Texas to act as a general contracting and construction company focused on the remodeling, general construction and interior
finish of both the Company’s newly established med spa locations as well as to market to other commercial real estate projects
within the United States.
Service
Offerings
CCS
currently offers a variety of general contracting services to oversee the entirety of commercial construction projects and manage
all phases of construction. These areas can range from permitting, roofing and exterior construction or remodeling, to interior
finish out, including but not limited to cabinetry, drywall, plumbing and electrical. CCS primarily utilizes the services of its
sub-contractors in order to perform its services and in some instances will perform various construction related tasks with its
own work force in order to improve its project specific margins and profitability.
LEGEND
NUTRITION, INC. – 100% OWNED
On
September 23, 2019, the Company formed and organized Legend Nutrition, Inc. (“Legend Nutrition”) in the State
of Texas to act as a new brand of retail vitamin and supplement stores to be branded and marketed as Legend Nutrition.
October
18, 2019, Legend entered into an Asset Purchase Agreement to acquire all of the assets associated with and related to a retail
vitamin, supplements and nutrition store located in McKinney, Texas and previously 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.
Product
and Service Offerings
Legend
Nutrition is currently operating a 1,500 square foot retail store offering a variety of vitamin & nutritional supplements
as well as nutritional and weight loss plans through a consultative approach with each and every customer. Legend Nutrition’s
products include, but are not limited to, a variety of workout related supplements such as vitamins, protein powders, pre-workout
powders, and post-workout supplements that focus on muscle and overall health recovery. Legend Nutrition is currently located
at 2851 Craig Drive, Suite #204, McKinney, TX 75070.
Although
our MedSpas were forced to close during the second and third quarters of 2020, and are temporarily closed for economic reasons
currently, Legend Nutrition was able to remain open as an essential business as we sold vitamins and other nutritional supplements.
Though the store was able to remain open, the store saw, and continues to see, a deep decline in sales due to social distancing
orders and decreases in customers who are willing to venture out to brick and mortar establishments. Legend Nutrition’s
lease is up January 31, 2021, and the Company plans to not renew the lease, close the store, and not continue in this line of
business moving forward.
LIFE
GURU, INC. – 51% OWNED
On
May 15, 2020, the Company acquired a 51% interest in Life Guru, Inc., a Delaware corporation. Life Guru owns the website www.LifeGuru.me
– a website dedicated to providing an online platform to connect consumers to a variety of mentors, professionals, life
coaches and career coaches (which includes information the Company does not desire to incorporate by reference into this prospectus).
The LifeGuru.me website is currently in development and is anticipated to be fully launched on or before March 31, 2021.
ZIPDOCTOR,
INC. – 100% OWNED
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’s online telemedicine platform is available to customers across the United States and offers bilingual coverage
(both English and Spanish), with virtual visits taking place either via the phone or through a secured video chat platform. ZipDoctor
customers subscribe through the website and are only required to pay a low monthly fee, which is determined based on if they are
an individual, a couple, or a family. ZipDoctor is currently being sold on a direct-to-consumer basis with an emphasis on digital
marketing and advertising. The Company intends to shift the business model to focus on offering ZipDoctor’s services to
small to medium size companies, to be used by their employees as an employment health benefit. The Company launched the platform
in the third quarter of 2020 and has generated nominal revenues to date.
EPIQ
MD, INC. – 100% OWNED
On
October 23, 2020, the Company incorporated a wholly-owned subsidiary, EPIQ MD, Inc. (“EPIQ MD”) in the State
of Nevada. EPIQ MD is planned to be a direct to consumer, telemedicine and healthcare company targeting the over approximately
76 million Americans who are uninsured or underinsured; this includes, but is not limited to the working class, middle income
and upper middle-income demographics. The EPIQ MD service offering is planned to be a convergence of primary care telemedicine,
preventative care services and wellness programs – under one brand and on one platform. The EPIQ MD services are planned
to be sold directly to consumers using a direct sales model and utilizing brand ambassadors.
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* * * * *
The
Company intends to continue to grow its business both organically and through identifying acquisition targets over the next 12
months in the telemedicine, life coaching and wellness space. As these opportunities arise, the Company will determine the best
method for financing its growth which may include the issuance of additional debt instruments, common stock, preferred stock,
or a combination thereof, any one or more of which may cause significant dilution to existing shareholders. The Company will also
seek to raise capital through the issuance of shares under its ongoing Regulation A offering, in which the Company is offering
for sale up to 10,000,000 shares of common stock at $0.50 per share, for a total of up to $5,000,000 in gross offering proceeds
(the “Offering Statement”), assuming all securities are sold.
COVID-19
Outlook
The
outbreak of the 2019 novel coronavirus disease (“COVID-19”), which was declared a global pandemic by the World
Health Organization on March 11, 2020, and the related responses by public health and governmental authorities to contain and
combat its outbreak and spread has severely impacted the U.S. and world economies, the market for health spa services, nutrition
supplements and our other business offerings during the end of the first quarter of 2020, and continuing through the second and
third quarters of 2020. Government mandated ‘stay-at-home’ and similar orders have to date, and may in the future,
prevent us from staffing our spas and construction services, and prohibit us from operating altogether. As discussed above, effective
on October 25, 2020, we made the decision to temporarily close both our VISSIA Waterway, Inc. and VISSIA McKinney locations. Such
locations remain closed through the date of this prospectus. We are currently seeking both financial and operating partners to
assist in the further management and operations of our VISSIA brand, to help fund the re-opening of our spas and are also entertaining
any and all purchase opportunities for such brand and spas as well.
Additionally,
our Legend Nutrition store saw, and continues to see, a deep decline in sales due to social distancing orders and decreases in
customers who are willing to venture out to brick and mortar establishments. Legend Nutrition’s lease is up January 31,
2021, and the Company plans to not renew the lease, close the store, and not continue in this line of business moving forward.
We
currently anticipate experiencing ongoing disruptions to our ability to reopen our medical spas and provide construction services,
and provide future planned telehealth services and other offerings throughout the first half of 2021, at a minimum, as Texas,
and the U.S. in general, continues to deal with the COVID-19 pandemic. Any prolonged disruption to our operations, work force
available, or failure to reopen our MedSpas, is likely to have a significant adverse effect on our results of operations, cash
flows and ability to meet continuing debt service requirements. We have also experienced delays in completing construction projects
due to the effects of COVID-19.
Summary
Risk Factors
Our
business is subject to numerous risks and uncertainties, including those in the section entitled “Risk Factors” and
elsewhere in this prospectus. These risks include, but are not limited to, the following:
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Our
limited operating history;
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Our
need for additional funding to support our operations, repay debt and expand our operations;
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The
effects of COVID-19 on our operations and prospects, including the recent closures of our MedSpas, and the future effects
of COVID-19 on us and our operations;
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The
fact that our MedSpas are currently shut down;
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Impairments
we may be required to assess in connection with our assets and goodwill as a result of such shutdowns and/or otherwise;
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Risks
associated with our recent launch of a telehealth platform, including liability in connection therewith, funding needed to
support such operations and other risks associated with the operations of the telehealth platform;
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Disruptions
to our operations or liabilities associated with future acquisitions;
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Our
ability to continue as a going concern;
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Our
dependence on our sole officer and director, Jacob D. Cohen, including the lack of independent directors, and related party
transactions affecting the Company;
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Competition
we face;
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Our
ability to maintain our varied operations, and service our indebtedness;
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Material
weaknesses in our controls and procedures;
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Our
ability to obtain and maintain adequate insurance;
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Legal
challenges and litigation;
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Liability
associated with our contracting operations;
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The
terms of Mr. Cohen’s employment agreement;
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Dilution
caused by the conversion of outstanding notes, conversion of preferred stock, exercise of outstanding warrants, and future
fund-raising activities;
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The
price of, volatility in, and lack of robust trading market for, our common stock; and
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The
fact that Mr. Cohen has voting control over the Company.
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Penny
Stock Rules
Our
common stock is considered a “penny stock”, and subject to the requirements of Rule 15g-9, promulgated under
the Exchange Act. “Penny stock” is generally defined as any equity security not traded on an exchange or quoted
on NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities
to persons other than established customers and accredited investors must satisfy special sales practice requirements, including
a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser’s
consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional
disclosure in connection with any trades involving a stock defined as a penny stock.
The
required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining
the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities
and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose
restrictions on transferring “penny stocks” and as a result, investors in the common stock may have their ability
to sell their shares of the common stock impaired.
Additional
Information
Additional
information about us can be obtained from the documents described under “Where You Can Find More Information.”
This
Offering
The
selling stockholders named in this prospectus may offer and sell up to 14,750,000 shares of our common stock, par value $0.0001
per share. Our common stock is currently quoted on the OTC Markets Group Inc.’s OTCQB Market (the “OTCQB”)
under the trading symbol, “AMIH.”
Shares
of Common Stock Offered by the Selling Stockholders:
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14,750,000
shares of common stock, which represents (i) up to 8,000,000 shares of common stock issuable upon conversion of the principal,
accrued interest, and late charges, from time to time, under the $850,000 in 6% Convertible Notes, issued by the Company to
the selling stockholders on January 6, 2021, at the option of the holders thereof; and (b) up to 6,750,000 shares of the Company’s
common stock issuable upon exercise of the Warrants, which 6% Convertible Notes, and which Warrants, are described in greater
detail under “Securities Purchase Agreement”, beginning on page 26.
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Shares
of Common Stock Outstanding Prior to this Offering:
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65,475,605
shares of common stock.
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Shares
of Common Stock Outstanding After this Offering1:
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80,225,605
shares of common stock.
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Use
of Proceeds:
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We
will not receive any of the proceeds from the sale or other disposition by the selling stockholders or their transferees of
the shares of common stock covered hereby. However, to the extent that the Warrants are exercised for cash, we will receive
the payment of the exercise price in connection with such exercise (see also “Use of Proceeds” on page 29 below).
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Risk
factors:
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The
purchase of our common stock involves a high degree of risk. The common stock offered in this prospectus is for investment
purposes only and currently only a limited market exists for our common stock. Please refer to the section entitled “Risk Factors” before making an investment in our common stock.
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Trading
symbol:
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Our
common stock is quoted on the OTCQB under the trading symbol “AMIH”.
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In
this prospectus, unless otherwise indicated, the number of shares of our common stock and other capital stock, and the other information
based thereon, is as of January 28, 2021 and excludes:
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shares
issuable upon the exercise of outstanding warrants, options and convertible notes.
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Additionally,
unless otherwise stated, all information in this prospectus:
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reflects
all currency in United States dollars.
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1
Assumes the issuance of all shares of common stock registered in the registration statement, of which this prospectus
forms a part.
Risk
Factors
You
should be aware that there are substantial risks for an investment in our common stock. You should carefully consider these risk
factors, along with the other information included in this prospectus, before you decide to invest in our common stock.
If
any of the following risks were to occur, such as our business, financial condition, results of operations or other prospects,
any of these could materially affect our likelihood of success. If that happens, the market price of our common stock, if any,
could decline, and prospective investors would lose all or part of their investment in our common stock.
Risks
Related to our Business
Since
we have a limited operating history it is difficult for potential investors to evaluate our business.
Our
short operating history in the health and wellness industry, construction industry and mentoring/life coach industry may hinder
our ability to successfully meet our objectives and makes it difficult for potential investors to evaluate our business or prospective
operations. As an early-stage company, we are subject to all the risks inherent in the financing, expenditures, operations, complications
and delays inherent in a new business. Accordingly, our business and success face risks from uncertainties faced by developing
companies in a competitive environment. There can be no assurance that our efforts will be successful or that we will ultimately
be able to attain profitability.
We
may not be able to raise capital when needed, if at all, which would force us to delay, reduce or eliminate our service locations
and product development programs or commercialization efforts and could cause our business to fail.
We
expect to need substantial additional funding to pursue additional service locations and product development and commercialize
our products and services. There are no assurances that future funding will be available on favorable terms or at all. The failure
to fund our operating and capital requirements could have a material adverse effect on our business, financial condition and results
of operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate
our expansion of spa locations and development programs or any future commercialization efforts. Any of these events could significantly
harm our business, financial condition and prospects.
Our
business has been materially and adversely disrupted by COVID-19, and the control response measures that state and local governments
have implemented to address it, and may be impacted by other epidemics or pandemics in the future. We have been forced to temporarily
close our MedSpas.
An
epidemic, pandemic or similar serious public health issue, and the measures undertaken by governmental authorities to address
it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby,
and/or along with any associated economic and/or social instability or distress, have a material adverse impact on our consolidated
financial statements.
On
March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment
and mitigation measures. On March 13, 2020, the United States declared a national emergency concerning the outbreak, and several
states and municipalities have declared public health emergencies. Along with these declarations, there have been extraordinary
and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain
and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including quarantines, “stay-at-home”
orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail
or cease normal operations.
The
COVID-19 pandemic, and related social distancing requirements, travel bans, stay-at-home orders and closures limited access to
our spas and store and forced us to close our spas and store during the first quarter of 2020 and into the second quarter of 2020.
Specifically, as a result of COVID-19 and ‘stay-at-home’ and social distancing orders issued in McKinney and The Woodlands,
Texas, we had to close both of our MedSpas, VISSIA McKinney and VISSIA Waterway, Inc., which were closed effective March 10, 2020,
and which resulted in both the loss of income and the loss of most of our workforce, who had to be let go. VISSIA Waterway, Inc.
reopened effective June 21, 2020 and VISSIA McKinney reopened effective August 8, 2020. However, due to the termination of employees
associated with the shutdown we were forced to expend resources to attract, hire and train completely new staff for preparation
of the re-launchings. Notwithstanding the re-openings, customer traffic and demand at our VISSIA Waterway, Inc. and VISSIA McKinney
MedSpa locations failed to rebound to pre-closure levels due to COVID-19 and the pandemic’s effects on the economy, and
because we are unable to predict the length of the pandemic or ultimate outcome thereof, and further due to our limited capital
resources, effective on October 25, 2020, we made the decision to temporarily close both our VISSIA Waterway, Inc. and VISSIA
McKinney locations. Such locations remain closed through the date of this prospectus. We are currently seeking both financial
and operating partners to assist in the further management and operations of our VISSIA brand, to help fund the re-opening of
our spas and are also entertaining any and all purchase opportunities for such brand and spas as well.
Although
our MedSpas were forced to close during the second and third quarters, and are temporarily closed for economic reasons currently,
Legend Nutrition was able to remain open as an essential business as we sold vitamins and other nutritional supplements. Though
the store was able to remain open, the store saw, and continues to see, a deep decline in sales due to social distancing orders
and decreases in customers who are willing to venture out to brick and mortar establishments. Legend Nutrition’s lease is
up January 31, 2021, and the Company plans to not renew the lease, close the store, and not continue in this line of business
moving forward.
All
of the above has in turn, not only negatively impacted our operations, financial condition and demand for our services, but our
overall ability to react timely to mitigate the impact of this event. To date, our second through fourth 2020 financial results
have been, and we anticipate our financial results for the first half of 2021, at a minimum, will be, significantly negatively
affected by COVID-19 and the closure of our med spas in connection therewith (both due to governmental orders and separately due
to our lack of operating funds); however, the full effect on our business and operation is currently unknown. The outbreak of
COVID-19 has caused significant disruptions to the Company’s ability to generate revenues and cash flows, and uncertainty
regarding the length of the disruption may adversely impact our ability to raise additional capital.
The
ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows will depend
on our ability to have sufficient liquidity until such time as we are able to re-open our stores and until our stores can again
generate revenue capable of supporting our ongoing operations, if at all, all of which remain highly uncertain at this time.
We
currently anticipate experiencing ongoing disruptions to our ability to provide construction services, throughout 2021 (and likely
beyond) as the U.S. continues to deal with the COVID-19 pandemic. Any prolonged disruption to our operations is likely to have
a significant adverse effect on our results of operations, cash flows and ability to meet continuing debt service requirements.
The
inherent uncertainty surrounding COVID-19, due in part to rapidly changing governmental directives, public health challenges and
progress, and market reactions thereto, also makes it more challenging for our management to estimate the future performance of
our business and develop strategies to generate growth. Should the adverse impacts described above (or others that are currently
unknown) occur, whether individually or collectively, we would expect to experience, among other things, significant decreases
in our revenues and increases in net loss, as we did during our 2020 first, second, third and fourth quarters, and such impacts
are likely to continue be material to our consolidated financial statements in the fourth quarter and beyond. In addition, should
the COVID-19 public health effort intensify to such an extent that we cannot operate, if there are prolonged government restrictions
on our business and our customers, and/or an extended economic recession, we could be unable to produce revenues and cash flows
sufficient to conduct our business; or service our outstanding debt. Such a circumstance could, among other things, exhaust our
available liquidity (and ability to access liquidity sources) and/or trigger an acceleration to pay a significant portion or all
of our then-outstanding debt obligations, which we may be unable to do.
Our
business may suffer from the severity or longevity of the Coronavirus/COVID-19 Global Outbreak.
The
demand for our services relies upon, among other things, (a) customers being able to, and being willing to, visit our health,
wellness and beauty medical spas (all of which are now closed, pending our receipt of further funding and/or entry into partnerships
to operate such medical spas) and vitamin store and our ability to keep our vitamin store open for business and/or re-open our
medical spas, (b) our ability to perform construction services for construction clients, and (c) the ability of our telemedicine
platform to provide telemedicine services. The inability due to state and local social distancing orders, or unwillingness of,
individuals to congregate in large groups, visit retail business or travel outside of their homes will, and has to date, had a
negative effect on our operations. Additionally, government mandated ‘stay-at-home’ and similar orders have to date,
and may in the future, prevent us from staffing our spas (all of which are currently closed) and construction services, and prohibited
us from operating altogether. Loss of available employees due to health concerns in the future may also limit our ability to operate.
Economic recessions, including those brought on by the COVID-19 outbreak may have a negative effect on the demand for our services
and our operating results. We have also experienced delays due to the COVID-19 outbreak in receiving products and supplies which
we need to operate. All of the above may be exacerbated in the future as the COVID-19 outbreak and the governmental responses
thereto continues. All of the above may in the future cause, and have to date caused, a material adverse effect on our operating
results.
We
have decided to temporarily shut down our MedSpas and are subject to continuing losses while such businesses are shut down.
Customer
traffic and demand at our VISSIA Waterway, Inc. and VISSIA McKinney MedSpa locations which were re-opened after mandatory closures
associated with COVID-19 in June and August 2020, respectively, failed to rebound to pre-closure levels due to COVID-19 and the
pandemic’s effects on the economy, and because we are unable to predict the length of the pandemic or ultimate outcome thereof,
and further due to our limited capital resources, effective on October 25, 2020, we made the decision to temporarily close both
our VISSIA Waterway, Inc. and VISSIA McKinney locations. Such locations remain closed through the date of this prospectus. We
are currently seeking both financial and operating partners to assist in the further management and operations of our VISSIA brand,
to help fund the re-opening of our spas and are also entertaining any and all purchase opportunities for such brand and spas as
well. While such locations are closed, they are not generating any revenue; however, we are still required to pay the rent and
utilities for each location. Such continuing expenses, without corresponding revenues, may have a significant negative affect
on our results of operations and cash flows. Furthermore, we may be forced to sell off our VISSIA brand, operations or locations
at a loss, or may be forced to write-off the full amount of such operations in the future, which would have a significant negative
affect on our financial position.
If
our assets and equipment (including our VISSIA MedSpa assets, equipment and goodwill) become impaired, we may be required to record
a significant charge to earnings.
We
have assets, goodwill and equipment on our balance sheet relating to our VISSIA MedSpa operations. Due to COVID-19’s effects
on the economy, and because we are unable to predict the length of the pandemic or ultimate outcome thereof, and further due to
our limited capital resources, effective on October 25, 2020, we made the decision to temporarily close both locations. Such locations
remain closed through the date of this prospectus. We are currently seeking both financial and operating partners to assist in
the further management and operations of our VISSIA brand, to help fund the re-opening of our spas and are also entertaining any
and all purchase opportunities for such brand and spas as well.
In
accordance with the Generally Accepted Accounting Principles of the United States of America (“GAAP”), we review
our assets for impairment when events or changes in circumstances indicate the carrying value of the asset may not be recoverable.
In the event we determine that the value of our assets, and particularly our VISSIA MedSpa assets are not recoverable, or have
declined in value, we may be forced to impair such assets, which impairment may be significant, and which result in a loss being
booked equal to the carrying value of the asset(s) impaired and the fair value thereof. Such impairments may have a significant
negative effect on our balance sheet, results of operations and financial results, and could cause the value of our common stock
to decline in value or become worthless.
We
face numerous risks associated with our telehealth planform which only recently commenced operations.
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’s online telemedicine platform is available to customers across the United States and offers bilingual coverage
(both English and Spanish), with virtual visits taking place either via the phone or through a secured video chat platform. Zip
Doctor’s telemedicine platform does not require the customer to have an existing insurance plan and does not demand or require
any additional copays. ZipDoctor customers subscribe through the website and are only required to pay a low monthly fee, which
is determined based on if they are an individual, a couple, or a family. There were no significant activities in ZipDoctor as
of September 30, 2020. The Company launched the platform in August 2020, and has generated nominal revenues through this soft
launch period. There is no significant operating history upon which to base any assumption as to the likelihood that our telemedicine
platform will prove successful, and we may never achieve operations or profitable operations. Our telehealth platform also faces
the following risks, any one of which may significantly negatively affect our operations, results of operations, and cash flows
and could cause the value of our common stock to decline in value:
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Our telehealth platform could be adversely affected by legal challenges or by actions restricting our ability of our health providers
to provide services in certain jurisdictions;
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We will be dependent on the relationships of our partners with health care professionals;
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Evolving government regulations may require increased costs or adversely affect our results of operations;
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The market for telehealth services is new and if it does not develop as we forecast or develops more slowly than we expect our
growth may be harmed;
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The market for telehealth services is competitive and we compete with multiple competitors which have more resources and funding
than we have and a more well-known brand name;
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Economic uncertainty or downturns, particularly as it impacts particular industries, could adversely affect our business and operating
results; and
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We will be entirely dependent on the infrastructure and operations of our partner to operate our telehealth platform and such
infrastructure and operations are completely outside of our control.
We
may have difficulty obtaining future funding sources, if needed, and we may have to accept terms that would adversely affect stockholders.
We
will need to raise funds from additional financing in the future to complete our business plan and may need to raise additional
funding in the future to support our operations. We have no commitments for any financing and any financing commitments may result
in dilution to our existing stockholders. We may have difficulty obtaining additional funding, and we may have to accept terms
that would adversely affect our stockholders. For example, the terms of any future financings may impose restrictions on our right
to declare dividends or on the manner in which we conduct our business. Additionally, we may raise funding by issuing additional
convertible notes, which if converted into shares of our common stock would dilute our then stockholders’ interests. Lending
institutions or private investors may impose restrictions on a future decision by us to make capital expenditures, acquisitions
or significant asset sales. If we are unable to raise additional funds, we may be forced to curtail or even abandon our business
plan.
If
we make any acquisitions, they may disrupt or have a negative impact on our business.
If
we make acquisitions in the future, funding permitting, which may not be available on favorable terms, if at all, we could have
difficulty integrating the acquired company’s assets, personnel and operations with our own. We do not anticipate that any
acquisitions or mergers we may enter into in the future would result in a change of control of the Company. In addition, the key
personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core
business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business,
distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions are accompanied
by a number of inherent risks, including, without limitation, the following:
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the
difficulty of integrating acquired products, services or operations;
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the
potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies;
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difficulties
in maintaining uniform standards, controls, procedures and policies;
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the
potential impairment of relationships with employees and customers as a result of any integration of new management personnel;
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the
potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products
to new and existing customers;
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the
effect of any government regulations which relate to the business acquired;
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potential
unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool,
reposition or modify the marketing and sales of acquired products or operations, or the defense of any litigation, whether
or not successful, resulting from actions of the acquired company prior to our acquisition; and
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potential
expenses under the labor, environmental and other laws of various jurisdictions.
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Our
business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other
problems encountered in connection with an acquisition, many of which cannot be presently identified. These risks and problems
could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results
of operations.
Our
independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
Our
historical financial statements have been prepared under the assumption that we will continue as a going concern. Our independent
registered public accounting firm has issued a report on our financial statements for the year ended December 31, 2019, that included
an explanatory paragraph referring to our recurring operating losses and expressing substantial doubt in our ability to continue
as a going concern. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity financing
or other capital, attain further operating efficiencies, reduce expenditures, and, ultimately, generate revenue. Our financial
statements do not include any adjustments that might result from the outcome of this uncertainty. However, if adequate funds are
not available to us when we need it, we will be required to curtail our operations which would, in turn, further raise substantial
doubt about our ability to continue as a going concern. The doubt regarding our potential ability to continue as a going concern
may adversely affect our ability to obtain new financing on reasonable terms or at all. Additionally, if we are unable to continue
as a going concern, our stockholders may lose some or all of their investment in the Company.
We
depend heavily on our Chief Executive Officer, and the loss of his services could harm our business.
Our
future business and results of operations depend in significant part upon the continued contributions of our senior management
personnel, which currently consists solely of our Chief Executive Officer, Jacob D. Cohen. If we lose his services or if he fails
to perform in his current position, or if we are not able to attract and retain skilled personnel as needed, our business could
suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing
senior management team. We depend on the skills and abilities of these key personnel in managing the operations of our medical
spas, product development, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.
Because
we do not have an audit or compensation committee, shareholders will have to rely on the entire board of directors to perform
these functions.
We
do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation
committee, nor any independent directors. These functions are performed by the board of directors as a whole (currently consisting
solely of Jacob D. Cohen, our sole director). Thus, there is a potential conflict in that board members who are also part of management
will participate in discussions concerning management compensation and audit issues that may affect management decisions. Such
conflicts of interest will be exacerbated until such time as we appoint additional directors, and during such period that Jacob
D. Cohen serves as our sole director.
We
expect to face intense competition, often from companies with greater resources and experience than we have.
The
health, wellness, construction, and mentoring/life coach industries are highly competitive and subject to rapid change. The industries
continue to expand and evolve as an increasing number of competitors and potential competitors enter the market. Many of these
competitors and potential competitors have substantially greater financial, technological, managerial and research and development
resources and experience than we have. Some of these competitors and potential competitors have more experience than we have in
the development of health and wellness services and products. In addition, our services and products compete with service and
product offerings from large and well-established companies that have greater marketing and sales experience and capabilities
than we or our collaboration partners have. If we are unable to compete successfully, we may be unable to grow and sustain our
revenue.
Current
global financial conditions have been characterized by increased volatility which could negatively impact our business, prospects,
liquidity and financial condition.
Current
global financial conditions and recent market events have been characterized by increased volatility and the resulting tightening
of the credit and capital markets has reduced the amount of available liquidity and overall economic activity. We cannot guaranty
that debt or equity financing, the ability to borrow funds or cash generated by operations will be available or sufficient to
meet or satisfy our initiatives, objectives or requirements. Our inability to access sufficient amounts of capital on terms acceptable
to us for our operations will negatively impact our business, prospects, liquidity and financial condition.
We
are growing the size of our organization, and we may experience difficulties in managing any growth we may achieve.
As
of the date of this prospectus, we have six full-time employees. As our development and commercialization plans and strategies
develop, we expect to need additional development, managerial, operational, sales, marketing, financial, accounting, legal, and
other resources. Future growth would impose significant added responsibilities on members of management. Our management may not
be able to accommodate those added responsibilities, and our failure to do so could prevent us from effectively managing future
growth, if any, and successfully growing our company.
We
may expend our limited resources to pursue particular products, services or locations and may fail to capitalize on products,
locations or services that may be more profitable or for which there is a greater likelihood of success.
Because
we have limited financial and managerial resources, we must focus our efforts on particular service programs, products and locations.
As a result, we may forego or delay pursuit of opportunities with other services, products or locations that later prove to have
greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products
or profitable market opportunities. Any such failure could result in missed opportunities and/or our focus on products, services
or locations with low market potential, which would harm our business and financial condition.
We
engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse
effect on us.
We
have entered, and may continue to enter, into transactions with related parties for financing, corporate, business development
and operational services, as detailed herein. Such transactions may not have been entered into on an arm’s-length basis,
and we may have achieved more or less favorable terms because such transactions were entered into with our related parties. This
could have a material effect on our business, results of operations and financial condition. The details of certain of these transactions
are set forth under “Certain Relationships and Related Transactions”. Such conflicts could cause an individual in
our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours.
Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors.
Such conflicts of interest will likely be greater until such time as we are able to appoint new directors, as we currently have
only one member of our board of directors, Jacob D. Cohen.
We
operate our business through many locations, and if we are unable to effectively oversee all of these locations, our business
reputation and operating results could be materially adversely affected.
Because
we operate at various different locations throughout Texas, we are subject to risks related to our ability to oversee these locations.
If in the future we are unable to effectively oversee our locations, our results of operations could be materially adversely affected,
we could lose customers, we could lose control of inventory and other assets, and our business could be materially adversely affected.
Our
ability to service our indebtedness will depend on our ability to generate cash in the future.
Our
ability to make payments on our indebtedness will depend on our ability to generate cash in the future. Our ability to generate
cash is subject to general economic and market conditions and financial, competitive, legislative, regulatory and other factors
that are beyond our control. Our business may not generate sufficient cash to fund our working capital requirements, capital expenditure,
debt service and other liquidity needs, which could result in our inability to comply with financial and other covenants contained
in our debt agreements, our being unable to repay or pay interest on our indebtedness, and our inability to fund our other liquidity
needs. If we are unable to service our debt obligations, fund our other liquidity needs and maintain compliance with our financial
and other covenants, we could be forced to curtail our operations, our creditors could accelerate our indebtedness and exercise
other remedies and we could be required to pursue one or more alternative strategies, such as selling assets or refinancing or
restructuring our indebtedness. However, such alternatives may not be feasible or adequate.
We
have identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting. If
not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial
reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial
obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common
stock.
Maintaining
effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce
reliable financial statements. As reported under “Controls and Procedures”, as of December 31, 2020 we determined
that our disclosure controls and procedures were not effective. Separately, management assessed the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2020 and determined that such internal control over financial reporting
was not effective as a result of such assessment.
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not
be prevented or detected on a timely basis. A control deficiency exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a
timely basis.
Maintaining
effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce
reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly
as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material
weaknesses will not arise in the future. Any failure to remediate the material weaknesses, or the development of new material
weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements
and cause us to fail to meet our reporting and financial obligations, which in turn could have a material adverse effect on our
financial condition and the trading price of our common stock, and/or result in litigation against us or our management. In addition,
even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent
or identify irregularities or facilitate the fair presentation of our financial statements or our periodic reports filed with
the SEC.
Our
potential for rapid growth and our entry into new markets make it difficult for us to evaluate our current and future business
prospects, and we may be unable to effectively manage any growth associated with these new markets, which may increase the risk
of your investment and could harm our business, financial condition, results of operations and cash flow.
Our
entry into the rapidly growing health, wellness, construction and mentoring/life coaching market may place a significant strain
on our resources and increase demands on our executive management, personnel and systems, and our operational, administrative
and financial resources may be inadequate. We may also not be able to effectively manage any expanded operations, or achieve planned
growth on a timely or profitable basis, particularly if the number of customers using our technology significantly increases or
their demands and needs change as our business expands. If we are unable to manage expanded operations effectively, we may experience
operating inefficiencies, the quality of our products and services could deteriorate, and our business and results of operations
could be materially adversely affected.
If
we are unable to develop and maintain our brand and reputation for our service and product offerings, our business and prospects
could be materially harmed.
Our
business and prospects depend, in part, on developing and then maintaining and strengthening our brand and reputation in the markets
we serve. If problems arise with our products or services, our brand and reputation could be diminished. If we fail to develop,
promote and maintain our brand and reputation successfully, our business and prospects could be materially harmed.
We
may not maintain sufficient insurance coverage for the risks associated with our business operations.
Risks
associated with our business and operations include, but are not limited to, claims for wrongful acts committed by our officers,
directors, and other representatives, the loss of intellectual property rights, the loss of key personnel, risks posed by natural
disasters and risks of lawsuits from customers who are injured from or dissatisfied with our services. Any of these risks may
result in significant losses. We cannot provide any assurance that our insurance coverage is sufficient to cover any losses that
we may sustain, or that we will be able to successfully claim our losses under our insurance policies on a timely basis or at
all. If we incur any loss not covered by our insurance policies, or the compensated amount is significantly less than our actual
loss or is not timely paid, our business, financial condition and results of operations could be materially and adversely affected.
Our
business could be adversely affected by ongoing legal challenges to our business model or by new state actions restricting our
ability to provide the full range of our services in certain states.
Our
ability to conduct planned business operations in each state is dependent upon the state’s treatment of medical spas under
such state’s laws, and rules and policies governing the practice of physician supervised services, which are subject to
changing political, regulatory and other influences.
We
may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant
damages if not covered by insurance.
Our
wellness business entails the risk of medical liability claims. Successful medical liability claims could result in substantial
damage awards that exceed the limits of our insurance coverage. Any claims made against us that are not fully covered by insurance
could be costly to defend against, result in substantial damage awards against us and divert the attention of our management and
our physicians from our operations, which could have a material adverse effect on our business, financial condition and results
of operations. In addition, any claims may adversely affect our business or reputation.
Our
use and disclosure of personally identifiable information, including health information, is subject to federal and state privacy
and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could
result in significant liability or reputational harm and, in turn, a material adverse effect on our client base and revenue.
Numerous
state and federal laws and regulations govern the collection, dissemination, use, privacy, confidentiality, security, availability
and integrity of personally identifiable information, or PII, including protected health information, or PHI. These laws and regulations
include the Health Information Portability and Accountability Act of 1996, as amended by the Health Information Technology for
Economic and Clinical Health Act, or HITECH, and their implementing regulations (referred to collectively as HIPAA). HIPAA establishes
a set of basic national privacy and security standards for the protection of PHI. HIPAA requires us to develop and maintain policies
and procedures with respect to PHI that is used or disclosed, including the adoption of administrative, physical and technical
safeguards to protect such information. HIPAA imposes mandatory penalties for certain violations. Penalties for violations of
HIPAA and its implementing regulations start at $100 per violation and are not to exceed $50,000 per violation, subject to a cap
of $1.5 million for violations of the same standard in a single calendar year. However, a single breach incident can result in
violations of multiple standards. HIPAA also authorizes state attorneys general to file suit on behalf of their residents. Courts
are able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not
create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been
used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of
PHI. In addition, HIPAA mandates that the Secretary of Health and Human Services, or HHS, conduct periodic compliance audits of
HIPAA covered entities or business associates for compliance with the HIPAA Privacy and Security Standards. It also tasks HHS
with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage
of the Civil Monetary Penalty fine paid by the violator. HIPAA further requires that patients be notified of any unauthorized
acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information, with
certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals. HIPAA specifies
that such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery
of the breach.” If a breach affects 500 patients or more, it must be reported to HHS without unreasonable delay, and HHS
will post the name of the breaching entity on its public web site. Breaches affecting 500 patients or more in the same state or
jurisdiction must also be reported to the local media. If a breach involves fewer than 500 people, the covered entity must record
it in a log and notify HHS at least annually.
Numerous
other federal and state laws protect the confidentiality, privacy, availability, integrity and security of PII, including PHI.
These laws in many cases are more restrictive than, and may not be preempted by, the HIPAA rules and may be subject to varying
interpretations by courts and government agencies, creating complex compliance issues for us and our clients and potentially exposing
us to additional expense, adverse publicity and liability.
Because
of the extreme sensitivity of the PII we store and transmit, the security features of our technology platform are very important.
If our security measures are breached or fail, unauthorized persons may be able to obtain access to sensitive client data, including
HIPAA-regulated PHI. As a result, our reputation could be severely damaged, adversely affecting client confidence. In addition,
we could face litigation, damages for contract breach, penalties and regulatory actions for violation of HIPAA and other applicable
laws or regulations and significant costs for remediation, notification to individuals and for measures to prevent future occurrences.
Any potential security breach could also result in increased costs associated with liability for stolen assets or information,
repairing system damage that may have been caused by such breaches, incentives offered to clients in an effort to maintain our
business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes,
deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants.
Any
failure to protect our intellectual property rights could impair our ability to protect our technology and our brand.
Our
success depends in part on our ability to enforce our intellectual property and other proprietary rights. We rely upon a combination
of trademark and trade secret laws, as well as license and other contractual provisions, to protect our intellectual property
and other proprietary rights. These laws, procedures and restrictions provide only limited protection and any of our intellectual
property rights may be challenged, invalidated, circumvented, infringed or misappropriated. To the extent that our intellectual
property and other proprietary rights are not adequately protected, third parties may gain access to our proprietary information,
develop and market solutions similar to ours or use trademarks similar to ours, each of which could materially harm our business.
The failure to adequately protect our intellectual property and other proprietary rights could have a material adverse effect
on our business, financial condition and results of operations.
Our
failure to attract and retain physicians and nurse practitioners in a competitive labor market could limit our ability to execute
our growth strategy, resulting in a slower rate of growth.
Our
wellness business depends on our ability to continue to recruit and retain a sufficient number of qualified licensed doctors and
nurses. Although we believe we have an effective recruitment process, there is no assurance that we will be able to secure arrangements
with sufficient numbers of licensed doctors and nurses or retain the services of such practitioners. If we experience delays or
shortages in obtaining access to qualified physicians and nurses, we would be unable to expand our services and operations, resulting
in reduced revenues.
If
our physicians develop a poor reputation, our operations and revenues would suffer.
The
success of our wellness business is dependent upon quality medical services being rendered by our physicians. As the patient-physician
relationship involves inherent trust and confidence, any negative publicity, whether from civil litigation, allegations of criminal
misconduct, or forfeiture of medical licenses, with respect to any of our physicians and/or our facilities could adversely affect
our results of operations.
If
we fail to comply with government laws and regulations it could have a materially adverse effect on our business.
The
health care industry is subject to extensive federal, state and local laws and regulations relating to licensure, conduct of operations,
ownership of facilities, addition of facilities and services, payment for services and prices for services that are extremely
complex and for which, in many instances, the industry does not have the benefit of significant regulatory or judicial interpretation.
We exercise care in structuring our arrangements with physicians and other referral sources to comply in all material respects
with applicable laws. We will also take such laws into account when planning future centers, marketing and other activities, and
expect that our operations will be in compliance with applicable law. The laws, rules and regulations described above are complex
and subject to interpretation. In the event of a determination that we are in violation of such laws, rules or regulations, or
if further changes in the regulatory framework occur, any such determination or changes could have a material adverse effect on
our business. There can be no assurance however that we will not be found in noncompliance in any particular situation.
We
could be adversely affected if any of our significant customers default in their obligations to us.
Defaults
by any of our customers could have a significant adverse effect on our revenues, profitability and cash flow. Our customers may
in the future default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons deriving
from the current general economic environment. If a customer defaults on its obligations to us, it could have a material adverse
effect on our business, financial condition, results of operations or cash flows.
Products
supplied to us and work done by subcontractors can expose us to risks that may adversely affect our business.
We
plan to rely on subcontractors to perform the actual construction work associated with our construction services, and in many
cases, to select and obtain building materials. Despite detailed specifications and quality control procedures, in some cases,
subcontractors may use improper construction processes or defective materials. Defective products can result in the need to perform
extensive repairs. The cost of complying with our warranty obligations may be significant if we are unable to recover the cost
of repairs from subcontractors, materials suppliers and insurers. We may also suffer damage to our reputation, and may be exposed
to possible liability, if subcontractors fail to comply with applicable laws, including laws involving things that are not within
our control.
Our
acquisitions may expose us to unknown liabilities.
Because
we have acquired, and expect generally to acquire, all (or a majority of) the outstanding securities of certain of our acquisition
targets, our investment in those companies are or will be subject to all of their liabilities other than their respective debts
which we paid or will pay at the time of the acquisitions. If there are unknown liabilities or other obligations, our business
could be materially affected. We may also experience issues relating to internal controls over financial reporting that could
affect our ability to comply with the Sarbanes-Oxley Act, or that could affect our ability to comply with other applicable laws.
The
employment agreement of Mr. Jacob Cohen, our sole officer and director, provides for him to receive profits directly from medical
spas which he manages, on top of his annual salary, and provide for the payment of certain severance payments upon termination.
Mr.
Jacob D. Cohen’s employment agreement provides for him to receive 25% of the net profits from each medical spa managed by
him. “Net profits” means all gross sales of a medical spa, less all expenses paid during the corresponding
period. The payment of the net profits as discussed above may reduce the funds available for the Company’s other initiatives
and/or create a situation where such executive/manager is incentive to drive up net profits at the expense of long-term growth.
If
Mr. Cohen’s employment agreement is terminated during the term of such agreement by the Company without cause (as defined
in the agreement) or by Mr. Cohen for good reason (as defined in the agreement), Mr. Cohen is due a severance payment. That severance
payment is equal to the compensation (including bonus) earned through the date of termination and three times (one time if less
than one year remains on the employment agreement)(the “multiplier”) the base salary in effect on the date
of the termination plus the average bonus received by Mr. Cohen over the prior two years and Mr. Cohen is also to be paid any
bonus which he would have earned at the end of the fiscal year during which the employment is terminated (pro-rated for days worked),
and is to be paid health insurance for Mr. Cohen and his family for 18 months from the date of termination (the “Severance
Payments”). Also, all equity compensation due to vest in the following 12 months vests immediately. If Mr. Cohen dies
while the employment agreement is in place, or the agreement is terminated due to Mr. Cohen’s disability, the Company is
required to pay Mr. Cohen’s salary to his beneficiaries for a period of one year following such death, pay the pro-rated
amount of any bonus due, and pay 18 months of health insurance. If a change in control (as defined in the agreement) occurs and
Mr. Cohen is terminated up to one year after such change in control, Mr. Cohen is due the Severance Payments (based on a 3x multiplier)
and all unvested equity awards vest immediately. The payment of severance fees could have a material adverse effect on our cash
flows and results of operations.
We
may not sell the $600,000 in Second Tranche Notes.
A
total of $850,000 in 6% Convertible Notes (the “First Tranche Notes”) were sold on the January 6, 2021, closing
date of the sale of the First Tranche Notes, and a total of $600,000 in 6% Convertible Notes (the “Second Tranche Notes”),
are required to be purchased by certain investors 50 days after the effective date of the registration statement, of which this
prospectus forms a part, subject to certain other closing conditions, including, the Company maintaining at least a $0.12 per
share stock price and $50,000 per day trading volume (each during the 10 prior trading days prior to the second closing), and
that prior to the trading day before the closing date for the sale of the Second Tranche Notes, the outstanding balance of principal
and interest due under the 6% Convertible Notes which would be outstanding immediately after the closing of the sale of the Second
Tranche Notes, do not exceed 15% of the market capitalization of the Company. Such closing conditions for the sale of the Second
Tranche Notes may not be met and such Second Tranche Notes may not be sold.
Risks
Related to our Common Stock
We
are subject to the reporting requirements of federal securities laws, which are expensive and subject us to potential liability.
We
are a public reporting company in the United States and, accordingly, subject to the information and reporting requirements of
the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing
and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to
stockholders causes our expenses to be higher than they would be if we remained a privately-held company. We could also be subject
to sanctions or deregistration if we fail to keep up with or run afoul of our reporting obligations.
Our
compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls is time consuming, difficult and costly.
Because
we are a reporting company with the SEC, we must comply with Sarbanes-Oxley Act and SEC rules concerning internal controls. It
is time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required
by the Sarbanes-Oxley Act. In order to expand our operations, we will need to hire additional financial reporting, internal control,
and other finance staff in order to develop and implement appropriate internal controls and reporting procedures.
Shareholders
who hold unregistered shares of our common stock will be subject to resale restrictions pursuant to Rule 144, if and when available,
due to the fact that we are deemed to be a former “shell company”.
Pursuant
to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is
defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and
cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. While we do not believe
that we are currently a “shell company”, we were previously a “shell company” and as such
are deemed to be a former “shell company” pursuant to Rule 144, and as such, sales of our securities pursuant
to Rule 144 may not be able to be made if we are not subject to Section 13 or 15(d) of the Exchange Act, and have filed all of
our required periodic reports for at least the previous one year period prior to any sale pursuant to Rule 144; and a period of
at least twelve months has elapsed from the date “Form 10 information” has been filed with the Commission reflecting
the Company’s status as a non-”shell company” (which Form 10 information was filed by the Company in
August 2019). Although to date we have complied with the requirement of Rule 144 as related to “shell companies”,
our status as a former “shell company” could prevent us from raising additional funds, engaging consultants,
and using our securities to pay for any acquisitions in the future (although none are currently planned).
If
we are unable to adequately protect our intellectual property rights our business is likely to be adversely affected.
We
rely on a combination of trademarks, non-disclosure agreements and other security measures to establish and protect our proprietary
rights. The measures we have taken or may take in the future may not prevent misappropriation of our proprietary information or
prevent others from independently developing similar products or services, designing around our proprietary technology or duplicating
our products or services.
We
have various outstanding convertible notes which are convertible into shares of our common stock at a discount to market.
As
of December 31, 2020, we owed approximately $485,500 under various convertible promissory notes. The conversion prices of the
convertible notes initially vary from between [60% to 61%] of the market value of our common stock, subject in many cases to adjustments
to the conversion prices upon defaults and anti-dilution and other rights which may result in such conversion prices declining.
As a result, any conversion of the convertible notes and sale of shares of common stock issuable in connection with the conversion
thereof may cause the value of our common stock to decline in value, as described in greater detail under the Risk Factors below.
Notwithstanding the above, we hope to repay the convertible notes in full before any conversions take place.
The
issuance and sale of common stock upon conversion of the convertible notes may depress the market price of our common stock.
If
sequential conversions of the convertible notes and sales of such converted shares take place, the price of our common stock may
decline, and as a result, the holders of the convertible notes will be entitled to receive an increasing number of shares in connection
with conversions, which shares could then be sold in the market, triggering further price declines and conversions for even larger
numbers of shares, to the detriment of our investors. The shares of common stock which the convertible notes are convertible into
may be sold without restriction pursuant to Rule 144. As a result, the sale of these shares may adversely affect the market price,
if any, of our common stock.
In
addition, the common stock issuable upon conversion of the convertible notes may represent overhang that may also adversely affect
the market price of our common stock. Overhang occurs when there is a greater supply of a company’s stock in the market
than there is demand for that stock. When this happens the price of the company’s stock will decrease, and any additional
shares which shareholders attempt to sell in the market will only further decrease the share price. The convertible notes will
be convertible into shares of our common stock at a discount to market as described above, and such discount to market provides
the holders with the ability to sell their common stock at or below market and still make a profit. In the event of such overhang,
the note holders will have an incentive to sell their common stock as quickly as possible. If the share volume of our common stock
cannot absorb the discounted shares, then the value of our common stock will likely decrease. Notwithstanding the above, we hope
to repay the convertible notes in full before any conversions take place.
The
issuance of common stock upon conversion of our outstanding convertible notes will cause immediate and substantial dilution.
The
issuance of common stock upon conversion of the convertible notes will result in immediate and substantial dilution to the interests
of other stockholders since the holders of the convertible notes may ultimately receive and sell the full number of shares issuable
in connection with the conversion of such convertible notes. Although certain of the convertible notes may not be converted if
such conversion would cause the holders thereof to own more than 4.99% or 9.99% of our outstanding common stock, this restriction
does not prevent the holders of the convertible notes subject to such restrictions from converting some of their holdings, selling
those shares, and then converting the rest of its holdings, while still staying below the 4.99%/9.99% limit. In this way, the
holders of the convertible notes could sell more than any applicable ownership limit while never actually holding more shares
than the applicable limits allow. If the holders of the convertible notes choose to do this, it will cause substantial dilution
to the then holders of our common stock.
The
continuously adjustable conversion price feature of the convertible notes could require us to issue a substantially greater number
of shares, which may adversely affect the market price of our common stock and cause dilution to our existing stockholders.
Our
existing stockholders will experience substantial dilution upon any conversion of the convertible notes. The convertible notes
are convertible into shares of common stock at a conversion price equal to a discount to the market value of our common stock
as described above. As a result, the number of shares issuable could prove to be significantly greater in the event of a decrease
in the trading price of our common stock, which decrease would cause substantial dilution to our existing stockholders. As sequential
conversions and sales take place, the price of our common stock may decline, and if so, the holders of the convertible notes would
be entitled to receive an increasing number of shares, which could then be sold, triggering further price declines and conversions
for even larger numbers of shares, which would cause additional dilution to our existing stockholders and would likely cause the
value of our common stock to decline.
We
could face significant penalties for our failure to comply with the terms of our outstanding convertible notes.
Our
various convertible notes contain positive and negative covenants and customary events of default including requiring us in many
cases to timely file SEC reports. In the event we fail to timely file our SEC reports in the future, or any other events of defaults
occur under the notes, we could face significant penalties and/or liquidated damages and/or the conversion price of such notes
could be adjusted downward significantly, all of which could have a material adverse effect on our results of operations and financial
condition, or cause any investment in the Company to decline in value or become worthless.
The
issuance and sale of common stock upon exercise of the Warrants may cause substantial dilution to existing stockholders and may
also depress the market price of our common stock.
A
total of 6,750,000 shares of common stock issuable upon exercise of Warrants are being registered in the registration statement,
of which this prospectus forms a part. The Warrants are exercisable at various prices with (i) Warrants to purchase 2,250,000
shares of common stock exercisable at $0.20 per share, (ii) Warrants to purchase 2,250,000 shares of common stock exercisable
at $0.35 per share, and (iii) Warrants to purchase 2,250,000 shares of common stock exercisable at $0.50 per share. All of the
Warrants may be exercised via cashless exercise in the event that the shares underlying the Warrants are not registered within
180 days of January 6, 2021. The Warrants, if not exercised by such date, terminate on January 7, 2026. The Warrants contain provisions
limiting each Investor’s ability to exercise the Warrants if such exercise would cause the Investor’s (or any affiliate
of any such Investor) holdings in the Company to exceed 9.99% of the Company’s issued and outstanding shares of common stock.
The Warrants are only exercisable by each applicable Investor if such Investor purchases its applicable Second Tranche Note (i.e.,
its pro rata portion of $600,000 in additional 6% Convertible Notes agreed to be sold within 50 days after the effective date
of the registration statement, of which this prospectus forms a part, subject to certain closing conditions). The ownership limitation
does not prevent such holder from exercising some of the Warrants, selling those shares, and then exercising the rest of the Warrants,
while still staying below the 9.99% limit. In this way, the holders of the Warrants could sell more than this limit while never
actually holding more shares than this limit allows. If the holders of the Warrants choose to do this, it will cause substantial
dilution to the then holders of our common stock.
If
exercises of the Warrants and sales of such shares issuable upon exercise thereof take place, the price of our common stock may
decline. In addition, the common stock issuable upon exercise of the Warrants may represent overhang that may also adversely affect
the market price of our common stock. Overhang occurs when there is a greater supply of a company’s stock in the market
than there is demand for that stock. When this happens the price of the company’s stock will decrease, and any additional
shares which shareholders attempt to sell in the market will only further decrease the share price. If the share volume of our
common stock cannot absorb shares sold by the warrant holders, then the value of our common stock will likely decrease.
The
issuance of common stock upon conversion of the 6% Convertible Notes will cause immediate and substantial dilution to existing
shareholders.
The
6% Convertible Notes (including accrued and unpaid interest and late fees) making up the $850,000 First Tranche Notes are convertible
into shares of the Company’s common stock at any time, at a rate equal to the lesser of (i) $0.50 per share and (ii) 75%
of the lowest daily volume-weighted average price (VWAP) of the Company’s common stock during the seven consecutive trading
days prior to the delivery of a conversion notice (the “Market Price”), but not less than 75% of the VWAP on
the Closing Date ($0.40 per share, making such initial floor price $0.30 per share). The $600,000 in Second Tranche Notes (to
be sold within 50 days after the date the registration statement of which this prospectus forms a part, is declared effective,
subject to certain closing conditions) are convertible into shares of the Company’s common stock at a rate equal to the
lesser of (1) the VWAP on the closing date of the Second Tranche Notes or (2) the Market Price, but not less than 75% of the VWAP
on the Second Tranche closing date. However, if while any 6% Convertible Notes are outstanding and the daily VWAP on any of seven
consecutive trading days is less than the applicable floor price(s), such floor price(s) are reduced (but not increased) to 75%
of the VWAP on the seventh trading day. Although the 6% Convertible Notes may not be converted by holder if such conversion would
cause the holder to own more than 9.99% of our outstanding common stock, this restriction does not prevent such holder from converting
some of its holdings, selling those shares, and then converting the rest of its holdings, while still staying below the 9.99%
limit. In this way, the holders of the 6% Convertible Notes could sell more than this limit while never actually holding more
shares than this limit allows. If the holders of the 6% Convertible Notes choose to do this, it will cause substantial dilution
to the then holders of our common stock.
The
issuance and sale of common stock upon conversion of the 6% Convertible Notes may depress the market price of our common stock.
If
conversions of the 6% Convertible Notes and sales of such converted shares take place, the price of our common stock may decline.
In addition, the common stock issuable upon conversion of the 6% Convertible Notes may represent overhang that may also adversely
affect the market price of our common stock. Overhang occurs when there is a greater supply of a company’s stock in the
market than there is demand for that stock. When this happens the price of the company’s stock will decrease, and any additional
shares which shareholders attempt to sell in the market will only further decrease the share price. If the share volume of our
common stock cannot absorb converted shares sold by the 6% Convertible Notes holders, then the value of our common stock will
likely decrease.
We
currently owe a significant amount of money under our outstanding convertible notes.
As
of the date of this filing we owe approximately $685,500 under outstanding convertible and non-convertible promissory notes. We
do not have sufficient funds to repay such notes and if we are unable to raise additional funds in the future to repay such amounts,
which may not be available on favorable terms, if at all, such failure could have a material adverse effect on our financial condition
or results of operations and cause any investment in the Company to decline in value or become worthless.
The
issuance of common stock upon conversion of the Series B Convertible Preferred Stock will cause immediate and substantial dilution.
The
issuance of common stock upon conversion of the Series B Convertible Preferred Stock will result in immediate and substantial
dilution to the interests of other stockholders, which will be exacerbated in the event the 1.5 million shares of Series B Convertible
Preferred Stock are issued in the event certain milestones related to LifeGuru.me are met. 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, with any remainder rounded to the
hundredths place. Although the Series B Convertible Preferred Stock holder may not receive shares of common stock exceeding 4.999%
of our outstanding shares of common stock immediately after affecting such conversion, this restriction does not prevent the holder
from receiving shares up to the 4.999% limit, selling those shares, and then receiving the rest of the shares it is due, in one
or more tranches, while still staying below the 4.999% limit, and such limit may be increased to 9.999% with 61 days prior written
notice. If the holder chooses to do this, it will cause substantial dilution to the then holders of our common stock. Additionally,
the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price
of our common stock as the holder sells material amounts of our common stock over time and/or in a short period of time. This
could place further downward pressure on the price of our common stock and in turn result in the holder receiving an ever-increasing
number of additional shares of common stock upon conversion of its securities, and adjustments thereof, which in turn will likely
lead to further dilution, reductions in the conversion price of the Series B Preferred Stock and even more downward pressure on
our common stock, which could lead to our common stock becoming devalued or worthless.
We
have established preferred stock which can be designated by the Company’s Board of Directors without shareholder approval
and the board has established Series A Preferred Stock, which gives the holders majority voting power over the Company.
The
Company has 5,000,000 shares of preferred stock authorized. The shares of preferred stock of the Company may be issued from time
to time in one or more series, each of which shall have a distinctive designation or title as shall be determined by the board
of directors of the Company (currently consisting solely of Jacob D. Cohen) prior to the issuance of any shares thereof. The preferred
stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional
or other special rights and such qualifications, limitations or restrictions thereof as adopted by the board of directors. In
May 2020, we designated three shares of Series A Preferred Stock. The Series A Preferred Stock have the right, voting in aggregate,
to vote on all shareholder matters equal to sixty percent (60%) of the total vote (the “Super Majority Voting Rights”),
so long as such shares are held by directors of the Company. A total of one share of Series A Preferred Stock is currently outstanding
and held by Jacob D. Cohen, our sole officer and director, providing him sole voting right over 60% of our voting shares.
Because
the board of directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of
the Company’s shareholders, shareholders of the Company will have no control over what designations and preferences the
Company’s preferred stock will have. The issuance of shares of preferred stock or the rights associated therewith, could
cause substantial dilution to our existing shareholders. Additionally, the dilutive effect of any preferred stock which we may
issue may be exacerbated given the fact that such preferred stock may have voting rights and/or other rights or preferences which
could provide the preferred shareholders with substantial voting control over us and/or give those holders the power to prevent
or cause a change in control, even if that change in control might benefit our shareholders (similar to the Series A Preferred
Stock). As a result, the issuance of shares of preferred stock may cause the value of our securities to decrease.
Stockholders
may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional
shares of our common stock.
We
have no committed source of financing. Wherever possible, our board of directors (currently consisting solely of Mr. Jacob D.
Cohen) will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration
will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the stockholders,
to issue all or part of the authorized but unissued shares of common stock and designate series of preferred stock. In addition,
if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock (or convertible
securities), possibly at a discount to market. These actions will result in dilution of the ownership interests of existing stockholders,
may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing
management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed
to supporting existing management.
Our
stock price may be volatile, which may result in losses to our stockholders.
The
stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies quoted on
the OTC Markets’ OTCQB Market, where our shares of common stock are quoted, generally have been very volatile and have experienced
sharp share-price and trading-volume changes. The trading price of our common stock is likely to be volatile and could fluctuate
widely in response to many of the following factors, some of which are beyond our control:
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in our operating results;
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in expectations of our future financial performance, including financial estimates by securities analysts and investors;
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changes
in operating and stock price performance of other companies in our industry;
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future
sales of our common stock.
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Domestic
and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general
economic and political conditions unrelated to our performance, may adversely affect the price of our common stock. In particular,
following initial public offerings, the market prices for stocks of companies often reach levels that bear no established relationship
to the operating performance of these companies. These market prices are generally not sustainable and could vary widely. In the
past, following periods of volatility in the market price of a public company’s securities, securities class action litigation
has often been initiated.
Our
common shares are thinly-traded, and in the future, may continue to be thinly-traded, and you may be unable to sell at or near
ask prices or at all, if you need to sell your shares to raise money or otherwise desire to liquidate such shares.
We
cannot predict the extent to which an active public market for our common stock will develop or be sustained due to a number of
factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional
investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention
of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or
recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods
of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which
has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share
price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop
or be sustained, or that current trading levels will be sustained. You may be unable to sell your common stock at or above your
purchase price if at all, which may result in substantial losses to you. As a consequence of this lack of liquidity, the trading
of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either
direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares
are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without
adverse impact on its share price. Secondly, an investment in us is a speculative or “risky” investment due
to our lack of revenues or profits to date. As a consequence of this enhanced risk, more risk-adverse investors may, under the
fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their
shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer.
We
do not anticipate paying any cash dividends.
We
presently do not anticipate that we will pay any dividends on any of our capital stock in the foreseeable future. The payment
of dividends, if any, would be contingent upon our revenues and earnings, if any, capital requirements, and general financial
condition. The payment of any dividends will be within the discretion of our board of directors. We presently intend to retain
all earnings, if any, to implement our business plan; accordingly, we do not anticipate the declaration of any dividends in the
foreseeable future.
Our
common stock is likely to be subject to penny stock rules, which may make it more difficult for our stockholders to sell their
common stock.
Broker-dealer
practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted
by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 per share. The penny stock rules require
a broker-dealer, prior to a purchase or sale of a penny stock not otherwise exempt from the rules, to deliver to the customer
a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny
stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in
a penny stock the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing
the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.
Our
Chief Executive Officer and sole director holds majority voting control over the Company.
Our
sole officer and director Jacob D. Cohen, beneficially owns 36.3% of our outstanding common stock and also have the ability to
vote in aggregate, a separate 60% of our voting stock pursuant to his ownership of the one outstanding share of Series A Preferred
Stock, which gives him control over 74.5% of our voting securities. As a result, Mr. Cohen has the ability to influence matters
affecting our stockholders and will therefore exercise control in determining the outcome of all corporate transactions or other
matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and
also the power to prevent or cause a change in control. Any investor who purchases shares will be a minority stockholder and as
such will have little to no say in the direction of the Company and the election of directors. Additionally, it will be difficult
if not impossible for investors to remove Mr. Cohen as a director, which will mean he will remain in control of who serves as
officers of the Company as well as whether any changes are made in the board of directors. As a potential investor in the Company,
you should keep in mind that even if you own shares of the Company’s common stock and wish to vote them at annual or special
stockholder meetings, your shares will likely have little effect on the outcome of corporate decisions. Because Mr. Cohen controls
such vote, investors may find it difficult to replace our management if they disagree with the way our business is being operated.
Additionally, the interests of Mr. Cohen may differ from the interests of the other stockholders and thus result in corporate
decisions that are averse to other stockholders.
For
all of the foregoing reasons and others set forth herein, an investment in our securities in involves a high degree of risk.
Securities
Purchase Agreement
On
January 6, 2021 (the “Closing Date”), we closed the transactions contemplated by a Securities Purchase Agreement
dated January 6, 2021 (the “Purchase Agreement”), which was entered into with a group of accredited institutional
investors (collectively, the “Investors”), for the sale of convertible promissory notes.
Pursuant
to the Purchase Agreement, the Company agreed to sell 6% Original Issue Discount Senior Secured Convertible Promissory Notes in
an aggregate principal amount of $1,450,000 and Warrants to purchase up to an aggregate of 6,750,000 shares of the Company’s
common stock to the Investors and entered into a Security Agreement, a Guaranty Agreement, a Pledge Agreement, and a Registration
Rights Agreement (the foregoing, collectively with the Purchase Agreement, 6% Convertible Notes and Warrant, the “Transaction
Documents”). The Purchase Agreement includes indemnification obligations of the Company, requirements for the Company
to reserve three times the number of shares of common stock issuable upon conversion of the 6% Convertible Notes and exercise
of the Warrants, the right of the Investors to participate up to 30% in any future equity or debt offering made by the Company
in the 12 months after the Closing Date, a prohibition on the Company selling any shares of common stock or common stock equivalents
until 30 days after the Closing Date, subject to certain exceptions, a one year prohibition on the Company entering into any equity
line transaction or variable rate transaction (including convertible notes with adjustable conversion prices), and a one year
prohibition, without the approval of the Investors, of a reverse or forward stock split.
A
total of $850,000 in 6% Convertible Notes (the “First Tranche Notes”) were sold on the Closing Date, and a
total of $600,000 in 6% Convertible Notes (the “Second Tranche Notes”), are required to be purchased by the
Investors 50 days after the effective date of the registration statement, of which this prospectus forms a part, subject to certain
other closing conditions, including, the Company maintaining at least a $0.12 per share stock price and $50,000 per day trading
volume (each during the 10 prior trading days prior to the second closing), and that prior to the trading day before the closing
date for the sale of the Second Tranche Notes, the outstanding balance of principal and interest due under the 6% Convertible
Notes which would be outstanding immediately after the closing of the sale of the Second Tranche Notes, do not exceed 15% of the
market capitalization of the Company. In connection with the sale of the First Tranche Notes, the Company paid $25,000 of the
Investors’ legal fees and certain other amounts in expense reimbursements.
The
Company plans to use a portion of the proceeds from the sale of the 6% Convertible Notes to fully repay its outstanding convertible
debentures held by Geneva Roth Remark Holdings, Inc., LGH Investments, LLC, JSJ Investments, LLC, and Quick Capital, LLC.
The
First Tranche Notes mature on January 7, 2022, and accrue interest at a rate of 6% per annum (15% upon the occurrence of an event
of default) payable to the Investors in cash on a calendar quarterly basis (which changes to monthly upon the occurrence of an
event of default). Each of the 6% Convertible Notes contained a 6% original issue discount.
The
First Tranche Notes are convertible into shares of the Company’s common stock at any time, at a rate equal to the lesser
of (i) $0.50 per share and (ii) 75% of the lowest daily volume-weighted average price (VWAP) of the Company’s common stock
during the seven consecutive trading days prior to the delivery of a conversion notice (the “Market Price”),
but not less than 75% of the VWAP on the Closing Date ($0.40 per share, making the initial floor price $0.30 per share). The Second
Tranche Notes are convertible into shares of the Company’s common stock at a rate equal to the lesser of (1) the VWAP on
the closing date of the Second Tranche Notes or (2) the Market Price, but not less than 75% of the VWAP on the Second Tranche
closing date. However, if while any 6% Convertible Notes are outstanding and the daily VWAP on any of seven consecutive trading
days is less than the applicable floor price(s), such floor price(s) are reduced (but not increased) to 75% of the VWAP on the
seventh trading day.
The
conversion price of the 6% Convertible Notes may be adjusted upon the occurrence of certain events and the 6% Convertible Notes
may be declared immediately due and payable by the Investors in the event the Company defaults on any terms of the 6% Convertible
Notes or the other Transaction Documents. Additionally, at the option of the Investors, upon the occurrence of any event of default,
the Investors can elect to convert the 6% Convertible Notes at the lower of the stated conversion price and a conversion price
equal to 70% of the lowest closing bid price of the common stock during the 10 consecutive trading day period ending and including
the date of delivery or deemed delivery of any applicable conversion notice (the “Alternative Conversion Price”).
The 6% Convertible Notes contain penalties for the Company’s failure to timely deliver shares due upon conversion thereof.
The 6% Convertible Notes contain provisions limiting each Investor’s ability to convert any portion of its individual 6%
Convertible Note if such conversion would cause the Investor’s (or any affiliate of any such Investor’s) holdings
in the Company to exceed 9.99% of the Company’s issued and outstanding shares of common stock. The 6% Convertible Notes
contain customary events of default, which include any default of $30,000 of more of indebtedness of the Company, final judgements
equal to or greater than $75,000 rendered against the Company, and the Company’s failure to comply with the reporting obligations
of the Securities Exchange Act of 1934, as amended. Upon the occurrence of an event of default, at the option of the holder thereof,
the amount of the 6% Convertible Notes increases by 110% (including principal and accrued interest) (plus 2% additional for each
event of default that occurs thereafter). The 6% Convertible Notes contain certain rights of the holders thereof upon the occurrence
of a change of control or fundamental transaction, each as described in greater detail therein. We may prepay the 6% Convertible
Notes (provided we treat all 6% Convertible Notes holders equally) by paying 110% of the principal and interest thereon at any
time (provided we are required to provide the holders 15 days prior written notice of such repayment, and during which time period
the holder may convert the applicable 6% Convertible Note into common stock).
The
Warrants are exercisable at various prices with (i) Warrants to purchase 2,250,000 shares of common stock exercisable at $0.20
per share, (ii) Warrants to purchase 2,250,000 shares of common stock exercisable at $0.35 per share, and (iii) Warrants to purchase
2,250,000 shares of common stock exercisable at $0.50 per share. All of the Warrants may be exercised via cashless exercise in
the event that the shares underlying the Warrants are not registered within 180 days of the closing of the transaction. The Warrants,
if not exercised by such date, terminate on January 7, 2026. The Warrants contain provisions limiting each Investor’s ability
to exercise the Warrants if such exercise would cause the Investor’s (or any affiliate of any such Investor’s) holdings
in the Company to exceed 9.99% of the Company’s issued and outstanding shares of common stock. The Warrants are only exercisable
by each applicable Investor if such Investor purchases its applicable Second Tranche Note.
Unless
the Company’s common stock is listed on the NYSE, the NYSE American, the Nasdaq Capital Market, Nasdaq Global Market or
Nasdaq Global Select, at any time the Company issues common stock or common stock equivalents, subject to certain exceptions,
below the then exercise price, the exercise price of the Warrants reset to the lower of such dilutive issuance or the VWAP on
the next trading day following the first public disclosure of such dilutive issuance. Upon an event of default, the exercise price
of the Warrants, at the option of the Investors, is the Alternative Conversion Price. If the Company undertakes a fundamental
transaction and the successor entity is not a publicly-traded company, the holders of the Warrants have the right to require the
Company to pay the greater of (a) the Black Scholes Value of the Warrants; and (b) the positive difference between the consideration
payable in such fundamental transaction minus the exercise price.
Pursuant
to the Security Agreement, the Company and each of its subsidiaries provided the Investors a first priority security interest
in substantially all of their assets to secure the repayment of the 6% Convertible Notes.
The
Subsidiary Guaranty, signed by each of the Company’s subsidiaries, provides for joint and several guaranties of the obligations
set forth in the 6% Convertible Notes by each of the Company’s subsidiaries. Each future subsidiary of the Company is required
to enter into a joinder to the agreement as well.
Pursuant
to the Pledge Agreement, we pledged all of the outstanding securities of each of our subsidiaries to the collateral agent of the
Investors in order to secure amounts payable pursuant to the 6% Convertible Notes.
In
connection with the Registration Rights Agreement, we provided the Investors registration rights in connection with the 6% Convertible
Notes and Warrants, and agreed to (1) file a Registration Statement on Form S-1 within 21 days after the Closing Date to register
the common stock to be acquired by the Investors pursuant to the conversion of the 6% Convertible Notes and exercise of the Warrants,
which registration statement this prospectus forms a part of. We also granted the Investors piggy-back registration rights. We
also agreed to indemnify the Investors in connection with any liability in connection with the registration of such securities.
The
Transaction Documents contain other representations, warranties, covenants and restrictions common with this type of transaction,
including but not limited to, most favored nations provisions (which apply to the conversion price of the 6% Convertible Notes,
the terms of the 6% Convertible Notes and the terms of the Warrants) and future participation clauses, and prohibitions on further
borrowing.
Use
of Proceeds
We
are registering the shares of common stock for the benefit of the selling stockholders. We are not selling any securities under
this prospectus and we will not receive any of the proceeds from the sale or other disposition by the selling stockholders or
their transferees of the shares of common stock covered hereby. However, to the extent that the Warrants are exercised for cash,
we will receive up to $2,364,950, which amount we plan to use for working capital and general corporate purposes. However, the
timing and manner of use of the net proceeds may vary, depending on the amount of actual proceeds received from the exercise of
the Warrants, if any, the timing of the receipt of such proceeds, our rate of growth and other factors. To the extent that any
shares of common stock issuable upon exercise of the Warrants are not registered under an effective registration statement under
the Securities Act, such unregistered Warrants or portion thereof are exercisable on a cashless basis pursuant to the terms of
the Warrant agreements.
We
have agreed to pay all costs, expenses and fees relating to registering the shares of our common stock referenced in this prospectus.
The selling stockholders will pay any underwriting discounts and commissions and expenses incurred by the selling stockholders
for brokerage, accounting, tax or legal services or any other expenses incurred by the selling stockholders in disposing of the
shares.
See
“Selling Stockholders” and “Plan of Distribution” described below.
Determination
of Offering Price
The
selling stockholders will offer the shares at the prevailing market prices or privately negotiated price. The offering price of
our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition
or any other established criteria of value. Our common stock may not trade at market prices in excess of the offering price as
prices for common stock in any public market will be determined in the marketplace and may be influenced by many factors, including
the depth and liquidity.
Description
of Capital Stock
The
following information describes our common stock and preferred stock, as well as certain provisions of our Articles of Incorporation
and Bylaws, as amended and restated (the “Bylaws”). This description is only a summary. You should also refer
to our Articles of Incorporation and Bylaws, which have been filed with the SEC as exhibits to our registration statement, of
which this prospectus forms a part.
General
Our
authorized capital stock consists of 195,000,000 shares of common stock with a $0.0001 par value per share, and 5,000,000 shares
of preferred stock with a $0.0001 par value per share. As of the date of this prospectus, we have designated three shares of Series
A Preferred Stock and 2,000,000 shares of Series B Preferred Stock. The following is a summary of the material provisions of the
common stock and preferred stock provided for in our Articles of Incorporation and Bylaws. For additional detail about our capital
stock, please refer to our Articles of Incorporation and Bylaws.
Description
of Capital Stock
Common
Stock
Voting
Rights. Each share of our common stock is entitled to one vote on all stockholder matters. Shares of our common stock
do not possess any cumulative voting rights.
Except
for the election of directors, if a quorum is present, an action on a matter is approved if it receives the affirmative vote of
the holders of a majority of the voting power of the shares of capital stock present in person or represented by proxy at the
meeting and entitled to vote on the matter, unless otherwise required by applicable law, Nevada law, our Articles of Incorporation,
as amended or Bylaws, as amended. The election of directors will be determined by a plurality of the votes cast in respect of
the shares present in person or represented by proxy at the meeting and entitled to vote, meaning that the nominees with the greatest
number of votes cast, even if less than a majority, will be elected. The rights, preferences and privileges of holders of common
stock are subject to, and may be impacted by, the rights of the holders of shares of any series of preferred stock that we have
designated, or may designate and issue in the future.
Dividend
Rights. Each share of our common stock is entitled to equal dividends and distributions per share with respect to the
common stock when, as and if declared by our board of directors, subject to any preferential or other rights of any outstanding
preferred stock.
Liquidation
and Dissolution Rights. Upon liquidation, dissolution or winding up, our common stock will be entitled to receive pro
rata on a share-for-share basis, the assets available for distribution to the stockholders after payment of liabilities and payment
of preferential and other amounts, if any, payable on any outstanding preferred stock.
Fully
Paid Status. All outstanding shares of the Company’s common stock are validly issued, fully paid and non-assessable.
Other
Matters. No holder of any shares of our common stock has a preemptive right to subscribe for any of our securities, nor
are any shares of our common stock subject to redemption or convertible into other securities.
Preferred
Stock
On
May 18, 2020, the board of directors of the Company approved the filing of (a) an Amended and Restated Certificate of Designation
of the Company’s Series A Preferred Stock (the “Series A Preferred Stock” and the “Series A
Designation”); and (b) an Amended and Restated Certificate of Designation of the Company’s Series B Convertible
Preferred Stock (the “Series B Preferred Stock” and the “Series B Designation”), with the
Secretary of State of Nevada, which designations were filed with, and became effective with, the Secretary of State of Nevada
on the same date. The Series A Designation designated three shares of Series A Preferred Stock and the Series B Designation designated
2,000,000 shares of Series B Preferred Stock.
Series
A Preferred Stock
The
Series A Designation provides for the Series A Preferred Stock to have the following rights:
Dividend
Rights. The Series A Preferred Stock do not accrue dividends.
Liquidation
Preference. The Series A Preferred Stock have no liquidation preference.
Conversion
Rights. The Series A Preferred Stock have no conversion rights.
Voting
Rights. For so long as any shares of Series A Preferred Stock remain issued and outstanding, the holders thereof, voting
separately as a class, have the right to vote on all shareholder matters (including, but not limited to at every meeting of the
stockholders of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to sixty
percent (60%) of the total vote (the “Total Series A Vote” and the “Voting Rights”). For
example, if there are 10,000 shares of the Company’s common stock issued and outstanding at the time of a shareholder vote,
the holders of the Series A Preferred Stock, voting separately as a class, will have the right to vote an aggregate of 15,000
shares, out of a total number of 25,000 shares voting.
Additionally,
so long as Series A Preferred Stock is outstanding, the Company shall not, without the affirmative vote of the holders of at least
66-2/3% of all outstanding shares of Series A Preferred Stock, voting separately as a class (i) amend, alter or repeal any provision
of the Articles of Incorporation or the Bylaws of the Company so as to adversely affect the designations, preferences, limitations
and relative rights of the Series A Preferred Stock, (ii) effect any reclassification of the Series A Preferred Stock, (iii) designate
any additional series of preferred stock, the designation of which adversely effects the rights, privileges, preferences or limitations
of the Series A Preferred Stock; or (iv) amend, alter or repeal any provision of the Series A Designation (except in connection
with certain non-material technical amendments).
Notwithstanding
the above, no shares of Series A Preferred Stock held by any person who is not a then member of the board of directors of the
Company (each a “Non-Director Holder”), shall have any Voting Rights and the Voting Rights of all other shares
of Series A Preferred Stock (including, but not limited to the Total Series A Vote) shall be calculated without regard to, and
without taking into account, the shares of Series A Preferred Stock held by such Non-Director Holder.
Redemption
Right. The Company has the option in its sole discretion, at any time, with the majority consent or approval of the board
of directors of the Company, to redeem any outstanding shares of Series A Preferred Stock of the Company held by any Non-Director
Holder, by paying the Non-Director Holder(s) a redemption price of $1.00 per share for each such Series A Preferred Stock shares
redeemed (the “Redemption Amount”, and each a “Redemption”). The payment by the Company
to the Non-Director Holder (at such Non-Director Holder’s address of record) of the Redemption Amount in connection with
a Redemption automatically results in the cancellation, termination and invalidation of any outstanding Series A Preferred Stock
held by a Non-Director Holder or his, her or its assigns.
Purchase
Right. In the event the Company is legally prohibited from exercising the redemption right discussed above, any one or
more of the other holders of the Series A Preferred Stock, other than any Non-Director Holder(s) (the “Director Holders”),
have the option, exercisable in their sole discretion, to purchase their pro rata share of any shares of Series A Preferred Stock
held by any Non-Director Holder(s) for $1.00 per share of Series A Preferred Stock (the “Purchase Amount”,
and the “Purchase”). The payment by the Director Holder(s) of the Series A Preferred Stock to the Non-Director
Holder of the Purchase Amount automatically, and without any required action by the Director Holder(s) or the Non-Director Holder,
results in the transfer of the rights to, and ownership of, such Series A Preferred Stock held by a Non-Director Holder or his,
her or its assigns, to the Director Holder(s), pro rata with their payment of the Purchase Amount.
Protective
Provisions. Subject to the rights of series of preferred stock which may from time to time come into existence, so long
as any shares of Series A Preferred Stock are outstanding, the Company cannot without first obtaining the approval (by written
consent, as provided by law) of the holders of a majority of the then outstanding shares of Series A Preferred Stock, voting together
as a class:
(a)
Issue any additional shares of Series A Preferred Stock after the original issuance of shares of Series A Preferred Stock;
(b)
Increase or decrease the total number of authorized or designated shares of Series A Preferred Stock;
(c)
Effect an exchange, reclassification, or cancellation of all or a part of the Series A Preferred Stock;
(d)
Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series
A Preferred Stock; or
(e)
Alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the
shares of such series, including the rights set forth in the Series A Designation.
Transfer
Restrictions. Each holder of Series A Preferred Stock is prohibited from Transferring any shares of Series A Preferred
Stock. “Transfer” means directly or indirectly (a) offering for sale, selling, pledging, hypothecating, transferring,
assigning or otherwise disposing of (or enter into any transaction or device that is designed to, or could be expected to, result
in the sale, pledge, hypothecation, transfer, assignment or other disposition at any time) (including, without limitation, by
operation of law); or (b) entering into any swap or other derivatives transaction that transfers to another, in whole or in part,
any of the benefits or risks of ownership of the applicable securities, whether any such transaction is to be settled by delivery
of securities or other securities, in cash or otherwise.
A
total of one share of Series A Preferred Stock is currently outstanding.
Series
B Convertible Preferred Stock
The
Series B Designation provides for the Series B Preferred Stock to have the following rights:
Dividend
Rights. The Series B Preferred Stock does not accrue any dividends, but the Series B Preferred Stock holders are entitled
to share in dividends paid to the holders of the Company’s common stock to the same extent that such holders would have
received such dividends had they converted the Series B Preferred Stock into common stock pursuant to the conversion rights discussed
below.
Liquidation
Preference. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary
(each a “Liquidation Event”), the holders of Series B Preferred Stock 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 (which include holders of capital leases, other preferred stock and debt holders, and banks or others,
which hold priority liquidation preferences over the assets of the Company), which holders of the senior securities have priority
to the distribution of any assets of the Company, an amount per share for each share of Series B Preferred Stock held by them
equal to $1.00 per share.
Conversion
Rights. 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,
with any remainder rounded to the hundredths place. Notwithstanding the above, at no time may the Series B Preferred Stock be
converted into shares of our common stock by any holder, if such conversion would result in such holder thereof and its affiliates
owning an aggregate of in excess of 4.999% of the then outstanding shares of our common stock, which amount may be increased to
9.999% on a per holder basis, upon 61 days’ prior written notice.
Voting
Rights. The Series B Preferred Stock have no voting rights on general corporate matters, provided that the Series B Designation
does contain customary protective provisions restricting the Company’s ability to undertake any of the following without
the approval of a majority in interest of such shares of Series B Preferred Stock:
(a)
Increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series B Preferred Stock;
(b)
Re-issue any shares of Series B Preferred Stock converted pursuant to the terms of the Series B Designation;
(c)
Issue any shares of Series B Preferred Stock other than pursuant to the SPA;
(d)
Alter or change the rights, preferences or privileges of the shares of Series B Preferred Stock so as to affect adversely the
shares of such series; or
(e)
Amend or waive any provision of the Company’s Articles of Incorporation or Bylaws relative to the Series B Preferred Stock
so as to affect adversely the shares of Series B Preferred Stock in any material respect as compared to holders of other series
of shares.
Redemption
Rights. The Series B Preferred Stock have no redemption rights.
No
shares of Series B Preferred Stock are currently outstanding.
Anti-Takeover
Provisions Under the Nevada Revised Statutes
Business
Combinations
Sections
78.411 to 78.444 of the Nevada revised statutes (the “NRS”) prohibit a Nevada corporation from engaging in
a “combination” with an “interested stockholder” for three years following the date that
such person becomes an interested stockholder and places certain restrictions on such combinations even after the expiration of
the three-year period. With certain exceptions, an interested stockholder is a person or group that owns 10% or more of the corporation’s
outstanding voting power (including stock with respect to which the person has voting rights and any rights to acquire stock pursuant
to an option, warrant, agreement, arrangement, or understanding or upon the exercise of conversion or exchange rights) or is an
affiliate or associate of the corporation and was the owner of 10% or more of such voting stock at any time within the previous
three years.
A
Nevada corporation may elect not to be governed by Sections 78.411 to 78.444 by a provision in its Articles of Incorporation.
We do not have such a provision in our Amended and Restated Articles of Incorporation, as amended, pursuant to which we have elected
to opt out of Sections 78.411 to 78.444; therefore, these sections apply to us.
Control
Shares
Nevada
law also seeks to impede “unfriendly” corporate takeovers by providing in Sections 78.378 to 78.3793 of the
NRS that an “acquiring person” shall only obtain voting rights in the “control shares” purchased
by such person to the extent approved by the other stockholders at a meeting. With certain exceptions, an acquiring person is
one who acquires or offers to acquire a “controlling interest” in the corporation, defined as one-fifth or
more of the voting power. Control shares include not only shares acquired or offered to be acquired in connection with the acquisition
of a controlling interest, but also all shares acquired by the acquiring person within the preceding 90 days. The statute covers
not only the acquiring person but also any persons acting in association with the acquiring person.
A
Nevada corporation may elect to opt out of the provisions of Sections 78.378 to 78.3793 of the NRS. We do not have a provision
in our Amended and Restated Articles of Incorporation pursuant to which we have elected to opt out of Sections 78.378 to 78.3793;
therefore, these sections do apply to us.
Removal
of Directors
Section
78.335 of the NRS provides that 2/3rds of the voting power of the issued and outstanding shares of the Company are required to
remove a Director from office. As such, it may be more difficult for stockholders to remove Directors due to the fact the NRS
requires greater than majority approval of the stockholders for such removal.
Anti-Takeover
Effects of Our Articles of Incorporation and Bylaws
The
following provisions of our Articles of Incorporation and Bylaws could have the effect of delaying or discouraging another party
from acquiring control of us and could encourage persons seeking to acquire control of us to first negotiate with our board of
directors:
|
●·
|
no
cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
|
|
●·
|
the
right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or
the resignation, death or removal of a director, with our stockholders only allowed to fill such a vacancy if not filled by
the board;
|
|
|
|
|
●
|
the
ability of our board of directors to alter our Bylaws without obtaining stockholder approval; and
|
|
|
|
|
●·
|
the
requirement that a special meeting of stockholders may be called only by the board of directors, the Chairman of the Board,
the President or a committee of the board of directors duly designated and whose powers and authority include the power to
call meetings may call special meetings of the Company.
|
Listing
Our
common stock is traded on the OTCQB Market under the symbol “AMIH”.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, 6201 15th Ave, Brooklyn, NY
11219. Its telephone number is (800) 937-5449.
Plan
of Distribution
We
are registering the shares of common stock covered by the registration statement of which this prospectus is a part, which are
issuable to the selling stockholders upon the conversion of 6% Convertible Notes and upon the exercise of Warrants, to permit
the resale of these shares of common stock by the selling stockholders from time to time from after the date of this prospectus.
Each
selling stockholder may, from time to time, sell any or all of their shares of common stock covered hereby on the over-the-counter
market, any national securities exchange or quotation service on which the shares of our common stock may be listed or quoted
at the time of sale, in the over-the counter market, in privately negotiated transactions, through the writing of options, whether
such options are listed on an options exchange or otherwise, short sales or in a combination of such transactions. These sales
may be at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale,
or privately negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling shares:
|
●
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
|
|
●
|
block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
|
|
|
|
|
●
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
|
|
|
●
|
an
exchange distribution in accordance with the rules of the applicable exchange;
|
|
|
|
|
●
|
privately
negotiated transactions;
|
|
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|
|
●
|
settlement
of short sales, to the extent permitted by law;
|
|
|
|
|
●
|
in
transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such shares at
a stipulated price per share;
|
|
●
|
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
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|
|
●
|
a
combination of any such methods of sale; or
|
|
|
|
|
●
|
any
other method permitted pursuant to applicable law.
|
The
selling stockholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of
common stock from time to time pursuant to this prospectus.
The
selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The
selling stockholders may also sell the shares of common stock under Rule 144 under the Securities Act, if available, rather than
under this prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from
the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA IM-2440-1.
The
aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of
the common stock less discounts or commissions, if any. Each of the selling stockholders reserve the right to accept and, together
with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly
or through agents. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock.
In
connection with the sale of the shares of common stock or interests therein, the selling stockholders may enter into hedging transactions
with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares of common stock in
the course of hedging the positions they assume. The selling stockholders may also sell the shares of common stock short and deliver
these securities to close out their short positions or to return borrowed shares in connection with such short sales, or loan
or pledge the shares of common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also
enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution of shares of common stock offered by this prospectus,
which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The
selling stockholders and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to
be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such selling stockholders, broker-dealers or agents and any profit on the resale of the shares purchased
by them may be deemed to be underwriting commissions or discounts under the Securities Act. Selling stockholders who are “underwriters”
within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities
Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities
Act and Rule 10b-5 under the Exchange Act. Each selling stockholder has informed us that it is not a registered broker-dealer
or an affiliate of a registered broker-dealer.
Under
the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed
brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered
or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. There
can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the
registration statement, of which this prospectus forms a part.
We
are required to pay certain fees and expenses incurred by us incident to the registration of the shares. We have agreed to indemnify
the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act,
and the selling stockholders may be entitled to contribution. We may be indemnified by the selling stockholders against certain
losses, claims, damages and liabilities, including liabilities under the Securities Act that may arise from any written information
furnished to us by the selling stockholders specifically for use in this prospectus, or we may be entitled to contribution.
The
selling stockholders will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder
unless an exemption therefrom is available.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the shares of common stock
may not simultaneously engage in market making activities with respect to the shares of common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will
be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which
may limit the timing of purchases and sales of shares of common stock by the selling stockholders or any other person. We will
make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this
prospectus at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
To
the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase
prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with
respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
The
selling stockholders may not sell any or all of the shares of common stock we registered on behalf of the selling stockholders
pursuant to the registration statement of which this prospectus forms a part.
Once
sold under the registration statement of which this prospectus forms a part, the shares of common stock registered herein will
be freely tradable in the hands of persons other than our affiliates.
Selling
Stockholders
This
prospectus covers the resale from time to time by the selling stockholders identified in the table below of up to 14,750,000 shares
of common stock through this prospectus, including up to 8,000,000 shares of common stock issuable upon conversion of 6% Convertible
Notes and 6,750,000 shares of common stock issuable upon exercise of outstanding Warrants, each described in greater detail above
under “Securities Purchase Agreement”.
We
are registering the shares to permit the selling stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest
to, from time to time, sell any or all of the shares through public or private transactions at prevailing market prices, at prices
related to prevailing market prices or at privately negotiated prices of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions when and as they deem appropriate in the manner described in
“Plan of Distribution”. As of the date of this prospectus, there are 65,475,605 shares of our common stock issued
and outstanding.
The
following table sets forth, as of the date of this prospectus, the name of each selling stockholder, the number and percentage
of shares of our common stock beneficially owned by each selling stockholder prior to the offering for resale of the shares under
this prospectus, the number of shares of our common stock beneficially owned by each selling stockholder that may be offered from
time to time under this prospectus, and the number and percentage of shares of our common stock beneficially owned by the selling
stockholder after the offering of the shares (assuming all of the offered shares are sold by the selling stockholder).
There
are no agreements between the Company and any selling stockholder pursuant to which the shares subject to this registration statement
were issued except as discussed above under “Securities Purchase Agreement”. None of the selling stockholders has
ever been an executive officer or director of the Company or has had a material relationship with us at any time within the past
three years unless disclosed in the footnotes below.
Beneficial
ownership is determined in accordance with the rules of the SEC, and includes any shares of common stock as to which a person
has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within
sixty (60) days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic
termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement.
|
|
Number of Shares of Common Stock
Beneficially Owned
Prior to this
Offering (1)
|
|
|
Number of Shares of Common Stock Being
|
|
|
Beneficial Ownership of Common Stock After Registration Assuming All Shares Are Sold (#)
|
|
Name of Selling Stockholder
|
|
Number
|
|
|
Percentage
|
|
|
Offered
|
|
|
Number
|
|
|
Percentage
|
|
Cavalry Fund I LP
|
(2)
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|
4,475,000
|
|
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6.4
|
%(4)
|
|
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7,375,000
|
(6)
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—
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|
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—
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|
L1 Capital Global Opportunities Master Fund
|
(3)
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|
4,475,000
|
|
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|
6.4
|
%(5)
|
|
|
7,375,000
|
(6)
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—
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|
—
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|
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14,750,000
|
|
|
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|
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*
Less than one percent (1%).
#
Assumes the sale of all shares offered herein.
(1)
“Beneficial ownership” means that a person, directly or indirectly, has or shares voting or investment power
with respect to a security or has the right to acquire such power within 60 days. The percentage is based upon 65,475,605 shares
of our common stock outstanding as of January 28, 2021.
(2)
Address: 82 E. Allendale Rd., Ste 5B, Saddle River, NJ 07458. Cavalry Fund I Management LLC, the investment manager of Cavalry
Fund I LP, has voting and investment power over these securities. Thomas Walsh is the managing member of Cavalry Fund I Management
LLC, which is the general partner of Cavalry Fund I LP. Thomas Walsh disclaims beneficial ownership over these securities.
(3)
Address: 161A Shedden Road, 1 Artillery Court, PO Box 10085, Grand Cayman, Cayman Islands KY1-1001. David Feldman and Joel Arber
are the Directors of L1 Capital Global Opportunities Master Fund Ltd. As such, L1 Capital Global Opportunities Master Fund Ltd,
Mr. Feldman and Mr. Arber may be deemed to beneficially own the shares of the Company held by L1 Capital Global Opportunities
Master Fund. To the extent Mr. Feldman and Mr. Arber are deemed to beneficially own such shares, Mr. Feldman and Mr. Arber disclaim
beneficial ownership of these securities for all other purposes.
(4)
Based solely on the Schedule 13G filed by Cavalry Fund I LP on January 19, 2021, which information has not been confirmed by the
Company.
(5)
Based solely on the Schedule 13G filed by L1 Capital Global Opportunities Master Fund on January 19, 2021, which information has
not been confirmed by the Company.
(6)
Represents (A) shares of common stock of the Company issuable upon exercise of Common Stock Purchase Warrants granted to the selling
stockholder, providing such selling stockholder’s the right to purchase (a) 1,125,000 shares of common stock at an exercise
price of $0.20 per share; (b) 1,125,000 shares of common stock at an exercise price of $0.35 per share; and (c) 1,125,000 shares
of common stock at an exercise price of $0.50 per share; and (B) up to 4,000,000 shares of common stock of the Company issuable,
upon conversion of principal, accrued interest, and late charges, owed by the Company, pursuant to $400,000 of 6% Convertible
Notes acquired by the selling stockholder on January 6, 2021, at the option of the holder thereof. The 6% Convertible Notes contain
provisions limiting each holder’s ability to convert any portion of its individual 6% Convertible Note if such conversion
would cause the holder’s (or any affiliate of any such holder’s) holdings in the Company to exceed 9.99% of the Company’s
issued and outstanding shares of common stock. The Warrants contain provisions limiting each holder’s ability to exercise
the Warrants if such exercise would cause the holder’s (or any affiliate of any such holder’s) holdings in the Company
to exceed 9.99% of the Company’s issued and outstanding shares of common stock. The Warrants are only exercisable by each
applicable holder if such holder purchases its applicable Second Tranche Note (see “Securities Purchase Agreement”,
above).
Certain
Beneficial Owners and Management
The
following table sets forth information regarding the beneficial ownership of our common stock as of January 28, 2021 (the “Date
of Determination”) by (i) each Named Executive Officer, as such term is defined in “Executive and Director Compensation”,
(ii) each member of our board of directors, (iii) each person deemed to be the beneficial owner of more than five percent (5%)
of our common stock or preferred stock, and (iv) all of our executive officers and directors as a group. Unless otherwise indicated,
each person named in the following table is assumed to have sole voting power and investment power with respect to all shares
of our stock listed as owned by such person. The address of each person is deemed to be the address of the Company unless otherwise
noted.
Beneficial
ownership is determined in accordance with the rules of the SEC and includes voting and/or investing power with respect to securities.
These rules generally provide that shares of common stock subject to options, warrants or other convertible securities that are
currently exercisable or convertible, or exercisable or convertible within 60 days of the Date of Determination, are deemed to
be outstanding and to be beneficially owned by the person or group holding such options, warrants or other convertible securities
for the purpose of computing the percentage ownership of such person or group, but are not treated as outstanding for the purpose
of computing the percentage ownership of any other person or group. The percentages are based upon 65,475,605 shares of our common
stock outstanding as of the Date of Determination.
To
our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, as of the
Date of Determination, (a) the persons named in the table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them, subject to applicable community property laws; and (b) no person owns more than
5% of our common or preferred stock. Unless otherwise indicated, the address for each of the officers or directors listed in the
table below is 3990 Vitruvian Way, Suite 1152, Addison, Texas 75001.
Name and Address of
Beneficial Owner
|
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Common Shares Beneficially Owned
|
|
|
Common Ownership Percentage
|
|
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Series A Preferred Stock Shares Beneficially Owned
|
|
|
Series A Preferred
Stock Percentage (1)
|
|
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Total
Voting Percentage (2)
|
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Officers and Directors
|
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Jacob D. Cohen
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22,500,000
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(3)
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34.4
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%
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|
1
|
|
|
|
100
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%
|
|
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73.7
|
%
|
Esteban Alexander#
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2,000,000
|
|
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|
3.1
|
%
|
|
|
—
|
|
|
|
—
|
%
|
|
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1.2
|
%
|
Alan Hernandez#
|
|
|
2,000,000
|
|
|
|
3.1
|
%
|
|
|
—
|
|
|
|
—
|
%
|
|
|
1.2
|
%
|
Everett Bassie#
|
|
|
100,000
|
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
—
|
%
|
All officers and directors as a group (1 person)
|
|
|
22,500,000
|
|
|
|
34.4
|
%
|
|
|
1
|
|
|
|
100
|
%
|
|
|
73.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Greater than 5% Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Holden (4)
|
|
|
3,800,000
|
|
|
|
5.8
|
%
|
|
|
—
|
|
|
|
—
|
%
|
|
|
2.3
|
%
|
Cavalry Fund I LP (5)
|
|
|
4,475,000
|
(5)
|
|
|
6.4
|
%
|
|
|
—
|
|
|
|
—
|
%
|
|
|
2.7
|
%
|
L1 Capital Global Opportunities Master Fund (6)
|
|
|
4,475,000
|
(6)
|
|
|
6.4
|
%
|
|
|
—
|
|
|
|
—
|
%
|
|
|
2.7
|
%
|
*
Less than 1%.
#
Former officers.
The
Company’s Series B Preferred Stock has no voting rights on general shareholder matters.
(1)
The Series A Preferred Stock have the right, voting in aggregate, to vote on all shareholder matters equal to sixty percent (60%)
of the total vote, so long as such shares are held by directors of the Company.
(2)
Based on 163,689,013 total voting shares, including 65,475,605 shares voted by our common stock holders and 98,213,408 voting
shares voted by our Series A Preferred Stock holder, Mr. Cohen (see also footnote 1).
(4)
The Company is currently pursuing legal action to recover the 3,800,000 shares of stock issued to Mr. Holden.
(3)
The shares of common stock are held in the name of Cohen Enterprises, Inc., which shares Mr. Cohen is deemed to beneficially own
due to his ownership of 100% of Cohen Enterprises and his position as President thereof.
(5)
Address: 82 E. Allendale Rd., Ste 5B, Saddle River, NJ 07458. Cavalry Fund I Management LLC, the investment manager of Cavalry
Fund I LP, has voting and investment power over these securities. Thomas Walsh is the managing member of Cavalry Fund I Management
LLC, which is the general partner of Cavalry Fund I LP. Thomas Walsh disclaims beneficial ownership over these securities. Based
solely on the Schedule 13G filed by Cavalry Fund I LP on January 19, 2021, which information has not been confirmed by the Company,
of which no shares have been issued and outstanding as of the date of this prospectus.
(6)
Address: 161A Shedden Road, 1 Artillery Court, PO Box 10085, Grand Cayman, Cayman Islands KY1-1001. David Feldman and Joel Arber
are the Directors of L1 Capital Global Opportunities Master Fund Ltd. As such, L1 Capital Global Opportunities Master Fund Ltd,
Mr. Feldman and Mr. Arber may be deemed to beneficially own the shares of the Company held by L1 Capital Global Opportunities
Master Fund. To the extent Mr. Feldman and Mr. Arber are deemed to beneficially own such shares, Mr. Feldman and Mr. Arber disclaim
beneficial ownership of these securities for all other purposes. Based solely on the Schedule 13G filed by L1 Capital Global Opportunities
Master Fund on January 19, 2021, which information has not been confirmed by the Company, of which no shares have been issued
and outstanding as of the date of this prospectus.
Change
of Control
The
Company is not aware of any arrangements which may at a subsequent date result in a change of control of the Company.
Dividend
Policy
We
have never paid or declared any cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable
future. We anticipate that we will retain all of our future earnings for use in the operation of our business and for general
corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly,
investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize
any future gains on their investments.
Legal
Matters
The
validity of the securities offered by this prospectus have been passed upon for us by The Loev Law Firm, PC. David M. Loev, the
Managing Partner of The Loev Law Firm, PC, who is also the brother-in-law of Jacob D. Cohen, the sole officer and director
of the Company, owns 1,000,000 shares of the Company’s common stock. The securities are subject to a two-year lock-up
agreement (expiring January 22, 2023), preventing the sale or transfer of such shares without the written approval of the Company,
except to affiliates of the holder, who agree to be bound by the same terms.
Experts
The
audited financial statements of American International Holdings Corp. and its subsidiaries as of December 31, 2019 and, 2018,
and for the years then ended, included in this prospectus have been audited by M&K CPAS, PLLC, Houston, Texas, independent
registered public accounting firm, as stated in their report date dated July 2, 2019, which is included herein, and has been so
incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
No
expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion
upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering
of the common stock was employed on a contingency basis, or had, or is to receive, any interest, directly or indirectly, in our
Company or any of our parents or subsidiaries, nor was any such person connected with us or any of our parents or subsidiaries,
if any, as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Description
of Business
The
following discussion should be read in conjunction with our financial statements and the related notes and other financial information
appearing elsewhere in this prospectus.
Corporate
History
American
International Holdings Corp.
American
International Holdings Corp. was organized in 1986 and is incorporated in Nevada. The Company has undergone several name changes
and changes of control since its incorporation; however, from 2012 until April 2019, the Company had no operations and nominal
assets.
Prior
to May 31, 2018, the Company was a 93.2% owned subsidiary of American International Industries, Inc. (“American”,
“AMIN”), a company whose securities are traded on the OTCQB market maintained by OTC Markets under the symbol
“AMIN”.
Effective
on May 31, 2018, the Company issued (a) 4,300,000 shares of restricted common stock to Mr. Daniel Dror (the Company’s former
Chief Executive Officer and President (who resigned from such positions effective on May 31, 2018)); (b) 3,800,000 shares of restricted
common stock to Mr. Robert Holden (who was appointed President, Chief Executive Officer and Director of the Company on May 31,
2018 and resigned on August 20, 2018); (c) 750,000 shares of restricted common stock to Mr. Everett Bassie (who was appointed
as Chief Financial Officer, Secretary, Treasurer and a member of the board of directors of the Company on May 31, 2018, and resigned
from all positions with the Company); (d) 750,000 shares of restricted common stock to Mr. Winfred Fields (a consultant to the
Company); and (e) 500,000 shares of restricted common stock to Mr. Charles R. Zeller (a then director of the Company), each in
consideration for services rendered to the Company.
As
a result of the issuance of the shares in May 2018 as discussed above, a change in control occurred. American International Industries,
Inc. ownership decreased from 93.2% to 6.4%.
On
April 12, 2019, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Novopelle
Diamond, LLC, a Texas limited liability company (“Novopelle Diamond” and “Novopelle”) and
certain unitholders of Novopelle Diamond. Pursuant to the terms of the Share Exchange Agreement, the Company acquired 100% of
the issued and outstanding membership interests of Novopelle Diamond by means of a share exchange with the Novopelle Members in
exchange for 18,000,000 newly issued shares of the common stock of the Company (the “Share Exchange”). As a
result of the Share Exchange, Novopelle became a 100% owned subsidiary of the Company. The closing of the Share Exchange occurred
concurrently with the entry into the Share Exchange Agreement and resulted in a change of control of the Company. As a result
of the Share Exchange, the Company acquired the business of Novopelle Diamond and all of its assets. Novopelle Diamond is a physician
supervised, medical spa and wellness clinic that offers a full menu of wellness services including anti-aging, weight loss and
skin rejuvenation treatments.
The
three unitholders of Novopelle Diamond who received shares pursuant to the Share Exchange Agreement were (1) Jacob D. Cohen; (2)
Esteban Alexander; and (3) Luis Alan Hernandez, who each received six million shares pursuant to the Share Exchange.
Concurrent
with the Share Exchange, 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 4,900,000 shares of their Company common stock for individual promissory
notes with an aggregate principal amount of $350,000 (the “Promissory Notes”). The Promissory Notes had a term
of two years and accrue interest at the rate of 10% per annum (payable at maturity) until paid in full by the Company. The current
principal balance of the Promissory Notes is approximately $110,000 as of the date of this filing.
As
a result of the issuance of the shares in the Share Exchange and the cancellation of the shares held by the AMIH Shareholders,
control of the Company changed to (1) Jacob D. Cohen; (2) Esteban Alexander; and (3) Alan Hernandez, who each owned 26% of the
Company’s common stock following such transactions.
Also
effective on April 12, 2019, the directors of the Company changed to Mr. Jacob D. Cohen; Mr. Esteban Alexander; and Mr. Alan Hernandez,
who were also each appointed as the Chief Executive Officer and President of the Company (Mr. Cohen); the Chief Operating Officer
and Treasurer (Mr. Alexander); and the Chief Marketing Officer and Secretary (Mr. Hernandez). Mr. Bassie resigned as a member
of the board of directors of the Company and as the Secretary and Treasurer on April 12, 2019, but remained as the Company’s
Chief Financial Officer until his passing on May 21, 2020.
On
October 2, 2020, Jacob D. Cohen, the Chief Executive Officer and member of the board of directors of the Company entered into
Stock Purchase Agreements with each of (a) Esteban Alexander, the Chief Operating Officer and member of the board of directors
of the Company, and (b) Luis Alan Hernandez, the Chief Marketing Officer and member of the board of directors of the Company (collectively,
the “Preferred Holders” and the “Stock Purchase Agreements”).
Pursuant
to the Stock Purchase Agreements, Mr. Alexander agreed to sell 7,000,000 shares of common stock of the Company which he held to
Mr. Cohen, which rights to such shares were assigned by Mr. Cohen to Cohen Enterprises, Inc., which entity he controls (“Cohen
Enterprises”), in consideration for an aggregate of $1,500 as well as for the amount of services provided by Mr. Cohen
to the Company; and Mr. Hernandez agreed to sell 4,000,000 shares of common stock of the Company which he held to Cohen Enterprises,
in consideration for an aggregate of $1,000 as well as for the amount of services provided by Mr. Cohen to the Company. The sales
closed on November 5, 2020.
One
of the reasons that Mr. Alexander and Mr. Hernandez agreed to the terms of the Stock Purchase Agreements (including the sale of
the shares of common stock of the Company at below market value), is because (a) each of Mr. Cohen, Mr. Alexander, and Mr. Hernandez
were all appointed as officers and directors of the Company at the same time in April 2019, with the intention that such persons
would provide a relatively equal amount of services to the Company in the roles as officers and directors thereof; (b) since such
appointment date Mr. Cohen has been required to provide a disproportionate amount of services to the Company; and (c) each of
Mr. Alexander and Mr. Hernandez desired to provide additional consideration to Mr. Cohen for such disproportionate level of service.
A
condition to the Stock Purchase Agreements was that each of Mr. Alexander and Mr. Hernandez resign as a member of the board of
directors of the Company by no later than January 15, 2021, which resignations were effective December 15, 2020.
A
further requirement to the terms of the Stock Purchase Agreements was that each of Mr. Alexander and Mr. Hernandez take such actions
necessary and which may be requested from time to time by Mr. Cohen, to affect the cancellation of the one share of Series A Preferred
Stock of the Company held by each of them, for no consideration (including, but not limited to, without the required payment by
the Company of the $1 redemption price described in the designation of such Series A Preferred Stock).
The
shares of Series A Preferred Stock held by Mr. Alexander and Mr. Hernandez were canceled on November 6, 2020.The common shares
were also transferred to Mr. Cohen on November 6, 2020, and as such, a change of control occurred on such date, with Mr. Cohen
taking over voting control of the Company.
The
Company is headquartered in Addison, Texas and operates as a holding company dedicated to acquiring, managing and operating subsidiaries
in (a) the health, wellness, and auxiliary industries across the United States and abroad; (b) general contracting and construction
services; and (c) life coaching industry. The Company seeks opportunities to acquire and grow businesses that possess strong brand
values and that can generate long-term sustainable free cash flow and attractive returns in order to maximize value for all stakeholders.
The
Company currently is the parent to seven wholly owned subsidiaries and one majority owned subsidiary.
MEDICAL
SPA AND WELLNESS
The
Company currently owns three wholly-owned subsidiaries that are in the Medical Spa and Wellness Sector (collectively hereinafter
referred to as “MedSpa”, or “VISSIA”). They are:
|
1.
|
VISSIA
MCKINNEY, LLC (F/K/A NOVOPELLE DIAMOND, LLC) – 100% OWNED
|
As
described above, on April 12, 2019, the Company entered into the Share Exchange Agreement with Novopelle and acquired 100% of
the issued and outstanding membership interests of Novopelle Diamond by means of a share exchange with the Novopelle Members in
exchange for 18,000,000 newly issued shares of the common stock of the Company. As a result of the Share Exchange, VISSIA McKinney
became a 100% owned subsidiary of the Company. As a result of the Share Exchange, the Company acquired the business of VISSIA
McKinney and all of its assets. VISSIA McKinney is a physician supervised, medical spa and wellness clinic that offers a full
menu of wellness services including anti-aging, weight loss and skin rejuvenation treatments located at 5000 Collin McKinney Parkway,
Suite 150, McKinney, Texas 75070.
On
June 27, 2019, the Company entered into an Exclusive License Agreement with Novo MedSpa Addison Corporation (“NMAC”)
granting the Company the exclusive rights to the Novopelle intellectual property, including copyrights and trademarks, proprietary
technology, and other assets necessary or desirable to operate Novopelle branded MedSpa locations and the right to open additional
Novopelle branded MedSpa locations. The agreement provides the Company with an exclusive worldwide, unrestricted, perpetual, irrevocable,
and royalty-bearing license.
Upon
the execution of the License Agreement, the Company made a one-time cash payment in the amount of Forty Thousand Dollars ($40,000)
and issued to NMAC a one-time stock issuance of 250,000 shares of the Company’s common stock. In addition, the Company has
agreed to compensate NMAC with a one-time payment of Thirty Thousand Dollars ($30,000) per new Novopelle location as established
by the Company and provide NMAC with an ongoing royalty payment equal to six percent (6%) of the newly established location’s
total gross monthly revenues. The Company has accrued royalties of $6,325 due to NMAC as of December 31, 2019.
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. As a result, on May 19, 2020, Novopelle Diamond, LLC was officially renamed to VISSIA
McKinney, LLC. Effective on May 13, 2020 the License Agreement was terminated.
|
2.
|
VISSIA
WATERWAY, INC. (F/K/A NOVOPELLE WATERWAY, INC.) – 100% OWNED
|
On
September 11, 2019, the Company formed and organized Novopelle Waterway, Inc., in the State of Texas to establish a Novopelle
branded med spa located in the Waterway section of the Woodlands, Texas. As a result of the termination of the License Agreement
with NMAC, Novopelle Waterway, Inc. was officially renamed to VISSIA Waterway, Inc. on May 19, 2020.
On
November 6, 2019, VISSIA Waterway, Inc. entered into a Lease Agreement with 20 & 25 Waterway Holdings, LLC to lease and occupy
approximately 1,254 square feet of commercial retail space located at 25 Waterway, Suite 150, The Woodlands, Texas and officially
opened its doors for service at the end of February 2020.
|
3.
|
NOVOPELLE
TYLER, INC. – 100% OWNED
|
On
December 3, 2019, the Company formed and organized Novopelle Tyler, Inc. in the State of Texas with the plan to come to terms
on a retail location for a newly established Novopelle branded med spa to be located in Tyler, Texas.
On
January 6, 2020, Novopelle Tyler, Inc. entered into a Lease Agreement with Asher Park, LLC to lease and occupy approximately 1,900
square feet of commercial retail space located in Tyler, Texas to operate a planned new Novopelle MedSpa location. As of the date
of this prospectus, and due to issues and delays related to COVID-19, Novopelle Tyler has canceled the lease agreement in August
2020 as the current market and economic conditions continue to worsen due to unforeseen circumstances related to COVID-19. As
such, Novopelle Tyler has not effectuated the name change to VISSIA with the State of Texas and no longer intends to open this
location. No further activity has been performed under Novopelle Tyler to date.
*
* * * *
As
a result of COVID-19 and ‘stay-at-home’ and social distancing orders issued in McKinney and The Woodlands, Texas,
we had to close both of our then operational MedSpas, VISSIA McKinney and VISSIA Waterway, Inc., which were closed effective March
10, 2020, and which resulted in both the loss of income and the loss of most of our workforce, who had to be let go. VISSIA Waterway,
Inc. reopened effective June 21, 2020 and VISSIA McKinney reopened effective August 8, 2020. However, due to the termination of
employees associated with the shutdown we were forced to expend resources to attract, hire and train completely new staff for
preparation of the re-launchings. Notwithstanding the re-openings, customer traffic and demand at our VISSIA Waterway, Inc. and
VISSIA McKinney MedSpa locations failed to rebound to pre-closure levels due to COVID-19 and the pandemic’s effects on the
economy, and because we are unable to predict the length of the pandemic or ultimate outcome thereof, and further due to our limited
capital resources, effective on October 25, 2020, we made the decision to temporarily close both our VISSIA Waterway, Inc. and
VISSIA McKinney locations, which remain closed as of the date of this prospectus. We are currently seeking both financial and
operating partners to assist in the further management and operations of our VISSIA brand, to help fund the re-opening of our
spas and are also entertaining any and all purchase opportunities for such brand and spas as well.
VISSIA
Service Offerings
Our
VISSIA med spas are Texas based, physician-supervised medical spa & wellness clinics. When operational, VISSIA offers the
following products and services:
●
|
Stem
Cell Therapy
|
●
|
Acne
& Acne Scar Reduction
|
●
|
Laser
Hair Removal
|
●
|
Testosterone
Replacement Therapy
|
●
|
PRP
Facial (Vampire Facial)
|
●
|
Hair
Restoration
|
●
|
Novo
Lipo (Body Contouring)
|
●
|
Botox
& Fillers
|
●
|
Laser
Vein Removal
|
●
|
Facials
& Peels
|
●
|
Cellulite
Reduction
|
●
|
Weight
Loss Solutions
|
●
|
Stretch
Mark Reduction
|
●
|
IV
Therapies
|
Medical
Spa Marketing Strategy
When
operational, VISSIA markets its products and services to both men and women that are conscience about fitness, health, wellness
and aesthetics.
When
operational, VISSIA deploys unique, proven marketing strategies through social media with both sponsored and paid advertisements
as well as the use of local brand ambassadors and influencers. VISSIA has also experienced a lot of success by placing marketing
materials in nearby retail establishments and utilizing cross marketing relationships with other vendors and retailers that market
to similar demographics.
Competition
The
health, wellness, fashion and medical spa industries are highly competitive with new locations, brands and facilities being established
on a frequent basis. The industries continue to expand and evolve as an increasing number of competitors and potential competitors
enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, managerial
and research and development resources and experience than we have. Some of these competitors and potential competitors have more
experience than we have in the development of health and wellness services and products. In addition, our services and products
compete with service and product offerings from large and well-established companies that have greater marketing and sales experience
and capabilities than we or our collaboration partners have.
Specifically,
and as it relates to medical spas, there are both many independently operated locations as well as doctor’s offices that
provide some or all of the services that we provide. At the same time, the demand and the number of individuals – both men
and women – that are seeking medical spas for a variety of health, wellness and cosmetic/aesthetic type treatments and solutions
has increased dramatically over the past several years. With medical spa treatments, such as laser hair removal and Botox injections,
becoming more available, desirable, and affordable, demand for these services has dramatically increased.
CAPITOL
CITY SOLUTIONS, USA, INC. – 100% OWNED
On
September 17, 2019, the Company formed and organized Capitol City Solutions USA, Inc. (“CCS”) in the State
of Texas to act as a general contracting and construction company focused on the remodeling, general construction and interior
finish of both the Company’s newly established med spa locations as well as to market to other commercial real estate projects
within the United States.
Service
Offerings
CCS
currently offers a variety of general contracting services to oversee the entirety of commercial construction projects and manage
all phases of construction. These areas can range from permitting, roofing and exterior construction or remodeling, to interior
finish out, including but not limited to cabinetry, drywall, plumbing and electrical. CCS primarily utilizes the services of its
sub-contractors in order to perform its services and in some instances will perform various construction related tasks with its
own work force in order to improve its project specific margins and profitability.
Marketing
Strategy
CCS
has primarily relied on word of mouth and existing relationships in order to market and secure its services and obtain access
to viable projects. Additional strategies include the utilization of search engine optimization (SEO) marketing on its website
at www.capitolcitysolutionsusa.com (which includes information the Company does not desire to incorporate by reference
into this prospectus) and other social media outlets to reach out to both commercial developers and multi-family property owners
and developers to solicit additional projects. Due to its current resources, CCS is currently limiting its marketing initiatives
for projects located within the State of Texas.
Competition
The
general contracting and construction industry is highly competitive with many larger, more established construction companies
vying and marketing for the same projects as CCS. Many of these competitors and potential competitors have substantially greater
financial, technological, managerial, technical and development resources and experience than we have. Some of these competitors
and potential competitors have more experience than we have in all aspects of construction from both a new construction development
and commercial remodeling.
LEGEND
NUTRITION, INC. – 100% OWNED
On
September 23, 2019, the Company formed and organized Legend Nutrition, Inc. (“Legend Nutrition”) in the State
of Texas to act as a new brand of retail vitamin and supplement stores to be branded and marketed as Legend Nutrition.
October
18, 2019, Legend entered into an Asset Purchase Agreement to acquire all of the assets associated with and related to a retail
vitamin, supplements and nutrition store located in McKinney, Texas and previously 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.
Product
and Service Offerings
Legend
Nutrition is currently operating a 1,500 square foot retail store offering a variety of vitamin & nutritional supplements
as well as nutritional and weight loss plans through a consultative approach with each and every customer. Legend Nutrition’s
products include, but are not limited to, a variety of workout related supplements such as vitamins, protein powders, pre-workout
powders, and post-workout supplements that focus on muscle and overall health recovery. Legend Nutrition is currently located
at 2851 Craig Drive, Suite #204, McKinney, TX 75070.
Legend
Nutrition sells, markets and caters to an audience of health conscience and minded individuals including, but not limited to,
athletes, sports enthusiasts and bodybuilders. Legend Nutrition currently deploys a number of marketing strategies in order to
attract local customers to its retail store. The most effective marketing strategy to date has been the use of promotional marketing
materials, such as Legend Nutrition branded t-shirts, which were distributed to its customers free of charge. Customers would
wear these t-shirts when they work out at their local gym and were encouraged to post pictures and tag Legend Nutrition on various
social media applications. Legend has also set up displays at local gyms and other local retail establishments to promote its
various products and services.
Although
our MedSpas were forced to close during the second and third quarters of 2020, and are temporarily closed for economic reasons
currently, Legend Nutrition was able to remain open as an essential business as we sold vitamins and other nutritional supplements.
Though the store was able to remain open, the store saw, and continues to see, a deep decline in sales due to social distancing
orders and decreases in customers who are willing to venture out to brick and mortar establishments. Legend Nutrition’s
lease is up January 31, 2021, and the Company plans to not renew the lease, close the store, and not continue in this line of
business moving forward.
LIFE
GURU, INC. – 51% OWNED
On
May 15, 2020, the Company acquired a 51% interest in Life Guru, Inc., a Delaware corporation. Life Guru owns the website www.LifeGuru.me
– a website dedicated to providing an online platform to connect consumers to a variety of mentors, professionals, life
coaches and career coaches (which includes information the Company does not desire to incorporate by reference into this prospectus).
The LifeGuru.me website is currently in development and is anticipated to be fully launched on or before March 31, 2021.
ZIPDOCTOR,
INC. – 100% OWNED
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’s online telemedicine platform is available to customers across the United States and offers bilingual coverage
(both English and Spanish), with virtual visits taking place either via the phone or through a secured video chat platform. ZipDoctor
customers subscribe through the website and are only required to pay a low monthly fee, which is determined based on if they are
an individual, a couple, or a family. ZipDoctor is currently being sold on a direct-to-consumer basis with an emphasis on digital
marketing and advertising. The Company intends to shift the business model to focus on offering ZipDoctor’s services to
small to medium size companies to provide its telemedicine services to their employees as an employment health benefit. The Company
launched the platform in the third quarter of 2020 and has generated nominal revenues to date.
EPIQ
MD, INC. – 100% OWNED
On
October 23, 2020, the Company incorporated a wholly-owned subsidiary, EPIQ MD, Inc. (“EPIQ MD”) in the State
of Nevada. EPIQ MD is planned to be a direct to consumer, telemedicine and healthcare company targeting the over approximately
76 million Americans who are uninsured or underinsured; this includes, but is not limited to the working class, middle income
and upper middle-income demographics. The EPIQ MD service offering is planned to be a convergence of primary care telemedicine,
preventative care services and wellness programs – under one brand and on one platform. The EPIQ MD services are planned
to be sold directly to consumers using a direct sales model and utilizing brand ambassadors.
*
* * * * *
The
Company intends to continue to grow its business both organically and through identifying acquisition targets over the next 12
months in the telemedicine, life coaching, and wellness space. As these opportunities arise, the Company will determine the best
method for financing its growth which may include the issuance of additional debt instruments, common stock, preferred stock,
or a combination thereof, any one or more of which may cause significant dilution to existing shareholders. The Company will also
seek to raise capital through the issuance of shares under its ongoing Regulation A offering, in which the Company is offering
for sale up to 10,000,000 shares of common stock at $0.50 per share, for a total of up to $5,000,000 in gross offering proceeds
(the “Offering Statement”), assuming all securities are sold.
Organizational
Structure
COVID-19
Outlook
The
outbreak of the 2019 novel coronavirus disease (“COVID-19”), which was declared a global pandemic by the World
Health Organization on March 11, 2020, and the related responses by public health and governmental authorities to contain and
combat its outbreak and spread has severely impacted the U.S. and world economies, the market for health spa services, nutrition
supplements and our other business offerings during the end of the first quarter of 2020, and continuing through the second and
third quarters of 2020. Government mandated ‘stay-at-home’ and similar orders have to date, and may in the future,
prevent us from staffing our spas and construction services, and prohibit us from operating altogether. As discussed above, effective
on October 25, 2020, we made the decision to temporarily close both our VISSIA Waterway, Inc. and VISSIA McKinney locations. Such
locations remain closed through the date of this prospectus. We are currently seeking both financial and operating partners to
assist in the further management and operations of our VISSIA brand, to help fund the re-opening of our spas and are also entertaining
any and all purchase opportunities for such brand and spas as well.
Additionally,
our Legend Nutrition store saw, and continues to see, a deep decline in sales due to social distancing orders and decreases in
customers who are willing to venture out to brick and mortar establishments. Legend Nutrition’s lease is up January 31,
2021, and the Company plans to not renew the lease, close the store, and not continue in this line of business moving forward.
We
currently anticipate experiencing ongoing disruptions to our ability to reopen our medical spas and provide construction services,
and provide future planned telehealth services and overall declines in the demand for our other offerings throughout the first
half of 2021, at a minimum, as Texas, and the U.S. in general, continues to deal with the COVID-19 pandemic. Any prolonged disruption
to our operations, work force available, or failure to reopen our MedSpas, is likely to have a significant adverse effect on our
results of operations, cash flows and ability to meet continuing debt service requirements. We have also experienced delays in
completing construction projects due to the effects of COVID-19.
Employees
We
currently have a total of six full-time employees and 2 part time employees. We have and will also engage independent contractors
to provide professional services.
Government
Regulation
The
health care industry is subject to extensive federal, state and local laws and regulations relating to licensure, conduct of operations,
ownership of facilities, addition of facilities and services, payment for services and prices for services that are extremely
complex and for which, in many instances, the industry does not have the benefit of significant regulatory or judicial interpretation.
We will also be subject to regulation regarding sale of our products online and solicitation of clients thereby, as well as through
our general contractor business and the licensing and code requirements relating thereto.
Available
Information
We
are subject to the information and reporting requirements of the Exchange Act, under which we file periodic reports, proxy and
information statements and other information with the Commission. Copies of the reports, proxy statements and other information
may be examined without charge on the Internet at http://www.sec.gov.
We
file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available
to the public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge,
soon after such reports are filed with or furnished to the SEC, on our website at https://amihcorp.com/investors/. Copies
of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary,
who can be contacted at 3990 Vitruvian Way, Suite 1152, Addison, Texas, 75001. Our website address is https://amihcorp.com.
The information on, or that may be accessed through, our website is not incorporated by reference into this prospectus and
should not be considered a part of this prospectus.
Description
of Property
CORPORATE
OFFICE
The
Company currently utilizes approximately 1,200 square feet of office space located at 3990 Vitruvian Way, Suite 1152, Addison,
Texas 75001 (the “Company Headquarters”). The Company executed a short term, one-year lease which expires in
July, 2020 and pays rent of $2,828 per month in connection with the Company Headquarters. We believe that the Company Headquarters
is currently adequate for the purposes of our operations.
VISSIA
MCKINNEY, LLC
On
June 11, 2018, VISSIA McKinney, LLC. (f/k/a Novopelle Diamond, LLC) entered into a Lease Agreement with The Shops at Lake Forest,
LLC to lease and occupy approximately 1,400 square feet of commercial retail space located at 5000 Collin McKinney Parkway, Suite
150, McKinney, Texas 75070, to operate a MedSpa (the “McKinney Lease Agreement”).
Lease
Term - The McKinney Lease Agreement has a term of seven (7) years and commenced ninety (90) days from the date of the
signing of the McKinney Lease Agreement.
Base,
Additional and Percentage Rent Expense - The annual base rent is $43,400, or $31 per square foot, and increases at a rate
of two percent (2%) per annum until the end of the lease term (the “Base Rent”). In addition to the Base Rent,
VISSIA McKinney is required to reimburse the landlord for its pro-rata share of all real estate taxes and assessments, hazard
and liability insurance and common area maintenance costs for the entire shopping center (the “Additional Rent”
or “Triple Net”). At execution of the McKinney Lease Agreement, the Additional Rent was estimated at $6.50
per square foot per year.
Security
Deposits - Upon the execution of the McKinney Lease Agreement, VISSIA McKinney agreed to prepay the first full month’s
Base Rent plus Triple Net charges along with a security deposit equal one (1) month Base Rent plus Triple Net charges paid upon
lease execution.
Tenant
Improvement Allowance - The Landlord provided VISSIA McKinney with a Tenant Improvement Allowance of $27.00 per square
foot, or approximately $37,800, towards improvements to the leased premises that are affixed and permanent in nature. The Tenant
Improvement Allowance was paid by Landlord to VISSIA McKinney upon the completion of construction work performed and satisfactory
inspection of such.
Utilities
and Maintenance - VISSIA McKinney is responsible for all utility charges as well as all maintenance of the leased premises
including, but not limited to, the mechanical, electrical and plumbing systems. The Landlord is responsible for maintenance of
the roof, exterior walls and structural integrity of the building, which comprises the leased premises, and the common areas of
the Shopping Center including, but not limited to, the parking areas.
VISSIA
WATERWAY, INC.
On
November 6, 2019, VISSIA Waterway, Inc. (f/k/a Novopelle Waterway, Inc.) entered into a Lease Agreement with 20 & 25
Waterway Holdings, LLC to lease and occupy approximately 1,254 square feet of commercial retail space located at 25 Waterway,
Suite 150, The Woodlands, Texas to operate a MedSpa (the “Waterway Lease Agreement”).
Lease
Term - The Waterway Lease Agreement has a term of five (5) years beginning on February 25, 2020.
Base,
Additional and Percentage Rent Expense - The annual base rent is $53,922, or $43 per square foot, and increases at a rate
of three percent (3%) per annum until the end of the lease term (the “Base Rent”). In addition to the Base
Rent, VISSIA Waterway is required to reimburse the landlord for its pro-rata share of all real estate taxes and assessments, hazard
and liability insurance and common area maintenance costs for the entire shopping center (the “Additional Rent”
or “Triple Net”). At execution of the Waterway Lease Agreement, the Additional Rent was estimated at $15.59
per square foot per year.
In
addition to both the Base Rent and Additional Rent, VISSIA Waterway is required to pay to Landlord a percentage rent equal to
six percent (6%) of gross sales generated by VISSIA Waterway (the “Percentage Rent”). The Percentage Rent is
only required to be paid to the landlord once VISSIA Waterway has exceeded $1,000,000 in gross sales for each calendar year during
the term.
Security
Deposits - Upon the execution of the Waterway Lease Agreement, VISSIA Waterway agreed to prepay the first full month’s
Base Rent plus Triple Net charges along with a security deposit equal to the last three (3) months Base Rent plus Triple Net charges
paid upon lease execution, provided however, that the landlord has agreed to refund two (2) months of the security deposit back
to VISSIA Waterway after the third (3rd) month, which refund is not is not currently due until three consecutive rent payments
have been made. Such rent payments have been delayed due to COVID-19 issues.
Tenant
Improvement Allowance - The Landlord provided VISSIA Waterway with a Tenant Improvement Allowance of $10.00 per square
foot, or $12,540, towards improvements to the leased premises.
Utilities
and Maintenance - VISSIA Waterway is be responsible for all utility charges as well as all maintenance of the leased premises
including, but not limited to, the mechanical, electrical and plumbing systems. The Landlord is responsible for maintenance of
the roof, exterior walls and structural integrity of the building, which comprises the leased premises, and the common areas of
the Shopping Center including, but not limited to, the parking areas.
LEGEND
NUTRITION, INC.
In
connection with the Asset Purchase Agreement dated October 18, 2019, the Company is making lease payments in connection with Legend
Nutrition Inc.’s lease. Legend Nutrition, Inc. currently leases and occupies approximately 1,206 square feet of commercial
retail space located at 2851 Craig Drive, Suite #204, McKinney, TX 75070 (the “Legend Nutrition Lease Agreement”).
The Legend Nutrition Lease Agreement has a term of five (5) years commencing on January 8, 2016 and ends in January, 2021.
The annual base rent is $31,959 and Legend Nutrition is required to reimburse the landlord for its pro-rata share of all real
estate taxes and assessments, hazard and liability insurance and common area maintenance costs for the entire shopping center
(the “Additional Rent” or “Triple Net”). Legend Nutrition is be responsible for all utility
charges as well as all maintenance of the leased premises including, but not limited to, the mechanical, electrical and plumbing
systems. The Landlord is responsible for maintenance of the roof, exterior walls and structural integrity of the building, which
comprises the leased premises, and the common areas of the Shopping Center including, but not limited to, the parking areas. Legend
Nutrition’s lease is up January 31, 2021, and the Company plans to not renew the lease, close the store, and not continue
in this line of business moving forward.
NOVOPELLE
TYLER, INC.
On
January 6, 2020, Novopelle Tyler, Inc. (“Novopelle Tyler”) entered into a Lease Agreement with Asher Park,
LLC to lease and occupy approximately 1,900 square feet of commercial retail space located in Tyler, Texas to operate a planned
new Novopelle MedSpa location.
Lease
Term - The Lease Agreement has a term of 60 months (or five (5) years), and commences 120 days from the later of
the fully executed Lease Agreement, delivery of premises, and delivery of a construction permit from the City of Tyler, which
has not occurred to date. This lease was terminated in August 2020.
Base,
Additional and Percentage Rent Expense - The annual base rent is $34,200, or $18 per square foot, for the first
36 months and then increases to an annual base rent of $36,100, or $19 per square foot, for the remaining 24 months (the “Base
Rent”). In addition to the Base Rent, Novopelle Tyler is required to reimburse the landlord for its pro-rata share of
all real estate taxes and assessments, hazard and liability insurance and common area maintenance costs for the entire shopping
center (the “Additional Rent” or “Triple Net”). At execution of the Lease Agreement, the
Additional Rent was estimated at $6.00 per square foot per year.
Security
Deposits – Upon the execution of the Lease Agreement, Novopelle Tyler agreed to pay a security deposit equal
to the full first month’s Base Rent plus Triple Net charges in the amount of $3,800.
Tenant
Improvement Allowance – The Landlord has agreed to provide Novopelle Tyler with a Tenant Improvement Allowance
of up to $70.00 per square foot, or $133,000, towards improvements to the leased premises that are affixed and permanent in nature.
The Tenant Improvement Allowance will be paid by Landlord to Novopelle Tyler upon the completion of construction work performed
and satisfactory inspection of such, Landlord’s receipt of contractor’s signed lien releases, and Novopelle Tyler’s
official opening for business.
Utilities
and Maintenance – Novopelle Tyler is responsible for all utility charges as well as all maintenance of the leased
premises including, but not limited to, the mechanical, electrical and plumbing systems. The Landlord is responsible for maintenance
of the roof, exterior walls and structural integrity of the building, which comprises the leased premises, and the common areas
of the Shopping Center including, but not limited to, the parking areas.
CAPITOL
CITY SOLUTIONS USA, INC.
On
January 3, 2020, Capitol City Solutions USA, Inc. (“CCS”) entered into a Lease Agreement with Asher Park, LLC
to lease and occupy approximately 1,516 square feet of commercial office space located in Tyler, Texas to be used for CCS’s
corporate offices and headquarters.
Lease
Term – The Lease Agreement has a term of 60 months ((5) years) and 29 days, commences on January 3, 2020 and ends
on January 31, 2025. The property is move in ready and the Lease Agreement does not provide for any tenant improvement allowances.
Base,
Additional and Percentage Rent Expense – The annual base rent is $27,288, or $18 per square foot, for the term of
the Lease Agreement. In addition to the base rent, CCS is required to reimburse the landlord for its pro-rata share of all real
estate taxes and assessments, hazard and liability insurance and common area maintenance costs for the entire shopping center.
At execution of the Lease Agreement, such additional rent was estimated at $6.00 per square foot per year.
Security
Deposits – Upon the execution of the Lease Agreement, CCS agreed to pay a security deposit equal to the full first
month’s base rent plus estimated additional rent charges in the amount of $3,032.
Utilities
and Maintenance – CCS is responsible for all utility charges as well as all maintenance of the leased premises including,
but not limited to, the mechanical, electrical and plumbing systems. The Landlord is responsible for maintenance of the roof,
exterior walls and structural integrity of the building, which comprises the leased premises, and the common areas of the Shopping
Center including, but not limited to, the parking areas.
Legal
Proceedings
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 650,000 of the 750,000 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”). 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. 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 650,000 shares from Mr. Fields which
were cancelled in 2019.
Market
for Common Equity and Related Stockholder Matters
Market
Information
Our
common stock is quoted on the OTCQB Market maintained by OTC Markets Group Inc. under the symbol “AMIH”. Until
recently the market for our common stock has been highly illiquid and sporadic. For the periods indicated, the following table
sets forth the high and low sales prices per share of our common stock. The below prices represent inter-dealer quotations without
retail markup, markdown, or commission and may not necessarily represent actual transactions.
|
|
Fiscal 2020
|
|
|
Fiscal 2019
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
First Quarter ended March 31
|
|
$
|
0.75
|
|
|
$
|
0.13
|
|
|
$
|
2.40
|
|
|
$
|
1.00
|
|
Second Quarter ended June 30
|
|
$
|
0.39
|
|
|
$
|
0.12
|
|
|
$
|
2.00
|
|
|
$
|
1.00
|
|
Third Quarter ended September 30
|
|
$
|
0.33
|
|
|
$
|
0.12
|
|
|
$
|
2.00
|
|
|
$
|
1.00
|
|
Fourth Quarter ended December 31
|
|
$
|
0.45
|
|
|
$
|
0.06
|
|
|
$
|
2.40
|
|
|
$
|
0.61
|
|
As
of January 28, 2021, our shares of common stock were held by approximately 246 stockholders of record.
Dividends
We
have never paid any cash dividends on our common stock. We currently anticipate that we will retain all future earnings for use
in our business. Consequently, we do not anticipate paying any cash dividends in the foreseeable future. The payment of dividends
in the future will depend upon our results of operations, as well as our short-term and long-term cash availability, working capital,
working capital needs, and other factors as determined by our board of directors (currently consisting solely of Jacob D. Cohen).
Currently, except as may be provided by applicable laws, there are no contractual or other restrictions on our ability to pay
dividends if we were to decide to declare and pay them.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table sets forth information, as of December 31, 2020, with respect to our compensation plans under which common stock
is authorized for issuance.
Plan Category
|
|
Number of
securities to be
issued upon exercise
of outstanding
options,
warrants and rights
|
|
|
Weighted-
average exercise
price of
outstanding
options,
warrants and
rights
|
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
Equity compensation plans not approved by security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
7,565,000
|
|
Total
|
|
|
|
|
|
$
|
|
|
|
$
|
7,565,000
|
|
Stock
Option Plan
On
July 5, 2019, the board of directors adopted and approved a 2019 Stock Option and Incentive Plan (the “Plan”).
The Plan is intended to promote the interests of the Company by providing eligible persons 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 has issued
2,435,000 shares of common stock under the Plan as of December 31, 2020.
The
Plan is administered by the Company’s board of directors. Persons eligible to participate in the Plan must: (i) be a natural
person, (ii) provide bona fide services to the Company, and (iii) provide services to the Company that services are not in connection
with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a
market for the registrant’s securities. All grants under the Plan are intended to comply with the requirements under Internal
Revenue Code Section 409A and activities under the Plan will be administered accordingly.
Options
granted under the Plan are evidenced by agreement between the recipient and the Company, subject to the following general provisions:(i)
a recipient of employee stock option may not exercise any options which would cause him/her/it to hold more than 4.9% of the Company’s
issued and outstanding common or voting stock, unless such limitation is waived by providing 61 days’ written notice to
the Company, but in no event may exercise options that would cause such recipient to hold more than 9.9% of the Company’s
issued and outstanding common or voting stock; and (ii) the term of stock options shall be limited to a maximum of two years,
unless otherwise approved by the board of directors.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
Introduction
Our
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition
to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition,
and cash flows. MD&A is organized as follows:
|
●
|
Results
of Operations.
|
|
|
|
|
●
|
Liquidity
and Capital Resource.
|
|
|
|
|
●
|
Critical
Accounting Estimates.
|
The
following discussion should be read in conjunction with the American International Holdings Corp. financial statements and accompanying
notes included elsewhere in this prospectus.
All
references to years relate to the fiscal year ended December 31 of the particular year.
This
information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this
prospectus.
Results
of Operations
Revenues
We
had revenues of $680,369 and $5,981,221, for the three and nine months ended September 30, 2020, respectively, compared to revenues
of $52,085 and $143,032, for the three and nine months ended September 30, 2019, respectively. The significant increase in revenues
in 2020 was due primarily to two construction contracts for an apartment and clubhouse rebuild at Gateway Village, Texas, and
the replacement of a roof replacement at Port Arthur, Texas. The total revenues generated by such contracts totaled $7,333,264
from the 4th quarter of 2019 through the 3rd quarter of 2020.
We
recognized revenues in accordance with Accounting Standards Codification (ASC) Topic 606. A five-step process has been designed
for the individual or pool of contracts to keep financial statements focused on this principle. Revenues from fixed-price and
cost-plus contracts are recognized on the percentage of completion method, whereby revenues on long-term contracts were recorded
on the basis of the Company’s estimates of the percentage of completion of contracts based on the ratio of actual cost incurred
to total estimated costs. This cost-to-cost method was used because management considered it to be the best available measure
of progress on these contacts. Revenues from cost-plus-fee contracts were recognized on the basis of costs incurred during the
period plus the fee earned, measured on the cost-to-cost method. Revenues from time-and-material and rate chart contracts were
recognized currently as work is performed. During the three and nine months ended September 30, 2020, we recognized revenues of
$493,885 and $5,556,425, respectively, in connection with these two construction contracts. The revenues during the three and
nine months ended September 30, 2019, were primarily generated from our medical spa facility located in McKinney, Texas, which
we temporarily closed, pending additional financing and/or an agreement with a partner, in October 2020.
Cost
of Revenues
We
had cost of revenues of $680,133 and $4,097,781, for the three and nine months ended September 30, 2020, compared to cost of revenues
of $37,957 and $73,672, for the three and nine months ended September 30, 2019. 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
cost of revenues in the three and nine months ended September 30, 2019 were primarily attributable to our medical spa facility
located in McKinney, Texas.
Cost
of revenues as a percentage of revenues was 100% and 68.5% for the three and nine months ended September 30, 2020, respectively,
compared to 68.5.9% and 51.5% for the three and nine months ended September 30, 2019, respectively. Cost of revenues as a percentage
of revenue increased for the three and nine months ended September 30, 2020, compared to the prior periods in 2019, due primarily
to the two construction contracts for an apartment and clubhouse rebuild at Gateway Village, Texas and the replacement of a roof
in Port Arthur, Texas.
Operating
Expenses
General
and administrative expenses were $804,583 and $4,406,209 for the three and nine months ended September 30, 2020, respectively,
compared to general and administrative expenses of $2,068,141 and $2,208,533, for the three and nine months ended September 30,
2019, respectively. The increase in 2020 was due primarily to stock-based compensation in the amount of $2,798,950 during the
nine months ended September 30, 2020, rental expenses of $157,798 relating to our MedSpas and nutrition store and professional
expenses incurred because of being a public company (for legal, financial reporting, accounting and auditing compliance). General
and administrative expenses incurred during the three and nine months ended September 30, 2019, were in connection with the operation
of our medical spa facility located in McKinney, Texas. The Company had stock-based compensation of $1,837,750 during the same
period in 2019.
Other
Expenses
During
the three and nine months ended September 30, 2020, we incurred interest expense of $36,017 and $90,381, respectively, of which
$1,066 and $3,345, respectively, were recorded as imputed interest in connection with related party loans. Comparatively, during
the three and nine months ended September 30, 2019, we incurred interest expense of $17,161 and $32,428, respectively, of which
$5,916 and $7,942, respectively, were recorded as imputed interest in connection with related party loans.
Amortization
of debt discount was $263,534 and $444,810 during the three and nine months ended September 30, 2020, respectively, compared to
$0 for the three and nine months ended September 30, 2019.
We
had a loss of $132,977 and $157,546, respectively, due to change in derivative liabilities during the three and nine months ended
September 30, 2020. See also “Note 13 – Derivative Liabilities”, to the notes to unaudited financial statements
included herein.
There
was no amortization of debt discount and gain/loss due to change in derivative liabilities in the same periods of 2019.
We
also had an impairment loss of $95,000, and $300 of other income in the nine months ended September 30, 2020, compared to no impairment
loss or other income during the same period in 2019.
Net
Loss
We
had a net loss of $1,471,388, or $0.04 per share, for the three months ended September 30, 2020 and a net loss of $3,544,719,
or $0.11 per share, for the nine months ended September 30, 2020, compared to a net loss of $2,071,174, or $0.08 per share, and
$2,171,601, or $0.10 per share, for the three and nine months ended September 30, 2019, respectively. The increase in net loss
in the nine months ended September 30, 2020, was primarily attributable to non-cash expenses in connection with stock-based compensation,
amortization of debt discount, and the change in derivative values associated with outstanding convertible debt, offset by the
increase in gross profit, each as discussed above. As a result of COVID-19 and ‘stay-at-home’ and social distancing
orders issued in McKinney and The Woodlands, Texas, we had to close both of our MedSpas—VISSIA McKinney and VISSIA Waterway,
Inc. during the nine months ended September 30, 2020, which were closed effective March 10, 2020, and which resulted in both the
loss of income and the loss of most of our workforce, who had to be let go. VISSIA Waterway, Inc. reopened effective June 21,
2020 and VISSIA McKinney reopened effective August 8, 2020; provided that as discussed above, both locations have since been temporarily
closed.
The
decrease in net loss during the three months ended September 30, 2020, compared to the same period in 2019, was due primary to
the increase in revenues and decrease in stock-based compensation.
The
Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018
Revenues
We
had revenues of $1,913,987 for the year ended December 31, 2019, compared to revenues of $35,913 for the year ended December 31,
2018. The significant increase in revenues in 2019 was due primarily to two construction contracts for an apartment and clubhouse
rebuild at Gateway Village, Texas and the replacement of a roof replacement at Port Arthur, Texas. The total contract revenues
totaled $7,333,264.
We
recognized revenues in according with Accounting Standards Codification (ASC) Topic 606. A five-step process has been designed
for the individual or pool of contracts to keep financial statements focused on this principle. Revenues from fixed-price and
cost-plus contracts are recognized on the percentage of completion method, whereby revenues on long-term contracts were recorded
on the basis of the Company’s estimates of the percentage of completion of contracts based on the ratio of actual cost incurred
to total estimated costs. This cost-to-cost method was used because management considered it to be the best available measure
of progress on these contacts. Revenues from cost-plus-fee contracts were recognized on the basis of costs incurred during the
period plus the fee earned, measured on the cost-to-cost method. Revenues from time-and-material and rate chart contracts were
recognized currently as work is performed. During the year ended December 31, 2019, we recognized revenues of $1,717,566 in connection
with these two construction contracts. The revenues in 2018 were primarily generated from our medical spa facility located in
McKinney, Texas.
Cost
of Revenues
We
had cost of revenues in amount of $1,627,136 for the year ended December 31, 2019, compared to cost of revenues in amount of $8,895
for the year ended December 31, 2018. 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
cost of revenues in 2018 were primarily attributable to our medical spa facility located in McKinney, Texas.
Operating
Expenses
General
and administrative expenses were $3,223,191 and $23,947 for the years ended December 31, 2019 and 2018, respectively. The significant
increase in 2019 was due primarily to stock-based compensation in the amount of $2,303,390, and professional expenses incurred
because of being a public company (for legal, financial reporting, accounting and auditing compliance). General and administrative
expenses in 2018 were in connection with the operation of our medical spa facility located in McKinney, Texas.
Other
Expenses
During
the years ended December 31, 2019 and 2018, we incurred interest expenses of $69,916 and $10,591, respectively, of which $8,995
and $2,136, respectively, were recorded as imputed interest in connection with related party loans. The amortization of debt discount
and loss due to change in derivative liabilities were $76,230 and $147,495, respectively, in 2019. There was no amortization of
debt discount and loss due to change in derivative liabilities in 2018. We also had $17,733 of other income in 2019, compared
to no other income in 2018.
Net
Loss
We
had a net loss of $3,212,248, or $0.13 per share, for the year ended December 31, 2019, compared to a net loss of $7,520, or $0.00
per share, for the year ended December 31, 2018. The increase in net loss in 2019 was primarily attributable to non-cash expenses
in connection with stock-based compensation and the change in derivative values associated with outstanding convertible debt in
the amount of $147,495, offset by the increase in gross profit, each as discussed above. We did not have non-cash expenses in
2018.
Liquidity
and Capital Resources
As
of September 30, 2020, and December 31, 2019, the Company had total assets of $2,437,709 and $2,192,477, respectively.
As
of September 30, 2020, the Company had total liabilities of $2,547,916, which consisted of accounts payable, accrued interest
and accrued compensation in the amount of $347,489, rights-of-use liability of $504,893, capital lease of $71,758, notes payable
and loans payable to related parties and non-related parties in the amount of $776,247, net of debt discount of $515,009, and
derivative liabilities of $847,529. The Company had a total stockholders’ deficit of $110,207 as of September 30, 2020.
During
the nine months ended September 30, 2020 and 2019, net cash used in operating activities was $1,727,416 and $155,504, respectively.
Negative cash flows during the nine months ended September 30, 2020 were due primarily to the net loss of $3,544,719, plus the
increase in costs in excess of billings by $140,719 and the decrease in billing in excess of costs and estimated earnings by $1,657,998,
partially offset by non-cash expenses, including stock-based compensation of $2,798,950, amortization of debt discount of $444,810
and non-cash lease expense of $123,014. Comparatively, cash used in operating activities for the nine months ended September 30,
2019 were due primarily to the net loss of $2,171,601, plus the increase in operating lease right-of-use of $247,430, partially
offset by accrued interest payable and accrued compensation totaling $177,539, the increase in operating lease right-of-use liabilities
of $256,167, and stock-based compensation of $1,837,750.
During
the nine months ended September 30, 2020 and 2019, we had cash used in investing activities of $91,649 and $17,034, respectively,
solely attributable to capital expenditures for property and equipment.
During
the nine months ended September 30, 2020 and 2019, net cash flows provided by financing activities were $670,325 and $175,609,
respectively, primarily attributable to the proceeds from notes payable to related parties and non-related parties during the
respective periods. We had proceeds of $0 from related party borrowings and proceeds of $690,000 from non-related party borrowings
in the nine months ended September 30, 2020, compared to proceeds of $195,257 and $40,000, respectively, in the same period ended
September 30, 2019. We made repayments of $40,000 to related party borrowings and repayments of $15,421 to non-related party borrowings
in the nine months ended September 30, 2020, compared to repayments of $66,624 and $3,024, respectively, in the same period ended
September 30, 2019. We had proceeds of $46,500 from sales of stock in 2020 (which shares of stock were sold in connection with
our Regulation A offering (discussed below)), which was $10,000 in the same period ended September 30, 2019. In addition, we had
principal payments of $10,754 for capital leases during the nine months ended September 30, 2020.
We
had cash of $109,970 and a working capital deficit of $1,147,149, as of September 30, 2020. On the short-term basis, we will be
required to raise a significant amount of additional funds over the next 12 months to sustain operations and pay outstanding liabilities.
On the long-term basis, we will potentially need to raise capital to grow and develop our business.
To
date we have sold (a) 231,250 shares of our common stock in consideration for $81,500 in cash; and (b) 131,250 shares of our common
stock in exchange for the conversion of $75,000 in debt, pursuant to our on-going Regulation A offering, which relates to the
sale of up to 10,800,000 shares of our common stock at a price of $0.50 per share.
It
is likely that we will require significant additional financing within the next 12 months and if we are unable to raise the needed
funds on an acceptable basis, we may be forced to cease or curtail operations.
Additional
information regarding the Company’s (a) accrued compensation for related parties can be found in “Note 10 –
Accrued Compensation for Related Parties”; (b) notes payable can be found in “Note 11 – Notes Payable”;
(c) related party loans can be found in “Note 12 – Loans from Related Parties”; derivative liabilities can be
found in “Note 13 – Derivative Liabilities”; billings in excess of costs and estimated earnings can be found
in “Note 14 – Costs and estimated earnings in excess of billings on uncompleted contract”, in the notes to unconsolidated
financial statements included herein.
Critical
Accounting Policies
Revenue
Recognition
The
Company recognizes revenue in accordance 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 $140,719 as of September 30, 2020. The liability, “billings in excess of costs and
estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized, which was $0 as of September
30, 2020.
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 or more significant inputs or significant value drivers are
unobservable.
Our
financial instruments include cash, accounts receivable, other receivable, inventories, accounts payable, accrued liabilities,
convertible note payable, and derivative liabilities.
The
carrying values of the Company’s cash, accounts receivable, other receivable, inventories, accounts payable, and accrued
liabilities approximate their fair value due to their short-term nature.
The
Company’s convertible notes 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 13 – Derivative Liabilities” of the unaudited
financial statements included herein, for the Company’s assumptions used in determining the fair value of these financial
instruments.
Convertible
note payable
The
Company accounts for convertible notes payable in accordance with the Under Financial Accounting Standard Board (“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 notes 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.
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.
Off-Balance
Sheet Arrangements
As
of September 30, 2020, and December 31, 2019, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)
of Regulation S-K promulgated under the Securities Act of 1934.
Quantitative
and Qualitative Disclosures About Market Risk
Not
applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K
Controls
and Procedures
Evaluation
of Disclosure Controls and Procedures
We
have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance
that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is
accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer/principal financial/accounting
officer), to allow timely decisions regarding required disclosures.
Management,
with the participation of our Chief Executive Officer (principal executive officer/principal financial/accounting officer), evaluated
the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act) as of the end of December 31, 2020. As of December 31, 2020, based on the evaluation of these disclosure
controls and procedures, and in light of the material weakness we found in our internal controls over financial reporting as of
December 31, 2020 (as described in greater detail below), our Chief Executive Officer (principal executive officer/principal financial/accounting
officer) has concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information
required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Exchange Act, is recorded
properly, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that
such information is accumulated and communicated to our management, including our Chief Executive Officer (principal executive
officer/principal financial/accounting officer), as appropriate, to allow timely decisions regarding required disclosures.
Management’s
Annual Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with
the participation of management, including our principal executive and principal financial officers, we conducted an evaluation
of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the - Commission (the “COSO Framework”).
Based on this evaluation under the COSO Framework, management concluded that our internal control over financial reporting was
not effective as of December 31, 2020.
This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant
to rules of the Securities and Exchange Commission that permit smaller reporting companies to provide only management’s
report in this annual report.
The
Company recognizes the following weaknesses and deficiencies of the Company as of December 31, 2020:
We
recognized the following deficiencies that we believe to be material weaknesses:
-
|
The
Company has not fully designed, implemented or assessed internal controls over financial reporting. Due to the Company being
a developing company, management’s assessment and conclusion over internal controls were ineffective this year.
|
|
|
-
|
We
recognized the following deficiencies that we believe to be significant deficiencies:
|
|
|
-
|
The
Company has no formal control process related to the identification and approval of related party transactions.
|
|
|
-
|
We
do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls
over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act.
|
|
|
-
|
We
do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size
and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However,
to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be
performed by separate individuals.
|
Changes
in Internal Control over Financial Reporting
There
has not been any change in our internal control over financial reporting that occurred during the three-months ended December
31, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Directors,
Executive Officers and Corporate Governance
The
following table sets forth the name, age and position of each director and executive officer of the Company.
Name
|
|
Position
|
|
Age
|
|
Term
of Office
|
|
Approximate
Hours Per Week
|
Jacob
D. Cohen
|
|
Chief
Executive Officer, President, Director
|
|
41
|
|
April,
2019 – Present
|
|
Full
time
|
Our
directors are elected annually (or as often as we hold meetings of stockholders) and will hold office until our next annual meeting
of the stockholders and until their successors are elected and qualified. Officers will hold their positions at the pleasure of
the board of directors, absent any employment agreement. Our officers and directors (currently consisting solely of Mr. Cohen)
may receive compensation as determined by us from time to time by vote of the board of directors (currently consisting solely
of Mr. Cohen). Such compensation might be in the form of stock options or other equity. Directors may be reimbursed by the Company
for expenses incurred in attending meetings of the board of directors. Vacancies in the Board are filled by majority vote of the
remaining directors.
The
business experience of Mr. Cohen is as follows:
Jacob
D. Cohen, Chief Executive Officer, President and Director
Jacob
Cohen is a serial entrepreneur, corporate finance and executive management professional with over 18 years of investment banking
and capital markets experience having started and growing multiple companies in various industry sectors including marketing,
advertising, healthcare, IT and financial services. Prior to joining the Company, Mr. Cohen was the co-founder and managing partner
of several boutique investment bank and strategic advisory firms where he advised both early and later stage companies in raising
capital in the form of debt and/or equity and in both private and public markets.
Prior
to his experiences in investment banking, Mr. Cohen served as the Chief Financial Officer of The Renewed Group, Inc. – a
manufacturer, wholesaler and retailer of eco-friendly and sustainable apparel primarily made from recycled textiles and under
the brand name REUSE JEANS from 2010 through the end of 2013. Further, Mr. Cohen served from 2008 through 2010 as Executive Vice
President and Controller of Metiscan, Inc., a publicly-traded company, and as the President and Chief Executive Officer of one
of its subsidiaries, Shoreline Employment Services, Inc. During his tenure at Metiscan, Mr. Cohen was instrumental in restructuring,
reorganizing and operating the company and its five subsidiaries, and successfully raised over $8 million in equity financing
for growth capital. Mr. Cohen also spearheaded the company’s financial audit process and managed its various filings with
the SEC.
From
2007 through 2008, Mr. Cohen served as the Chief Operating Officer of Artfest International, which he assisted in taking public
at the end of 2007. Throughout his career, Mr. Cohen was involved in starting many new ventures, including The AdvertEyes Network,
a digital signage advertising company where he served as founder and CEO. Other positions include investment advisor and institutional
equity research analyst for Solomon Advisors and Huberman Financial, securities broker-dealers, from 2003 through 2005, and investment
banker for Allegiance Capital, a middle market investment bank specializing on mergers and acquisitions, from 2005-2007. Mr. Cohen
holds a Bachelors of Arts in International Economics and Finance from Brandeis University in Waltham, MA.
Corporate
Governance
The
Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely
and understandable disclosure in reports and documents that the Company files with the SEC and in other public communications
made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations.
Board
Leadership Structure
Our
board of directors (currently consisting solely of Mr. Cohen) has the responsibility for selecting the appropriate leadership
structure for the Company. In making leadership structure determinations, the board of directors considers many factors, including
the specific needs of the business and what is in the best interests of the Company’s stockholders. We currently do not
have a Chairman of the board of directors; however, Mr. Cohen, who serves as the sole member of the board of directors, serves
as the Chief Executive Officer of the Company. The board of directors (currently consisting solely of Mr. Cohen) believes that
this leadership structure is the most effective and efficient for the Company at this time. Mr. Cohen possesses detailed and in-depth
knowledge of the issues, opportunities, and challenges facing the Company. The Board believes that its programs for overseeing
risk, as described below, would be effective under a variety of leadership frameworks and therefore do not materially affect its
choice of structure.
Risk
Oversight
Effective
risk oversight is an important priority of the board of directors (currently consisting solely of Mr. Cohen). Because risks are
considered in virtually every business decision, the board of directors discusses risk throughout the year generally or in connection
with specific proposed actions. The board of directors’ approach to risk oversight includes understanding the critical risks
in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities
for risk oversight, and fostering an appropriate culture of integrity and compliance with legal responsibilities. The directors
exercise direct oversight of strategic risks to the Company.
Family
Relationships
None
of our directors (currently solely Mr. Cohen) are related by blood, marriage, or adoption to any other director, executive officer,
or other key employees.
Arrangements
between Officers and Directors
To
our knowledge, there is no arrangement or understanding between any of our officers and any other person, including directors,
pursuant to which the officer was selected to serve as an officer.
Other
Directorships
No
directors of the Company (currently consisting solely of Mr. Cohen) are also directors of issuers with a class of securities registered
under Section 12 of the Exchange Act (or which otherwise are required to file periodic reports under the Exchange Act).
Involvement
in Certain Legal Proceedings
None
of our executive officers or directors (currently consisting solely of Mr. Cohen) has been involved in any of the following events
during the past ten years:
|
(1)
|
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
|
|
|
|
|
(2)
|
any
conviction in a criminal proceeding or being a named subject to a pending criminal proceeding (excluding traffic violations
and minor offenses);
|
|
|
|
|
(3)
|
being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
or banking activities;
|
|
|
|
|
(4)
|
being
found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have
violated a federal or state securities or commodities law;
|
|
|
|
|
(5)
|
being
the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law
or regulation; (ii) any law or regulation respecting financial institutions or insurance companies, including, but not limited
to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent
cease-and-desist order, or removal or prohibition order, or (iii) any law or regulation prohibiting mail or wire fraud or
fraud in connection with any business entity; or
|
|
|
|
|
(6)
|
being
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section (1)(a)(40)
of the Commodity Exchange Act), or any equivalent exchange, association, entity, or organization that has disciplinary authority
over its members or persons associated with a member.
|
Board
of Directors and Committee Meetings
During
the fiscal years that ended on December 31, 2020 and 2019, the Board held no meetings, but took various actions via written consent
of the board of directors.
Committees
of the Board
Our
Company currently does not have nominating, compensation or audit committees or committees performing similar functions, nor does
our Company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary
to have such committees, at this time, because the functions of such committees can be adequately performed by our board of directors
(currently consisting solely of Mr. Cohen).
Our
Company does not have any defined policy or procedural requirements for stockholders to submit recommendations or nominations
for directors. Our directors (currently consisting solely of Mr. Cohen) believe that, given the stage of our development, a specific
nominating policy would be premature and of little assistance until our business operations develop to a more advanced level.
Our Company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and
we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates,
whether submitted by management or stockholders, and make recommendations for election or appointment.
Corporate
Governance
The
Company promotes accountability for adherence to honest and ethical conduct and strives to be compliant with applicable governmental
laws, rules and regulations.
In
lieu of an Audit Committee, the Company’s board of directors (currently consisting solely of Mr. Cohen) is responsible for
reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness
of the annual audit of the Company’s financial statements and other services provided by the Company’s independent
public accountants. The board of directors reviews the Company’s internal accounting controls, practices and policies.
Director
Independence
Our
common stock is currently quoted on the OTCQB Market maintained by OTC Markets. The OTCQB Market does not require us to have independent
members of our board of directors. We do not identify any of our directors as being independent.
As
described above, we do not currently have a separately designated audit, nominating or compensation committee.
Stockholder
Communications with the Board
Our
stockholders and other interested parties may communicate with members of the Board by submitting such communications in writing
to our Corporate Secretary, 3990 Vitruvian Way, Suite 1152, Addison, Texas 75001, who, upon receipt of any communication other
than one that is clearly marked “Confidential,” will note the date the communication was received, open the
communication, make a copy of it for our files and promptly forward the communication to the director(s) to whom it is addressed.
Upon receipt of any communication that is clearly marked “Confidential,” our Corporate Secretary will not open
the communication, but will note the date the communication was received and promptly forward the communication to the director(s)
to whom it is addressed. If the correspondence is not addressed to any particular Board member or members, the communication will
be forwarded to a Board member to bring to the attention of the Board.
Code
of Ethics
On
June 24, 2020, our board of directors adopted a Code of Ethical Business Conduct that applies to all of our directors, officers
and employees. The Code of Ethics will be available for review in print, without charge, to any stockholder who requests a copy
by writing to us at 3990 Vitruvian Way, Suite 1152, Addison, Texas 75001, Attention: Investor Relations. Each of our directors,
employees and officers are required to comply with the Code of Ethics.
We
intend to disclose any amendments to our Code of Ethics and any waivers with respect to our Code of Ethics granted to our principal
executive officer, our principal financial officer, or any of our other employees performing similar functions on our website
at amihcorp.com within four business days after the amendment or waiver. In such case, the disclosure regarding the amendment
or waiver will remain available on our website for at least 12 months after the initial disclosure. There have been no waivers
granted with respect to our Code of Ethics to any such officers or employees.
Policy
on Equity Ownership
The
Company does not have a policy on equity ownership at this time. However, as illustrated in “Certain
Beneficial Owners and Management ”, all current officers and directors (currently consisting solely of Mr. Cohen) are
beneficial owners of stock of the Company.
Policy
Against Hedging
The
Company recognizes that hedging against losses in Company shares may disturb the alignment between stockholders and executives
that equity awards are intended to build. Accordingly, the Company discourages ‘short sales’ of the Company’s
securities by officers, directors and employees.
Compensation
Recovery
Under
the Sarbanes–Oxley Act of 2002 (the “Sarbanes-Oxley Act”), in the event of misconduct that results in
a financial restatement that would have reduced a previously paid incentive amount, we can recoup those improper payments from
our Chief Executive Officer and Chief Financial Officer. We plan to implement a clawback policy in the future, although we have
not yet implemented such policy.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of our
common stock to file reports of their ownership of, and transactions in, our common stock with the SEC and to furnish us with
copies of the reports they file. Based solely upon our review of the Section 16(a) filings that have been furnished to us and
representations by our directors and executive officers (where applicable), we believe that for the year ended December 31, 2020,
all Section 16(a) filings were timely filed, except that Luis Alan Hernandez, inadvertently failed to timely two Form 4s and as
a result, three transactions were not timely disclosed; Esteban Alexander, inadvertently failed to timely two Form 4s and as a
result, four transactions were not timely disclosed; and Jacob D. Cohen, inadvertently failed to timely file two Form 4s and as
a result, four transactions were not timely disclosed.
Board
of Directors Meetings
During
the fiscal years that ended on December 31, 2020 and 2019, the Board held no meetings, but took various actions via written consent
of the board of directors.
Executive
and Director Compensation
The
following table sets forth information concerning the compensation of (i) all individuals serving as our principal executive officer
or acting in a similar capacity during the last completed fiscal year (“PEO”), regardless of compensation level;
(ii) our two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of
the last completed fiscal year, if any; and (iii) up to two additional individuals for whom disclosure would have been provided
pursuant to paragraph (ii) but for the fact that the individual was not serving as an executive officer at the end of the last
completed fiscal year (collectively, the “Named Executive Officers”).
Name and Principal Position
|
|
Fiscal Year Ended December 31
|
|
|
Salary
($)(1)
|
|
|
Bonus
($)
|
|
|
Stock Award (s) *
|
|
|
Option Awards *
|
|
|
All Other Compensation
|
|
|
Total
|
|
Jacob D. Cohen, CEO
|
|
|
2020
|
|
|
$
|
120,000
|
|
|
|
—
|
|
|
$
|
780,000
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
900,000
|
|
|
|
|
2019
|
|
|
$
|
74,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
74,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Everett Bassie, Former CFO (2)
|
|
|
2020
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
2019
|
|
|
$
|
6,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Esteban Alexander, Former COO (3)
|
|
|
2020
|
|
|
$
|
100,000
|
|
|
|
—
|
|
|
$
|
780,000
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
880,000
|
|
|
|
|
2019
|
|
|
$
|
74,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
74,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Hernandez, Former CMO (3)
|
|
|
2020
|
|
|
$
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
100,000
|
|
|
|
|
2019
|
|
|
$
|
74,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
74,500
|
|
Does
not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is more than
$10,000. No executive officer earned any non-equity incentive plan compensation or nonqualified deferred compensation during the
periods reported above. There have been no changes in the Company’s compensation policies since December 31, 2020.
*
The fair value of stock issued for services computed in accordance with Financial Accounting Standards Board Accounting Standards
Codification Topic 718 on the date of grant. The fair value of options granted computed in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718 on the date of grant.
(1)
|
$56,000,
$46,000 and $52,000 has been accrued to each of Messrs. Cohen, Alexander and Hernandez, respectively, which remains unpaid
as of the date of this filing.
|
|
|
(2)
|
Mr.
Bassie died suddenly on May 31, 2020.
|
|
|
(3)
|
On December 15,
2020, (a) Esteban Alexander, the Chief Operating Officer and member of the board of directors of the Company and (b) Luis Alan
Hernandez, the Chief Marketing Officer and member of the board of directors of the Company, each provided notice to the board
of directors of the Company of their resignation from their respective officer and Board positions, effective December 15, 2020.
|
|
|
(4)
|
Represents the value of 3,000,000 shares of common stock issued on May 22, 2020, valued at $0.26 per share, in consideration for
services rendered.
|
Employment
Agreements
Concurrent
with the Share Exchange Agreement entered into on April 12, 2019, each of Jacob D. Cohen, Esteban Alexander and Alan Hernandez
(collectively, the “Executives”) entered into Executive Employment Agreements with the Company (collectively,
the “Executive Employment Agreements”). The Executive Employment Agreements have substantially similar terms.
Pursuant
to the Executive Employment Agreements, the Executives each were to receive an annual base salary of $90,000, which increased
to $120,000 per year in 2020, and will be eligible to receive equity awards in the future, as determined by the Board. Each Executive
is also paid a $1,500 per month automobile allowance. The Executive Employment Agreements have three-year terms, provided, however,
after the end of the term, the Executive Employment Agreements will automatically renew for successive one-year terms. The Board
may also grant the Executives bonuses (in cash or stock) in their discretion from time to time.
Each
of the employment agreements of the Executives provide for such Executives to receive 25% of the net profits from each medical
spa managed by such Executives. “Net profits” means all gross sales of a medical spa, less all expenses paid
during the corresponding period.
If
an Executive’s employment agreement is terminated during the term of such agreement by the Company without cause (as defined
in the agreement) or by the Executive for good reason (as defined in the agreement), such Executive is due a severance payment.
That severance payment is equal to the compensation (including bonus) earned through the date of termination and three times (one
time if less than one year remains on the employment agreement)(the “multiplier”) the base salary in effect
on the date of the termination plus the average bonus received by the Executive over the prior two years and the Executive is
also to be paid any bonus which he would have earned at the end of the fiscal year during which the employment is terminated (pro-rated
for days worked), and is to be paid health insurance for the Executive and his family for 18 months from the date of termination
(the “Severance Payments”). Also, all equity compensation due to vest in the following 12 months vests immediately.
If an Executive dies while the employment agreement is in place, or the agreement is terminated due to the Executive’s disability,
the Company is required to pay Executive’s salary to his beneficiaries for a period of one year following such death, pay
the pro-rated amount of any bonus due, and pay 18 months of health insurance. If a change in control (as defined in the agreement)
occurs and Executive is terminated up to one year after such change in control, the Executive is due the Severance Payments (based
on a 3x multiplier) and all unvested equity awards vest immediately.
Each
Executive also agreed to not compete against the Company for one year after the termination of their employment.
Effective
on December 15, 2020, Mr. Esteban Alexander and Mr. Alan Hernandez, resigned as officers and directors of the Company, and as
a result of such resignations, their employment agreements were terminated.
On
May 3, 2019, the Company entered into a Financial and Accounting Consulting Agreement (the “CFO Agreement”)
with Everett Bassie pursuant to which Mr. Bassie agreed to serve as the Company’s Chief Financial Officer on an independent
contractor basis for a term of two years. Mr. Bassie was paid a monthly fee of $1,000 for his services. On May 31, 2020, Mr. Bassie
died unexpectedly.
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 then 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 and will 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 are issuable to Mr. Dickens at the signing of the Employment Agreement and the remaining shares were 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.
In
addition, Mr. Dickens shall be eligible to receive cash performance bonuses and additional stock grants or options as determined
by the Company from time to time. The Employment Agreement has a one-year term, provided, however, after the end of one year,
the agreement will automatically renew for successive one-year terms.
On
October 18, 2019, Legend Nutrition, Inc. (the Company’s wholly-owned subsidiary) entered into an Employment Agreement with
Michael Ladner to serve as its Chief Executive Officer (the “Employment Agreement”). Pursuant to the Employment
Agreement, Mr. Ladner will receive an annual base salary of $60,000 per annum and shall increase to $100,000 per annum starting
January 1, 2020 through October 18, 2021. In addition, Mr. Ladner shall be eligible to receive cash performance bonuses equal
to five percent (5%) of the net profits generated by each Legend Nutrition store location while 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 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. Mr. Ladner’s employment ended effective December 1, 2020, and he is no longer employed by Legend Nutrition,
Inc.
On
January 21, 2021, we entered into an Executive Employment Agreement with Alejandro Rodriguez, pursuant to which Mr. Rodriguez
agreed to serve as the Chief Executive Officer of EPIQ MD, Inc. (“EPIQ MD”), a newly formed wholly-owned Texas
subsidiary of the Company. The agreement has an initial term of three years, beginning on January 1, 2021, provided that the agreement
automatically extends for additional one-year terms thereafter in the event neither party provides the other at least 60 days
prior notice of their intention not to renew the terms of the agreement.
Pursuant
to the terms of the agreement, Mr. Rodriguez’s annual compensation package includes annual base compensation of $90,000
for the first three months, which increases to an annual base salary of $120,000 commencing April 1, 2021, throughout the initial
term of this agreement, provided that the annual salary increases to $240,000 upon Mr. Rodriguez and EPIQ MD achieving the First
Performance Benchmarks (defined below), and increases to $500,000 upon achieving the Second Performance Benchmark (defined below).
The
“First Performance Benchmarks” are defined as the (a) launch the EPIQ MD Ambassador Program (defined below);
(b) EPIQ MD enrolling 10,000 active customers; (c) EPIQ MD enrolling 50,000 active customers by May 31, 2022; and (d) EPIQ MD
enrolling 100,000 active customers by March 31, 2023. The “Second Performance Benchmark” is defined as EPIQ
MD enrolling 200,000 active customers by March 31, 2024. “Launching of the Ambassador Program” means the commencement
and implementation of the direct-sales campaign wherein independent contractors will become sales agents of EPIQ MD for the purposes
of soliciting and procuring end-use customers for EPIQ MD’s telemedicine services.
As
additional consideration pursuant to the agreement, the Company agreed to issue Mr. Rodriguez (a) 4,000,000 shares of restricted
common stock, subject to forfeiture and vesting, of which 2,000,000 shares will vest upon the Launching of the Ambassador Program;
1,200,000 shares will vest upon EPIQ MD reaching the 5,000 active customer mark; and the remaining 800,000 shares will vest upon
EPIQ MD reaching the 10,000 active customer mark, provided that all shares vest if the Company uplists its common stock to a higher
trading exchange; and (b) together with other senior executives of EPIQ MD, up to 33% of the ownership of EPIQ MD, due as follows:
10% if Section (a) of the First Performance Benchmarks are met; 5% if Section (b) of the First Performance Benchmarks are met;
5% if Section (c) of the First Performance Benchmarks are met; 5% if Section (d) of the First Performance Benchmarks are met;
and 8% if the Second Performance Benchmark is met, which shares shall vest immediately if EPIQ MD completes a spin-off, up-listing
and/or a change of control event.
The
Board of Directors and/or Compensation Committee may also authorize bonuses payable to Mr. Rodriguez from time to time in their
discretion, in cash or securities.
The
agreement prohibits Mr. Rodriguez from competing against us during the term of the agreement and for a period of twelve months
after the termination of the agreement in any state and any other geographic area in which we or our subsidiaries provide Nutraceutical
products or services, directly or indirectly, during the twelve months preceding the date of the termination of the agreement.
We
may terminate Mr. Rodriguez’s employment (a) for “cause” (which is defined to include, a material breach
of the agreement by Mr. Rodriguez, any act of misappropriation of funds or embezzlement by Mr. Rodriguez, Mr. Rodriguez committing
any act of fraud, or Mr. Rodriguez being indicted of, or pleading guilty or nolo contendere with respect to, theft, fraud, a crime
involving moral turpitude, or a felony under federal or applicable state law); (b) in the event Mr. Rodriguez suffers a physical
or mental disability which renders him unable to perform his duties and obligations for either 90 consecutive days or 180 days
in any 12-month period; (c) for any reason without “cause”; or (d) upon expiration of the initial term of the
agreement (or any renewal) upon notice as provided above. The agreement also automatically terminates upon the death of Mr. Rodriguez.
Mr.
Rodriguez may terminate his employment (a) for “good reason” (i.e., (i) if his position or duties are modified
to such an extent that his duties are no longer consistent with the position of CEO of EPIQ MD, (ii) there has been a material
breach by us of a material term of the agreement or Mr. Rodriguez reasonably believes that we are violating any law which would
have a material adverse effect on our operations and such violation continues uncured thirty days after such breach and after
notice thereof has been provided to us by Mr. Rodriguez, or (iii) Mr. Rodriguez’s compensation is reduced without his consent,
or we fail to pay to Mr. Rodriguez any compensation due to him upon 15 days written notice from Mr. Rodriguez informing us of
such failure); provided, however, prior to any such termination by Mr. Rodriguez for “good reason”, Mr. Rodriguez
must first advise us in writing (within 15 days of the occurrence of such event) and provide us 15 days to cure (15 days in connection
with the reduction of Mr. Rodriguez’s salary or the failure to pay amounts owed to him)); (b) for any reason without “good
reason”; and (c) upon expiration of the initial term of the agreement (or any renewal) upon notice as provided above.
If
Mr. Rodriguez’s employment is terminated by Mr. Rodriguez for “good reason”, or by us without “cause”,
Mr. Rodriguez is entitled to continue to receive the salary due pursuant to the terms of the agreement at the rate in effect upon
the termination date for six (6) months and we are required to pay 12 months of Mr. Rodriguez’s COBRA expenses.
The
agreement contains standard assignment of inventions, indemnification, confidentiality and arbitration provisions. Further, Mr.
Rodriguez is subject to non-solicitation covenants during the term of the agreement.
On
January 21, 2021, we entered into an Executive Employment Agreement with Verdie Bowen, pursuant to which Mr. Bowen agreed to serve
as the President and Chief Operating Officer of EPIQ MD. The agreement has an initial term of three years, beginning on January
1, 2021, provided that the agreement automatically extends for additional one-year terms thereafter in the event neither party
provides the other at least 60 days prior notice of their intention not to renew the terms of the agreement.
Pursuant
to the terms of the agreement, Mr. Bowen’s annual compensation package includes base annual compensation of $60,000 for
the first three months, which increases to an annual base salary of $120,000 commencing April 1, 2021 throughout the initial term
of this agreement, provided that the annual increases to $240,000 upon Mr. Bowen and EPIQ MD achieving 10,000 active customers.
As
additional consideration pursuant to the agreement, the Company agreed to issue Mr. Bowen (a) 1,500,000 shares of restricted Company
common stock, subject to forfeiture and vesting, of which 500,000 shares vest upon the Launching of the Ambassador Program; 500,000
vest upon EPIQ MD reaching the 5,000 active customer mark; and 500,000 vesting upon EPIQ MD reaching the 10,000 active customer
mark, provided that all shares shall vest if the Company’s common stock is uplisted to a higher trading exchange; and (b)
up to 750,000 shares of EPIQ MD, upon reaching certain milestones, which vest immediately if EPIQ MD completes a spin-off, up-listing
and/or a change of control event.
The
Board of Directors and/or Compensation Committee may also authorize bonuses payable to Mr. Bowen from time to time in their discretion,
in cash or securities.
The
agreement prohibits Mr. Bowen from competing against us during the term of the agreement and for a period of twelve months after
the termination of the agreement in any state and any other geographic area in which we or our subsidiaries provide Nutraceutical
products or services, directly or indirectly, during the twelve months preceding the date of the termination of the agreement.
We
may terminate Mr. Bowen’s employment (a) for “cause” (which is defined to include, a material breach
of the agreement by Mr. Bowen, any act of misappropriation of funds or embezzlement by Mr. Bowen, Mr. Bowen committing any act
of fraud, or Mr. Bowen being indicted of, or pleading guilty or nolo contendere with respect to, theft, fraud, a crime involving
moral turpitude, or a felony under federal or applicable state law); (b) in the event Mr. Bowen suffers a physical or mental disability
which renders him unable to perform his duties and obligations for either 90 consecutive days or 180 days in any 12-month period;
(c) for any reason without “cause”; or (d) upon expiration of the initial term of the agreement (or any renewal)
upon notice as provided above. The agreement also automatically terminates upon the death of Mr. Bowen.
Mr.
Bowen may terminate his employment (a) for “good reason” (i.e., (i) if his position or duties are modified
to such an extent that his duties are no longer consistent with the position of President and Chief Operating Officer of EPIQ
MD, (ii) there has been a material breach by us of a material term of the agreement or Mr. Bowen reasonably believes that we are
violating any law which would have a material adverse effect on our operations and such violation continues uncured thirty days
after such breach and after notice thereof has been provided to us by Mr. Bowen, or (iii) Mr. Bowen’s compensation is reduced
without his consent, or we fail to pay to Mr. Bowen any compensation due to him upon 15 days written notice from Mr. Bowen informing
us of such failure); provided, however, prior to any such termination by Mr. Bowen for “good reason”, Mr. Bowen
must first advise us in writing (within 15 days of the occurrence of such event) and provide us 15 days to cure (15 days in connection
with the reduction of Mr. Bowen’s salary or the failure to pay amounts owed to him)); (b) for any reason without “good
reason”; and (c) upon expiration of the initial term of the agreement (or any renewal) upon notice as provided above.
If
Mr. Bowen’s employment is terminated by Mr. Bowen for “good reason”, or by us without “cause”,
Mr. Bowen is entitled to continue to receive the salary due pursuant to the terms of the agreement at the rate in effect upon
the termination date for six (6) months or otherwise until such obligation ceases and we are required to pay 12 months of Mr.
Bowen’s COBRA expenses.
The
agreement contains standard assignment of inventions, indemnification, confidentiality and arbitration provisions. Further, Mr.
Bowen is subject to non-solicitation covenants during the term of the agreement.
Director
Summary Compensation Table
We
had no non-executive directors for the years ended December 31, 2020 and 2019. The compensation paid to each executive director
is included in the table above.
Outstanding
Option Equity Awards at 2020 Fiscal Year End
There
were no unvested stock or option awards outstanding at year end held by executive officers.
Certain
Relationships and Related Transactions
Except
as discussed below or otherwise disclosed above under “Executive and Director Compensation”,
which information is incorporated by reference where applicable in this “Certain Relationships and Related
Transactions” section, the following sets forth a summary of all transactions since the beginning of the fiscal
year of 2018, or any currently proposed transaction, in which the Company was to be a participant and the amount involved
exceeded or exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at the fiscal
year-end for 2020 and 2019, and in which any related person had or will have a direct or indirect material interest (other
than compensation described above under “Executive and Director Compensation”). We believe the terms obtained or
consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to
terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
Loans
from Related Parties
During
the year ended December 31, 2019, two of the Company then officers and board members, Jacob Cohen and Esteban Alexander, loaned
the Company $25,571. During the year ended December 31, 2019, the Company repaid $110,774 of loans to the same 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 (Jacob Cohen and Esteban Alexander) was $35,879 at December 31, 2019.
On
June 21, 2019, the Company issued a promissory note with a principal amount of $40,000 to a related party (the father of the Company’s
CEO, Jacob Cohen) in exchange for $40,000 in cash. The promissory note is unsecured, has a maturity date of June 21, 2020 and
accrues interest at the rate of 8% per annum until paid in full by the Company. 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, which was accounted for as a discount on
the note.
On
September 9, 2019, the Company issued a promissory note with a principal amount of $100,000 to a related party (the father of
the Company’s CEO, Jacob Cohen) in exchange for $100,000 in cash. The promissory note is unsecured, has a maturity date
of September 9, 2020 and accrues interest at the rate of 8% per annum until paid in full by the Company. 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, which was
accounted for a discount on the note.
Amortization
of the discounts on the note was $30,874 for the 12 months ended December 31, 2019.
As
of December 31, 2019, the Company 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.
Long-Term
Debt to 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 (also the former CFO of the Company) 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 balance 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. As of December 31, 2019, 4,250,000 shares were returned to Treasury
for cancellation, and 1,650,000 shares were cancelled in 2020. The Company accrued $25,216 of interest on these notes during the
year ended December 31, 2019.
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 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. As of December 31, 2019, the balance
of the note was $26,753, of which $13,628 will be repaid in 2020, and $13,125 will be repaid in 2021.
Related
Party Transactions of the Company Prior to the April 12, 2019 Share Exchange
As
of December 31, 2018, and December 31, 2017, the Company had a payable to American International Industries, Inc. (“AMIN”)
of $0 and $31,496, respectively. The loan is from the former parent company. There is no loan agreement, and interest is not being
charged. Effective May 31, 2018, the AMIN Board forgave the $31,496 loan owed to AMIN at March 31, 2018 plus an additional $500
loaned during the second quarter of 2018, for a total of $31,996 in forgiveness, which was recorded as an increase in additional
paid in capital. The Company incurred an imputed interest expense in the amount of $2,136 on the loans owed to AMIN for the year
ended December 31, 2018.
As
of December 31, 2018, the Company had a short-term note payable in the amount of $13,072 to Kemah Development Texas, LP, a company
owned by Dror Family Trust, a related party. The original note was for $100,000. $86,928 was repaid during the year ended December
31, 2018. The note was effective May 31, 2018, bears interest at 3%, and is due on May 31, 2019. The accrued interest in connection
with this note was $949 as of December 31, 2019.
At
December 31, 2017, the Company had an accrued liability in the amount of $30,000 for compensation to the Company’s CEO for
the year ended December 31, 2016. Effective May 31, 2018, the Company former CEO resigned his position as CEO and forgave the
$30,000 in accrued compensation owed to the former CEO. The $2,124 in imputed interest expense and the $30,000 in forgiveness
of accrued compensation were recorded as increases in additional paid in capital during the year ended December 31, 2018.
During
the year ended December 31, 2018, the Company issued the following shares of restricted common stock to related parties. Stock
issued for services to related parties was valued at $0.50 per share:
|
●
|
The
Company issued 4,300,000 shares for common stock valued $2,150,000 for organizational and acquisition consulting services
to Daniel Dror, Chairman and CEO of AMIN. Daniel Dror is the former Chairman and CEO of the Company.
|
|
|
|
|
●
|
The
Company issued 3,800,000 shares of common stock valued at $1,900,000 to Robert Holden, for consideration as President, CEO
and Director of the Company. The Company is currently in litigation with Mr. Holden and is seeking a complete rescission of
the 3,800,000 shares due to lack of performance and misrepresentations made to the Company as CEO and Director.
|
|
|
|
|
●
|
The
Company issued 750,000 shares of common stock valued at $375,000 to Everett Bassie, for the positions as CFO and Director.
|
|
|
|
|
●
|
The
Company issued 500,000 shares of common stock valued at $250,000 for Director fees to Charles Zeller.
|
At
December 31, 2020, accrued compensation represents compensation for the Company’s executive officers from April 12, 2019
to December 31, 2020 in the amount of $154,500.
Additional
Transactions
On
July 5, 2019, our board of directors adopted and approved our 2019 Stock Option and Incentive 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 2,435,000 shares
to eligible persons under the Plan and recorded a total $2,153,550 as Stock Based Compensation against these issuances for the
year ended December 31, 2020.
On
January 13, 2020, and with an effective date of December 31, 2019, the Company sold 100% of its interest in YS Brands to its current
officers and directors in consideration of $300.00 in cash.
On
May 20, 2020, the Company issued one share of its newly designated shares of Series A Preferred Stock (the rights associated with
such Series A Preferred Stock are described in greater detail under “Description of Capital Stock—Preferred Stock—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) 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, as discussed in greater detail under “Description of Capital Stock—Preferred Stock—Series B Convertible Preferred Stock”. 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
October 2, 2020, Jacob D. Cohen, the Chief Executive Officer and member of the board of directors of the Company entered into
Stock Purchase Agreements with each of (a) Esteban Alexander, the Chief Operating Officer and member of the board of directors
of the Company, and (b) Luis Alan Hernandez, the Chief Marketing Officer and member of the board of directors of the Company (collectively,
the “Preferred Holders” and the “Stock Purchase Agreements”).
Pursuant
to the Stock Purchase Agreements, Mr. Alexander agreed to sell 7,000,000 shares of common stock of the Company which he held to
Mr. Cohen, which rights to such shares were assigned by Mr. Cohen to Cohen Enterprises, Inc., which entity he controls (“Cohen
Enterprises”), in consideration for an aggregate of $1,500 as well as for the amount of services provided by Mr. Cohen
to the Company; and Mr. Hernandez agreed to sell 4,000,000 shares of common stock of the Company which he held to Cohen Enterprises,
in consideration for an aggregate of $1,000 as well as for the amount of services provided by Mr. Cohen to the Company. The sales
closed on November 5, 2020.
One
of the reasons that Mr. Alexander and Mr. Hernandez agreed to the terms of the Stock Purchase Agreements (including the sale of
the shares of common stock of the Company at below market value), is because (a) each of Mr. Cohen, Mr. Alexander, and Mr. Hernandez
were all appointed as officers and directors of the Company at the same time in April 2019, with the intention that such persons
would provide a relatively equal amount of services to the Company in the roles as officers and directors thereof; (b) since such
appointment date Mr. Cohen has been required to provide a disproportionate amount of services to the Company; and (c) each of
Mr. Alexander and Mr. Hernandez desired to provide additional consideration to Mr. Cohen for such disproportionate level of service.
A
condition to the Stock Purchase Agreements was that each of Mr. Alexander and Mr. Hernandez resign as a member of the board of
directors of the Company by no later than January 15, 2021, which resignations were effective December 15, 2020.
A
further requirement to the terms of the Stock Purchase Agreements was that each of Mr. Alexander and Mr. Hernandez take such actions
necessary and which may be requested from time to time by Mr. Cohen, to affect the cancellation of the one share of Series A Preferred
Stock of the Company held by each of them, for no consideration (including, but not limited to, without the required payment by
the Company of the $1 redemption price described in the designation of such Series A Preferred Stock).
The
shares of Series A Preferred Stock held by Mr. Alexander and Mr. Hernandez were canceled on November 6, 2020.The common shares
were also transferred to Mr. Cohen on November 6, 2020, and as such, a change of control occurred on such date, with Mr. Cohen
taking over voting control of the Company.
Review,
Approval and Ratification of Related Party Transactions
Given
our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or
ratification of transactions, such as those described above, with our executive officers, directors and significant stockholders.
However, all of the transactions described above were approved and ratified by our board of directors (currently consisting solely
of Mr. Cohen). In connection with the approval of the transactions described above, our board of directors took into account various
factors, including their fiduciary duties to the Company; the relationships of the related parties described above to the Company;
the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such
benefits; whether comparable products or services were available; and the terms the Company could receive from an unrelated third
party.
We
intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional
directors. On a moving forward basis, our board of directors (currently consisting solely of Mr. Cohen) will continue to approve
any related party transaction based on the criteria set forth above.
Where
You Can Find Additional Information
We
will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon his or
her written or oral request, a copy of any or all of the reports or documents referred to above that have been incorporated by
reference into this prospectus, excluding exhibits to those documents unless they are specifically incorporated by reference into
those documents. You may request a copy of these filings, at no cost, by contacting us at our address at 3990 Vitruvian Way, Suite
1152, Addison, Texas, 75001 or by email at info@amihcorp.com.
We
file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available
to the public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge,
soon after such reports are filed with or furnished to the SEC, on our website at https://amihcorp.com/investors/. Our
website address is https://amihcorp.com.
We
do not incorporate information on our website into this prospectus or any supplement to this prospectus and you should not consider
any information on, or that can be accessed through, our website as part of this prospectus or any supplement to this prospectus
(other than those filings with the SEC that we specifically incorporate by reference into this prospectus or any supplement to
this prospectus).
Indemnification
of Directors and Officers
As
authorized by Section 78.751 of the Nevada Revised Statutes, we may indemnify our officers and directors against expenses
incurred by such persons in connection with any threatened, pending or completed action, suit or proceedings, whether civil, criminal,
administrative or investigative, involving such persons in their capacities as officers and directors, so long as such persons
acted in good faith and in a manner which they reasonably believed to be in our best interests. If the legal proceeding, however,
is by or in our right, the director or officer may not be indemnified in respect of any claim, issue or matter as to which he
is adjudged to be liable for negligence or misconduct in the performance of his duty to us unless a court determines otherwise.
Under
Nevada law, corporations may also purchase and maintain insurance or make other financial arrangements on behalf of any person
who is or was a director or officer (or is serving at our request as a director or officer of another corporation) for any liability
asserted against such person and any expenses incurred by him in his capacity as a director or officer. These financial arrangements
may include trust funds, self-insurance programs, guarantees and insurance policies.
Additionally,
our Bylaws, as amended and restated (“Bylaws”), state that we shall indemnify every (i) present or former director,
advisory director or officer of us, (ii) any person who while serving in any of the capacities referred to in clause (i) served
at our request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person
nominated or designated by (or pursuant to authority granted by) the Board of Directors or any committee thereof to serve in any
of the capacities referred to in clauses (i) or (ii) (each an “Indemnitee”).
Our
Bylaws provide that we shall indemnify an Indemnitee against all judgments, penalties (including excise and similar taxes), fines,
amounts paid in settlement and reasonable expenses actually incurred by the Indemnitee in connection with any proceeding in which
he was, is or is threatened to be named as a defendant or respondent, or in which he was or is a witness without being named a
defendant or respondent, by reason, in whole or in part, of his serving or having served, or having been nominated or designated
to serve, if it is determined that the Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the case of
conduct in his official capacity, that his conduct was in our best interests and, in all other cases, that his conduct was at
least not opposed to our best interests, and (c) in the case of any criminal proceeding, had no reasonable cause to believe that
his conduct was unlawful; provided, however, that in the event that an Indemnitee is found liable to us or is found liable on
the basis that personal benefit was improperly received by the Indemnitee, the indemnification (i) is limited to reasonable expenses
actually incurred by the Indemnitee in connection with the proceeding and (ii) shall not be made in respect of any proceeding
in which the Indemnitee shall have been found liable for willful or intentional misconduct in the performance of his duty to us.
Except
as provided above, the Bylaws provide that no indemnification shall be made in respect to any proceeding in which such Indemnitee
has been (a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted
from an action taken in the Indemnitee’s official capacity, or (b) found liable to us. The termination of any proceeding
by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative
that the Indemnitee did not meet the requirements set forth in clauses (a) or (b) above. An Indemnitee shall be deemed to have
been found liable in respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of
competent jurisdiction after exhaustion of all appeals therefrom. Reasonable expenses shall include, without limitation, all court
costs and all fees and disbursements of attorneys’ fees for the Indemnitee. The indemnification provided shall be applicable
whether or not negligence or gross negligence of the Indemnitee is alleged or proven.
Neither
our Bylaws nor our Articles of Incorporation include any specific indemnification provisions for our officers or directors against
liability under the Securities Act. Additionally, insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
Index
to Financial Statements
Unaudited
Financial Statements for the Three and Nine Months Ended September 30, 2020 and 2019
Audited
Financial Statements for the Years Ended December 31, 2019 and 2018
AMERICAN
INTERNATIONAL HOLDINGS CORP.
|
Consolidated
Balance Sheets
|
(Unaudited)
|
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
109,970
|
|
|
$
|
1,258,710
|
|
Inventory
|
|
|
61,206
|
|
|
|
16,484
|
|
Prepayment and deposits
|
|
|
678,600
|
|
|
|
365,520
|
|
Costs and estimated earnings in excess of billings
on incomplete contract
|
|
|
140,719
|
|
|
|
—
|
|
TOTAL CURRENT ASSETS
|
|
|
990,495
|
|
|
|
1,640,714
|
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
—
|
|
|
|
95,000
|
|
Goodwill
|
|
|
29,689
|
|
|
|
29,689
|
|
NET INTANGIBLE ASSETS
|
|
|
29,689
|
|
|
|
124,689
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of $61,100
and $19,744
|
|
|
287,620
|
|
|
|
154,815
|
|
Right-of-use asset - operating lease
|
|
|
492,747
|
|
|
|
267,482
|
|
Rent deposits
|
|
|
31,670
|
|
|
|
4,777
|
|
Other assets
|
|
|
605,488
|
|
|
|
—
|
|
NET NON-CURRENT ASSETS
|
|
|
1,417,525
|
|
|
|
427,074
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
2,437,709
|
|
|
$
|
2,192,477
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
75,469
|
|
|
$
|
63,315
|
|
Accrued interest payable
|
|
|
90,520
|
|
|
|
42,564
|
|
Accrued compensation - related parties
|
|
|
181,500
|
|
|
|
58,500
|
|
Right-of-use liability - operating lease
|
|
|
127,919
|
|
|
|
80,629
|
|
Capital lease
|
|
|
41,133
|
|
|
|
—
|
|
Convertible notes payable, net of debt discount of $411,682 and $282,144
|
|
|
244,636
|
|
|
|
144,106
|
|
Loans payable
|
|
|
129,586
|
|
|
|
98,500
|
|
Loans payable to related parties, net of discount of $0 and $69,126
|
|
|
399,352
|
|
|
|
133,854
|
|
Derivative liabilities
|
|
|
847,529
|
|
|
|
458,745
|
|
Billing in excess of costs and estimated earnings
|
|
|
—
|
|
|
|
1,657,998
|
|
TOTAL CURRENT LIABILITIES
|
|
|
2,137,644
|
|
|
|
2,738,211
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES
|
|
|
|
|
|
|
|
|
Right-of-use liability - operating lease
|
|
|
376,974
|
|
|
|
200,074
|
|
Long-term capital lease
|
|
|
30,625
|
|
|
|
—
|
|
Long-term convertible notes payable, net of debt discount of $103,327 and $0
|
|
|
2,673
|
|
|
|
—
|
|
Long-term debt - related parties
|
|
|
—
|
|
|
|
363,125
|
|
TOTAL LONG-TERM LIABILITIES
|
|
|
410,272
|
|
|
|
563,199
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
$
|
2,547,916
|
|
|
$
|
3,301,410
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Preferred stock ($0.0001 par value, 5,000,000 shares authorized, 3 shares of Series A Preferred
Stock issued and outstanding as of September 30, 2020)
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock ($0.0001 par value, 195,000,000 shares authorized, of which 40,444,575 and 27,208,356 shares issued and
outstanding as of September 30, 2020 and December 31, 2019, respectively)
|
|
|
4,044
|
|
|
|
2,721
|
|
Treasury stock (410 and 1,650,410 shares as of September 30, 2020 and
December 31, 2019, respectively), at cost;
|
|
|
(3,894
|
)
|
|
|
(103,537
|
)
|
Common stock payable
|
|
|
—
|
|
|
|
25,000
|
|
Additional paid in capital
|
|
|
6,654,130
|
|
|
|
2,186,651
|
|
Retained earnings (deficit)
|
|
|
(6,764,487
|
)
|
|
|
(3,219,768
|
)
|
TOTAL
STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
(110,207
|
)
|
|
|
(1,108,933
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
2,437,709
|
|
|
$
|
2,192,477
|
|
The
accompanying notes are an integral part of these unaudited financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
September 30, 2020
|
|
|
September 30, 2019
|
|
|
September 30, 2020
|
|
|
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
680,369
|
|
|
$
|
52,085
|
|
|
$
|
5,981,221
|
|
|
$
|
143,032
|
|
Cost of revenues
|
|
|
680,133
|
|
|
|
37,957
|
|
|
|
4,097,781
|
|
|
|
73,672
|
|
Gross profit
|
|
|
236
|
|
|
|
14,128
|
|
|
|
1,883,440
|
|
|
|
69,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
804,583
|
|
|
|
2,068,141
|
|
|
|
4,406,209
|
|
|
|
2,208,533
|
|
Total operating expenses
|
|
|
804,583
|
|
|
|
2,068,141
|
|
|
|
4,406,209
|
|
|
|
2,208,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations
|
|
|
(804,347
|
)
|
|
|
(2,054,013
|
)
|
|
|
(2,522,769
|
)
|
|
|
(2,139,173
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
|
(36,017
|
)
|
|
|
(17,161
|
)
|
|
|
(90,381
|
)
|
|
|
(32,428
|
)
|
Amortization of debt discount
|
|
|
(263,534
|
)
|
|
|
—
|
|
|
|
(444,810
|
)
|
|
|
—
|
|
Change in derivative liabilities
|
|
|
(132,977
|
)
|
|
|
—
|
|
|
|
(157,546
|
)
|
|
|
—
|
|
Impairment loss
|
|
|
—
|
|
|
|
—
|
|
|
|
(95,000
|
)
|
|
|
—
|
|
Loss on loans settlement
|
|
|
(234,513
|
)
|
|
|
—
|
|
|
|
(234,513
|
)
|
|
|
—
|
|
Other income
|
|
|
—
|
|
|
|
—
|
|
|
|
300
|
|
|
|
—
|
|
Total other income (expenses)
|
|
|
(667,041
|
)
|
|
|
(17,161
|
)
|
|
|
(1,021,950
|
)
|
|
|
(32,428
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(1,471,388
|
)
|
|
|
(2,071,174
|
)
|
|
|
(3,544,719
|
)
|
|
|
(2,171,601
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(1,471,388
|
)
|
|
$
|
(2,071,174
|
)
|
|
$
|
(3,544,719
|
)
|
|
$
|
(2,171,601
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.04
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.10
|
)
|
Dilutive
|
|
$
|
(0.04
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
38,411,015
|
|
|
|
24,792,455
|
|
|
|
32,281,583
|
|
|
|
20,945,539
|
|
Dilutive
|
|
|
38,411,015
|
|
|
|
24,792,455
|
|
|
|
32,281,583
|
|
|
|
20,945,539
|
|
The
accompanying notes are an integral part of these unaudited financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
|
Consolidated
Statement of Changes in Stockholders’ Equity (Deficit)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
Retained
|
|
|
|
|
|
Total
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Earnings
|
|
|
Treasury
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
(Deficit)
|
|
|
Stock
|
|
|
(Deficit)
|
|
Balance, December 31, 2018
|
|
|
—
|
|
|
$
|
—
|
|
|
|
18,000,000
|
|
|
$
|
1,800
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
$
|
(7,520
|
)
|
|
$
|
—
|
|
|
$
|
(5,384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Reverse Merger April 12, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
10,933,356
|
|
|
|
1,093
|
|
|
|
(15,885
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,894
|
)
|
|
|
(18,686
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,942
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares under private placement
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
10
|
|
|
|
9,990
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common shares for long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,900,000
|
)
|
|
|
(590
|
)
|
|
|
590
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(350,000
|
)
|
|
|
(350,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for discount on loan
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
15
|
|
|
|
104,985
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
105,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for licensing agreement
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
25
|
|
|
|
24,975
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for services
|
|
|
—
|
|
|
|
—
|
|
|
|
1,435,000
|
|
|
|
144
|
|
|
|
1,672,606
|
|
|
|
165,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,837,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,171,601
|
)
|
|
|
—
|
|
|
|
(2,171,601
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2019
|
|
|
—
|
|
|
$
|
—
|
|
|
|
24,968,356
|
|
|
$
|
2,497
|
|
|
$
|
1,805,539
|
|
|
$
|
165,000
|
|
|
$
|
(2,179,121
|
)
|
|
$
|
(353,894
|
)
|
|
$
|
(559,979
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
Retained
|
|
|
|
|
|
Total
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Earnings
|
|
|
Treasury
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
(Deficit)
|
|
|
Stock
|
|
|
(Deficit)
|
|
Balance, December 31, 2019
|
|
|
—
|
|
|
$
|
—
|
|
|
|
27,208,356
|
|
|
$
|
2,721
|
|
|
$
|
2,186,651
|
|
|
$
|
25,000
|
|
|
$
|
(3,219,768
|
)
|
|
$
|
(103,537
|
)
|
|
$
|
(1,108,933
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
3,345
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of derivative liabilities due to note conversion
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
359,811
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
359,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Series B preferred shares for investment
|
|
|
500,000
|
|
|
|
50
|
|
|
|
—
|
|
|
|
—
|
|
|
|
605,438
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
605,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares under private placement
|
|
|
—
|
|
|
|
—
|
|
|
|
131,250
|
|
|
|
13
|
|
|
|
71,487
|
|
|
|
(25,000
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
46,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common shares for long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,650,000
|
)
|
|
|
(165
|
)
|
|
|
(99,478
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
99,643
|
|
|
|
-—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for note conversion and settlement
|
|
|
—
|
|
|
|
—
|
|
|
|
4,919,494
|
|
|
|
492
|
|
|
|
728,859
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
729,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services - related parties
|
|
|
3
|
|
|
|
—
|
|
|
|
6,000,000
|
|
|
|
600
|
|
|
|
1,559,400
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,560,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services
|
|
|
—
|
|
|
|
—
|
|
|
|
1,752,142
|
|
|
|
175
|
|
|
|
1,238,775
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,238,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for Series B preferred shares conversion
|
|
|
(500,000
|
)
|
|
|
(50
|
)
|
|
|
2,083,333
|
|
|
|
208
|
|
|
|
(158
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,544,719
|
)
|
|
|
—
|
|
|
|
(3,544,719
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020
|
|
|
3
|
|
|
$
|
—
|
|
|
|
40,444,575
|
|
|
$
|
4,044
|
|
|
$
|
6,654,130
|
|
|
$
|
—
|
|
|
$
|
(6,764,487
|
)
|
|
$
|
(3,894
|
)
|
|
$
|
(110,207
|
)
|
The
accompanying notes are an integral part of these unaudited financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
For the Nine Months Ended
|
|
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(3,544,719
|
)
|
|
$
|
(2,171,601
|
)
|
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
41,356
|
|
|
|
18,480
|
|
Amortization of debt discount
|
|
|
444,810
|
|
|
|
—
|
|
Change in derivative liabilities
|
|
|
157,546
|
|
|
|
—
|
|
Non-cash lease expense
|
|
|
123,014
|
|
|
|
(247,430
|
)
|
Impairment loss
|
|
|
95,000
|
|
|
|
—
|
|
Loss on loans settlement
|
|
|
234,513
|
|
|
|
|
|
Stock issued for services rendered
|
|
|
2,798,950
|
|
|
|
1,837,750
|
|
Imputed interest expense
|
|
|
3,345
|
|
|
|
7,942
|
|
(Increase) decrease in operating assets:
|
|
|
|
|
|
|
|
|
Costs in excess of billings
|
|
|
(140,719
|
)
|
|
|
-
|
|
Inventory
|
|
|
(44,722
|
)
|
|
|
—
|
|
Prepaid expenses
|
|
|
(313,080
|
)
|
|
|
8,866
|
|
Licensing agreement
|
|
|
—
|
|
|
|
(40,000
|
)
|
Other asset - deposit
|
|
|
(26,893
|
)
|
|
|
4,433
|
|
(Decrease) increase in operating liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
18,908
|
|
|
|
77,235
|
|
Accrued interest payable
|
|
|
84,362
|
|
|
|
19,304
|
|
Accrued compensation - related parties
|
|
|
123,000
|
|
|
|
81,000
|
|
Deferred lease liability
|
|
|
—
|
|
|
|
(7,650
|
)
|
Operating lease right-of-use liability, net
|
|
|
(124,089
|
)
|
|
|
256,167
|
|
Billing in excess of costs and estimated earnings
|
|
|
(1,657,998
|
)
|
|
|
—
|
|
NET CASH (USED IN)
OPERATING ACTIVITIES
|
|
|
(1,727,416
|
)
|
|
|
(155,504
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Capital expenditures for property and equipment
|
|
|
(91,649
|
)
|
|
|
(17,034
|
)
|
NET CASH PROVIDED
BY (USED IN) INVESTING ACTIVITIES
|
|
|
(91,649
|
)
|
|
|
(17,034
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from borrowings - related parties
|
|
|
—
|
|
|
|
195,257
|
|
(Repayment) to borrowings - related parties
|
|
|
(40,000
|
)
|
|
|
(66,624
|
)
|
Principal payments for capital leases
|
|
|
(10,754
|
)
|
|
|
-
|
|
Proceeds from borrowings
|
|
|
690,000
|
|
|
|
40,000
|
|
(Repayment) to borrowings
|
|
|
(15,421
|
)
|
|
|
(3,024
|
)
|
Proceeds from sales of stock
|
|
|
46,500
|
|
|
|
10,000
|
|
NET CASH PROVIDED
BY (USED IN) FINANCING ACTIVITIES
|
|
|
670,325
|
|
|
|
175,609
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
(1,148,740
|
)
|
|
|
3,071
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
1,258,710
|
|
|
|
18,796
|
|
End of period
|
|
$
|
109,970
|
|
|
$
|
21,867
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash paid for interest
|
|
$
|
2,674
|
|
|
$
|
13,289
|
|
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
Capital lease
|
|
$
|
82,512
|
|
|
$
|
37,027
|
|
Common shares issued for notes conversion
|
|
$
|
298,769
|
|
|
$
|
350,000
|
|
Related party’s note settled in shares
|
|
|
109,278
|
|
|
|
|
|
Common shares issued for notes settlement
|
|
$
|
86,771
|
|
|
$
|
—
|
|
Stock payable
|
|
$
|
25,000
|
|
|
$
|
—
|
|
Common shares issued for intangible assets
|
|
$
|
—
|
|
|
$
|
25,000
|
|
Discounts on convertible notes
|
|
$
|
608,549
|
|
|
$
|
—
|
|
Lease Inception
|
|
$
|
348,279
|
|
|
$
|
—
|
|
Cancellation of common shares
|
|
$
|
99,643
|
|
|
$
|
—
|
|
Settlement of derivative liabilities
|
|
$
|
359,811
|
|
|
$
|
105,000
|
|
Common shares issued for reverse acquisition
|
|
$
|
—
|
|
|
$
|
1,800
|
|
Issuance of Series B for investment
|
|
$
|
605,488
|
|
|
$
|
—
|
|
Note issued for services
|
|
$
|
—
|
|
|
$
|
75,000
|
|
The
accompanying notes are an integral part of these unaudited financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
Notes
to Consolidated Financial Statements
Three
and Nine Months Ended September 30, 2020
(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, 2019. The interim results for the three and nine months ended September 30, 2020 are not necessarily indicative
of the results to be expected for the year ending December 31, 2020 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 second, third and fourth quarters of 2020. Government mandated ‘stay-at-home’
and similar orders have to date, and may in the future, prevent us from staffing our spas and construction services, and prohibited
us from operating altogether. Specifically, as a result of COVID-19 and ‘stay-at-home’ and social distancing orders
issued in McKinney and The Woodlands, Texas, we had to close both of our MedSpas, VISSIA McKinney and VISSIA Waterway, Inc., which
were closed effective March 10, 2020, and which resulted in both the loss of income and the loss of most of our workforce, who
had to be let go. VISSIA Waterway, Inc. reopened effective June 21, 2020 and VISSIA McKinney reopened effective August 8, 2020.
However, due to the termination of employees associated with the shutdown we were forced to expend resources to attract, hire
and train completely new staff for preparation of the re-launchings. Notwithstanding the re-openings, customer traffic and demand
at our VISSIA Waterway, Inc. and VISSIA McKinney MedSpa locations failed to rebound to pre-closure levels due to COVID-19 and
the pandemic’s effects on the economy, and because we are unable to predict the length of the pandemic or ultimate outcome
thereof, and further due to our limited capital resources, effective on October 25, 2020, we made the decision to temporarily
close both our VISSIA Waterway, Inc. and VISSIA McKinney locations. Such locations remain closed through the date of this Report.
We are currently seeking both financial and operating partners to assist in the further management and operations of our VISSIA
brand, to help fund the re-opening of our spas and are also entertaining any and all purchase opportunities for such brand and
spas as well. Although our MedSpas were forced to close during the second and third quarters, and are temporarily closed for economic
reasons currently, Legend Nutrition was able to remain open as an essential business as we sold vitamins and other nutritional
supplements. Though the store was able to remain open, the store saw, and continues to see, a deep decline in sales due to social
distancing orders and decreases in customers who are willing to venture out to brick and mortar establishments.
Moving
forward, even if Legend Nutrition is able to continue to operate through the COVID-19 pandemic, we expect to deal with the loss
of available employees due to health concerns which in the future may limit our ability to operate. Separately, economic recessions,
including those brought on by the COVID-19 outbreak may have a negative effect on the demand for our services and our operating
results. We have also experienced delays due to the COVID-19 outbreak in receiving products and supplies which we need to operate.
All
of the above may be exacerbated in the future as the COVID-19 outbreak and the governmental responses thereto continues. Furthermore,
all of the above may be exacerbated due to the fact that all of our operations currently take place in the state of Texas, which
has recently experienced some of the largest increases in the number of cases of, and the number of hospitalizations related to,
COVID-19.
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”) (OTC Pink: 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 (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 September 30, 2020.
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.
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. and ZipDoctor, Inc., and its majority owned subsidiary, Life Guru, Inc. All significant
intercompany transactions and balances have been eliminated in consolidation.
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
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 adopted
ASU No. 2018-13 effective on January 1, 2020 and it did not have a material impact on the Company’s 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
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 – Property and Equipment
Property
and equipment were as follows at September 30, 2020 and December 31, 2019:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Leasehold improvements
|
|
$
|
149,873
|
|
|
$
|
102,264
|
|
Furniture & fixtures
|
|
|
47,175
|
|
|
|
23,115
|
|
Equipment
|
|
|
151,672
|
|
|
|
49,180
|
|
|
|
|
348,720
|
|
|
|
174,559
|
|
Less accumulated depreciation and amortization
|
|
|
61,100
|
|
|
|
19,744
|
|
Net property and equipment
|
|
$
|
287,620
|
|
|
$
|
154,815
|
|
During
the nine months ended September 30, 2020, the Company’s fixed assets increased by $174,161, including leasehold improvements
of $47,609, furniture & fixtures of $24,060 and equipment of $102,492, of which $91,649 was paid by cash and $82,512 was financed
with a term of 2 years, and with a monthly payment of $3,638. The balance of the loan was $71,758 as of September 30, 2020.
Depreciation
and amortization expense for the nine months ended September 30, 2020 and 2019 was $41,356 and $18,480, respectively.
Note
5 – Goodwill
As
of September 30, 2020, the Company had goodwill of $29,689 in connection with the acquisition of the assets in October 2019 associated
with and related to a retail vitamin, supplements and nutrition store located in McKinney, Texas.
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
6 – 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
a new location fee pursuant to the exclusive license agreement.
On
May 13, 2020, the Company provided Novo Medspa with notice to terminate the June 27, 2019 License Agreement in pursuit of the
Company’s desire to establish and develop its own brand and have the flexibility to offer additional products and services
that are not currently available at Novopelle branded locations, which was effective immediately. Accordingly, the license of
$95,000 was impaired in full during the second quarter of 2020.
Note
7 – 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. LifeGuru owns
and operates the LifeGuru.me website which is currently in development and is anticipated to be fully launched in the fourth quarter
of 2020. 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. An additional up to 1,500,000 Series B Preferred Stock shares will
be issuable to the Seller upon the following 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, LifeGuru, Inc., is a consolidated entity which requires the presentation of noncontrolling interest
in the consolidated statements of operations for the three and nine months ended September 30, 2020. As there was no activity
for the entity as of September 30, 2020, no assets, liabilities or noncontrolling interest were presented at the period ended
September 30, 2020. The LifeGuru website and platform is still under development and is planned to launch in Q1 2021.
Note
8 – 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 September 30, 2020.
The
following is a schedule, by year, of maturities of capital lease liabilities as of September 30, 2020:
2020
|
|
|
5,457
|
|
2021
|
|
|
21,828
|
|
2022
|
|
|
11,094
|
|
Total undiscounted cash flows
|
|
|
38,379
|
|
Less imputed interest (8%)
|
|
|
(3,392
|
)
|
Present value of lease liability
|
|
$
|
34,987
|
|
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 $36,771 as of September 30, 2020.
The
following is a schedule, by year, of maturities of capital lease liabilities as of September 30, 2020:
2020
|
|
|
5,457
|
|
2021
|
|
|
21,828
|
|
2022
|
|
|
12,913
|
|
Total undiscounted cash flows
|
|
|
40,198
|
|
Less imputed interest (8%)
|
|
|
(3,427
|
)
|
Present value of lease liability
|
|
$
|
36,771
|
|
Note
9 – 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 September 30, 2020, the Company had four (4) leasing agreements subject to Accounting Standards Codification (ASC) 842.
Location
1 – VISSIA Mckinney, LLC
On
January 1, 2019, the Company recognized an operating right-of-use asset in the amount of $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 September 30, 2020:
2020
|
|
|
13,516
|
|
2021
|
|
|
54,951
|
|
2022
|
|
|
55,854
|
|
2023
|
|
|
56,776
|
|
2024
|
|
|
57,715
|
|
2025
|
|
|
53,828
|
|
Total undiscounted cash flows
|
|
|
292,640
|
|
Less imputed interest (8%)
|
|
|
(85,059
|
)
|
Present value of lease liability
|
|
$
|
207,581
|
|
Total
rental expense related to this location for the three and nine months ended September 30, 2020 was $13,966 and $41,897, respectively.
The operating lease right-of-use asset net balance at September 30, 2020 related to this location was $197,936.
Location
2 – Legend Nutrition, Inc.
On
January 1, 2019, the Company recognized an operating right-of-use asset in the amount of $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 September 30, 2020:
2020
|
|
|
9,272
|
|
Total undiscounted cash flows
|
|
|
9,272
|
|
Less imputed interest (8%)
|
|
|
(1,314
|
)
|
Present value of lease liability
|
|
$
|
7,958
|
|
Total
rental expense related to this location for the three and nine months ended September 30, 2020 was $9,272 and $27,814, respectively.
The operating lease right-of-use asset net balance at September 30, 2020 related to this location was $7,958.
Location
3 – VISSIA Waterway, Inc.
On
January 1, 2020, the Company recognized an operating right-of-use asset in the amount of $234,485 and an operating lease liability
in the amount of $234,485 in connection with Location 3. The lease term is sixty (60) months and expires in December 2024.
The
following is a schedule, by year, of maturities of lease liabilities as of September 30, 2020:
2020
|
|
|
13,480
|
|
2021
|
|
|
55,540
|
|
2022
|
|
|
57,206
|
|
2023
|
|
|
58,922
|
|
2024
|
|
|
60,690
|
|
Total undiscounted cash flows
|
|
|
245,838
|
|
Less imputed interest (8%)
|
|
|
(50,479
|
)
|
Present value of lease liability
|
|
$
|
195,359
|
|
Total
rental expense related to this location for the three and nine months ended September 30, 2020 was $14,314 and $42,942, respectively.
The operating lease right-of-use asset net balance at September 30, 2020 related to this location was $192,859.
Location
4 – Capitol City Solutions USA, Inc.
On
January 1, 2020, the Company recognized an operating right-of-use asset in the amount of $113,794 and an operating lease liability
in the amount of $113,794 in connection with Location 4. The lease term is sixty-one (61) months and expires in January 2025.
The
following is a schedule, by year, of maturities of lease liabilities as of September 30, 2020:
2020
|
|
|
6,822
|
|
2021
|
|
|
27,288
|
|
2022
|
|
|
27,288
|
|
2023
|
|
|
27,288
|
|
2024
|
|
|
27,288
|
|
2025
|
|
|
2,274
|
|
Total undiscounted cash flows
|
|
|
118,248
|
|
Less imputed interest (8%)
|
|
|
(24,254
|
)
|
Present value of lease liability
|
|
$
|
93,994
|
|
Total
rental expense related to this location for the three and nine months ended September 30, 2020 was $6,822 and $20,466, respectively.
The operating lease right-of-use asset net balance at September 30, 2020 related to this location was $93,994.
Note
10 – Accrued Compensation for Related Parties
At
September 30, 2020, accrued compensation was $181,500, representing cash compensation due to the Company’s executive officers
for services rendered.
Note
11 – Notes Payable
Notes
payable represents the following at September 30, 2020:
Note
payable dated May 17, 2019 for $30,000, with interest at 5% per annum and due on April 30, 2020. The
Note and accrued interest totaled $31,791 were settled by the issuance of 242,407 common shares of the Company at a price
of $0.131 per share. The shares were valued at $0.33 per share based on the market price at the settlement date. Accordingly,
the Company recorded loss on loan settlement of $48,203 during the nine months ended September 30, 2020.
|
|
$
|
30,000
|
|
Less:
Settlement
|
|
|
(30,000
|
)
|
|
|
|
0
|
(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 right to convert all or any portion of the principal amount and accrued interest
due on the Note into the shares issued under the Company’s qualified Regulation A offering circular (the “Offering
Statement”), at the offering price of such offering ($0.50 per share). The Note is currently past due.
|
|
|
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 right 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 (10) trading
days immediately prior to but not including the conversion date. During the nine months ended September 30, 2020, a portion
of principal and accrued interest totaling $55,000 was converted into 91,250 common shares of the Company.
|
|
|
75,000
|
|
Less:
partial conversion
|
|
|
(51,070
|
)
|
|
|
|
23,930
|
(3)
|
|
|
|
|
|
Note payable 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 right to convert all or any portion of the principal amount and accrued
interest due on the Note into the shares under 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. The Note is currently past due. During the nine months ended September 30, 2020, a portion of principal
and accrued interest totaling $45,000 was converted into 370,689 common shares of the Company.
|
|
|
75,000
|
|
Less:
partial conversion
|
|
|
(41,112
|
)
|
|
|
|
33,888
|
(4)
|
|
|
|
|
|
Note payable of
$78,750 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 ($0.50 per share), 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
completed trading day prior to the conversion date, representing a discount rate of 40%. The Note and accrued interest totaling
$84,620 was converted into 1,119,309 common shares of the Company during the nine months ended September 30, 2020. Accordingly,
the unamortized discount as of the conversion date in the amount of $62,652 was expensed.
|
|
|
78,750
|
|
Less:
conversion
|
|
|
(78,750
|
)
|
|
|
|
0
|
(5)
|
Note
payable of $78,750 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 ($0.50 per share), 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
completed trading day prior to the conversion date, representing a discount rate of 40%. The Note and accrued interest totaling
$84,529 was converted into 1,080,808 common shares of the Company during the nine months ended September 30, 2020. Accordingly,
the unamortized discount as of the conversion date in the amount of $57,130 was expensed.
|
|
|
78,750
|
|
Less:
conversion
|
|
|
(78,750
|
)
|
|
|
|
0
|
(6)
|
|
|
|
|
|
Note payable of
$78,750 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 ($0.50 per share), 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 completed trading day prior to the conversion
date, representing a discount rate of 40%. The Note and accrued interest totaling $84,620 was converted into 1,119,309 common
shares of the Company during the nine months ended September 30, 2020. Accordingly, the unamortized discount as of the conversion
date in the amount of $62,652 was expensed.
|
|
|
78,750
|
|
Less:
conversion
|
|
|
(78,750
|
)
|
|
|
|
0
|
(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, Texas. 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 $75,000 bearing an interest rate of five percent (5%) per annum and with a maturity date of one year (October
18, 2020), which note is past due as of the date of this Report.
|
|
|
75,000
|
|
Less:
partial repayment
|
|
|
(9,000
|
)
|
|
|
|
66,000
|
(8)
|
|
|
|
|
|
Note payable of
$157,500 dated February 24, 2020 for cash of $150,000, net of original issue discount of $7,500, with
interest at 8% per annum and due on February 24, 2021. The Note is a convertible promissory note. The conversion price equals
60% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior
to and including the conversion date, representing a discount rate of 40%.
|
|
|
157,500
|
(9)
|
The Company incurred long term debt in the amount of $37,027 in 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. The Company incurred $343 and 1,190 on imputed interest expense during the three and nine months ended September 30, 2020, respectively. The outstanding balance of this note was $24,586 as of September 30, 2020.
|
|
|
24,586
|
(10)
|
|
|
|
|
|
Note payable of $88,000 dated April 20, 2020 for cash of $88,000, with interest at 8% per annum and due on April 20, 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%.
|
|
|
88,000
|
(11)
|
|
|
|
|
|
Note payable of $105,000 dated April 30, 2020 for cash of $100,000, net of original issue discount of $5,000, with interest at 8% per annum and due on April 30, 2021. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lower of $0.50 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%.
|
|
|
105,000
|
(12)
|
|
|
|
|
|
Note payable of $53,000 dated May 19, 2020 for cash of $53,000, with interest at 8% per annum and due on August 19, 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%.
|
|
|
53,000
|
(13)
|
|
|
|
|
|
Note payable dated June 24, 2020 for $30,000, with interest at 5% per annum and due on September 24, 2020. The Note is unsecured and is currently past due.
|
|
$
|
30,000
|
(14)
|
|
|
|
|
|
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.
|
|
$
|
50,000
|
(15)
|
|
|
|
|
|
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%.
|
|
|
53,000
|
(16)
|
|
|
|
|
|
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 $0.50 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%.
|
|
|
105,000
|
(17)
|
|
|
|
|
|
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%.
|
|
|
53,000
|
(18)
|
|
|
|
|
|
Note payable to an unrelated party dated September 11, 2020 for $4,000, with no interest and due on demand.
|
|
$
|
4,000
|
(19)
|
Note payable to an unrelated party dated September 16, 2020 for $5,000, with no interest and due on demand.
|
|
$
|
5,000
|
(20)
|
|
|
|
|
|
|
|
$
|
891,904
|
|
Less: unamortized discount
|
|
|
(515,009
|
)
|
Total
|
|
$
|
376,895
|
|
Short term convertible notes, net of discount of $411,682
|
|
$
|
244,636
|
|
Long-term convertible notes, net of discount of $103,327
|
|
$
|
2,673
|
|
Short-term non-convertible notes
|
|
$
|
129,586
|
|
Long-term non-convertible notes
|
|
$
|
0
|
|
The
maturities of long-term debt are as follows:
Year
|
|
Amounts
|
|
2021
|
|
|
106,000
|
|
Total
|
|
$
|
106,000
|
|
Note
12 – Loans from Related Parties
As of June 30, 2020, the Company 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 Isaak Cohen, father to the Company’s CEO, 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 common shares valued at $0.10 per share, or $5,000, based on recent sales of common stock to the third party, which was accounted for at a discount on the note. The principal of this Note and accrued interest of $2,214 was paid in full during the first quarter of 2020. Accordingly, the unamortized discount as of the payment date in the amount of $2,363 was expensed.
|
|
|
0
|
|
|
|
|
|
|
Note payable to Isaak Cohen, father to the Company’s CEO, 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 common shares valued at $1.00 per share, or $100,000, based on the market price at the grant date, which was accounted for as a discount on the note. The Note and accrued interest totaling $109,278 was settled by the issuance of 895,722 common shares of the Company at a price of $0.122 per share. The shares were valued at $0.33 per share based on the market price at the settlement date. Accordingly, the Company recorded a loss on loan settlement of $186,310 during the nine months ended September 30, 2020.
|
|
|
0
|
|
|
|
|
|
|
As of September 30, 2020, outstanding loan balances payable to two of the Company officers and board members, Jacob Cohen and Esteban Alexander, was $35,879. The Company incurred $723 and $2,153, respectively, on imputed interest expense due to related party borrowing during the three and nine months ended September 30, 2020.
|
|
|
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 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 $8,821 and $26,367 on these notes during the three and nine months ended September 30, 2020. The accrued interest on these notes was $51,583 as of September 30, 2020.
|
|
|
350,000
|
|
|
|
$
|
399,352
|
|
Less: unamortized discount
|
|
|
(0
|
)
|
|
|
$
|
399,352
|
|
Note
13 – 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 $965,750, 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, 2019, issuance, conversion and September 30, 2020 as set forth in
the table below.
Derivative liabilities as of December 31, 2019
|
|
$
|
458,745
|
|
Initial derivative liabilities at new note issuance
|
|
|
625,336
|
|
Initial loss
|
|
|
(34,287
|
)
|
Conversion
|
|
|
(359,811
|
)
|
Mark to market changes
|
|
|
157,546
|
|
|
|
|
|
|
Derivative liabilities as of September 30, 2020
|
|
$
|
847,529
|
|
As
of September 30, 2020, the Company had derivative liabilities of $847,529, and recorded changes in derivative liabilities in the
amount of $157,546 during the nine months ended September 30, 2020.
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 218% through 290% 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
14 – Costs and estimated earnings in excess of billings on uncompleted contract
The
Company has two long-term contracts in progress during the nine months ended September 30, 2020, one of which was completed. 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
|
|
|
|
4,960,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Gross Profit
|
|
|
62,880
|
|
|
|
1,732,051
|
|
|
|
|
|
Gross Margin
|
|
|
10
|
%
|
|
|
26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COGS in 2019
|
|
|
199,482
|
|
|
|
1,444,397
|
|
|
|
|
|
COGS in nine months ended September 30, 2020
|
|
|
329,201
|
|
|
|
3,475,730
|
|
|
$
|
3,804,931
|
|
Total actual COGS
|
|
|
528,683
|
|
|
|
4,920,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of completion (POC)
|
|
|
100
|
%
|
|
|
99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues – POC
|
|
|
640,998
|
|
|
|
6,632,993
|
|
|
|
|
|
less: previously recognized
|
|
|
(220,886
|
)
|
|
|
(1,496,680
|
)
|
|
|
|
|
recognized in nine months ended September 30, 2020
|
|
|
420,112
|
|
|
|
5,136,313
|
|
|
$
|
5,556,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill to Date
|
|
$
|
640,998
|
|
|
$
|
6,492,274
|
|
|
$
|
7,133,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and estimated earnings in excess of billings on uncompleted contract
|
|
$
|
-
|
|
|
$
|
140,719
|
|
|
$
|
140,719
|
|
Contract
assets represent revenue recognized in excess of amounts billed and include unbilled receivables (typically for cost reimbursable
contracts), which was $140,719 as of September 30, 2020. 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 $0 as of September
30, 2020. The Company recognized revenue of $5,556,425 during the nine months ended September 30, 2020 in connection with such
contract assets. The Company anticipates that substantially all incurred costs associated with contract assets as of September
30, 2020 will be billed and collected within one year.
Note
15 – Income Taxes
The
Company has current net operating loss carryforwards in excess of $836,066 as of September 30, 2020, 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:
September 30, 2020
|
|
|
|
Deferred Tax Asset:
|
|
|
|
|
Net Operating Loss
|
|
$
|
175,574
|
|
Valuation Allowance
|
|
|
(175,574
|
)
|
Net Deferred Asset
|
|
$
|
—
|
|
At
September 30, 2020, 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
16 – Capital Stock
The
Company is authorized to issue up to 5,000,000 shares of preferred stock, $0.0001 par value, of which three shares were designated
as Series A Preferred Stock and 2,000,000 were designated as Series B Preferred stock, the balance of 2,999,997 shares of preferred
stock were undesignated as of September 30, 2020.
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.
On
May 15, 2020, the Company entered into a Securities Purchase Agreement with GCN as described in greater detail in “Note 2 – Organization, Ownership and Business”. Pursuant to the SPA, the Company acquired a 51% interest in Life Guru from
GCN in consideration for 500,000 shares of 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. The fair value of the first 500,000 shares of
the Company’s Series B Preferred Stock at grant date was $605,488, a result of market price per common share at the grant
date times the equivalent number of common shares after the conversion of Series B Preferred Stock. Such 500,000 initial shares
of Series B Preferred Stock were subsequently converted to common stock in June 2020, as discussed below.
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.
As
of September 30, 2020, there were 3 shares of Series A Preferred Stock and no shares of Series B Preferred Stock issued and outstanding.
There were no shares of preferred stock issued and outstanding as of December 31, 2019.
The
Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, of which 40,444,575 shares were issued
and outstanding at September 30, 2020 and 27,208,356 were issued and outstanding at 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 persons 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. During the nine months
ended September 30, 2020, the Company issued a total of 645,000 shares to eligible persons under the Plan and recorded $198,950
as Stock Based Compensation against these issuances based on the market prices at the grant date. As of September 30, 2020, the
number of shares under the Plan available for future issuance was 7,690,000 shares.
On
January 1, 2020, the Company issued Jesse J. Dickens, CEO of CCS, 500,000 shares of restricted common stock pursuant to an employment
agreement entered into on October 1, 2019. Mr. Dickens will receive an annual base salary of $120,000, plus an equity grant in
the amount of one million (1,000,000) shares of restricted common stock (the “Equity Shares”) subject to a
vesting period of one-year, of which two-hundred and fifty thousand (250,000) shares were issued to Mr. Dickens upon signing 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. Accordingly, 250,000 shares were recognized as Mr. Dickens’ compensation during
the first quarter of 2020, 250,000 shares shall be recognized as Mr. Dickens’ compensation during the second quarter of
2020, and the final tranche of 250,000 shares were recognized as Mr. Dickens’ compensation during the third quarter of 2020.
The shares were valued at $1.12 per share based on the market price at the grant date. Accordingly, the Company recorded stock-based
compensation of $280,000 and $840,000 for the three and nine months ended September 30, 2020, respectively.
On
January 3, 2020, 650,000 shares of restricted common stock were cancelled in connection with the four exchange agreements, dated
April 12, 2019 (see “Note 2 - Organization, Ownership and Business”), pursuant to which 5,900,000 shares of common
stock were to be cancelled in exchange for four long-term notes totaling $350,000. 4,250,000 shares were returned to treasury
and cancelled in 2019, and the remaining 1,000,000 shares were returned to treasury in the second quarter of 2020.
On
January 13, 2020, the Company executed a Data Delivery and Ancillary Services Agreement with a third party, pursuant to which
the Company issued 357,142 shares of the Company’s restricted common stock to the third party in exchange of sector-specific
consumer records and data to be utilized for marketing purposes provided by the third party and the ancillary advisory services
such as data cleaning, data emailing, lead generation campaigns, and social media management. The shares were valued at $0.56
per share or $200,000 in aggregate, based on the market price at the grant date.
On
January 17, 2020, the Company issued 62,500 shares of restricted common stock 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 cash of $25,000 on November 26, 2019 which was recorded as common stock payable as of December
31, 2019. The shares issued to the investor are part of the 10,000,000 shares qualified and registered in connection with the
Offering Statement.
On
February 28, 2020, the Company issued 160,000 common shares to an investor in exchange for $46,500 in cash, net of offering costs,
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 the Offering Statement.
On
April 2, 2020, the Company issued 40,000 shares of common stock 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. The shares issued
to the investor are part of the 10,000,000 Shares offered and registered by the Company under the Offering Statement.
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 in aggregate, based on the market price at the grant
date, and recorded as stock-based compensation to related parties.
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 in aggregate, based on the market price
at the grant date, and recorded as stock-based compensation to related parties.
On
June 2, 2020, the 500,000 shares of Series B Convertible Preferred stock were converted into 2,083,333 shares of the Company’s
restricted common stock per GCN’s request.
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
July 27, 2020, the Company issued 1,030,808 common shares to an investor in exchange for $77,929 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Fourth Man, LLC dated October 28, 2019. After this conversion,
the balance owed under the convertible note is $0.
On
July 27, 2020, the Company issued 1,119,309 common shares to an investor in exchange for $84,620 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Armada Capital Partners, LLC dated October 28, 2019.
After this conversion, the balance owed under the convertible note is $0.
On
July 27, 2020, the Company issued 1,119,309 common shares to an investor in exchange for $84,620 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to BHP Capital NY, Inc. dated October 28, 2019. After this
conversion, the balance owed under the convertible note is $0.
On
August 26, 2020, the Company issued 242,407 common shares to settle a Note with an unrelated party, dated May 17, 2019. The shares
were valued at $0.33 per share based on the market price at the settlement date. Accordingly, the Company recorded a loss on loan
settlement of $48,203 during the nine months ended September 30, 2020.
On
August 28, 2020, the Company issued 895,722 common shares to settle a Note with an unrelated party. The shares were valued at
$0.33 per share based on the market price at the settlement date. Accordingly, the Company recorded loss on loan settlement of
$186,310 during the nine months ended September 30, 2020.
On
September 8, 2020, the Company issued 330,689 common shares to an investor in exchange for $25,000 of principal and accrued interest
owed under the terms and conditions of that convertible note, dated October 15, 2019. After this conversion, the balance owed
under the convertible note is $33,888.
Note
17 – 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 of $1,471,388 and $3,544,719 for the three and
nine months ended September 30, 2020, and an accumulated deficit of $6,764,487 as of September 30, 2020. 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
18 – 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 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 650,000 of the 750,000 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 2 - Organization, Ownership and Business”). 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. 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 650,000 shares from Mr. Fields which were cancelled in 2019.
Note
19 – Subsequent Events
On
October 2, 2020, Jacob D. Cohen, the Chief Executive Officer and member of the Board of Directors of the Company entered into
Stock Purchase Agreements with each of (a) Esteban Alexander, the Chief Operating Officer and member of the Board of Directors
of the Company, and (b) Luis Alan Hernandez, the Chief Marketing Officer and member of the Board of Directors of the Company (collectively,
the “Preferred Holders” and the “Stock Purchase Agreements”).
Pursuant
to the Stock Purchase Agreements, Mr. Alexander agreed to sell 7,000,000 shares of common stock of the Company which he held to
Mr. Cohen, which rights to such shares were assigned by Mr. Cohen to Cohen Enterprises, Inc., which entity he controls (“Cohen
Enterprises”), in consideration for an aggregate of $1,500 as well as for the amount of services provided by Mr. Cohen
to the Company; and Mr. Hernandez agreed to sell 4,000,000 shares of common stock of the Company which he held to Cohen Enterprises,
in consideration for an aggregate of $1,000 as well as for the amount of services provided by Mr. Cohen to the Company. The sales
closed on November 5, 2020.
A
condition to the Stock Purchase Agreements is that each of Mr. Alexander and Mr. Hernandez resign as a member of the Board of
Directors of the Company by no later than January 15, 2021, provided that as of the date of this filing Mr. Alexander and Mr.
Hernandez continue to serve as a member of the Board of Directors and have not yet resigned as members of the Board of Directors.
A
further requirement to the terms of the Stock Purchase Agreements was that each of Mr. Alexander and Mr. Hernandez take such actions
necessary and which may be requested from time to time by Mr. Cohen, to affect the cancellation of the one share of Series A Preferred
Stock of the Company held by each of them, for no consideration (including, but not limited to, without the required payment by
the Company of the $1 redemption price described in the designation of such Series A Preferred Stock).
The
shares of Series A Preferred Stock held by Mr. Alexander and Mr. Hernandez were canceled on November 6, 2020.The common shares
were also transferred to Mr. Cohen on November 6, 2020.
On
October 12, 2020, the Company entered into a Securities Purchase Agreement with Quick Capital LLC an accredited investor (“Quick
Capital”), pursuant to which the Company sold Quick Capital a convertible promissory note in the principal amount of
$56,750 (the “Quick Capital Note”) in consideration for a $52,750 payment. The principal amount of the Quick
Capital Note includes an advancement of legal fees equal to Quick Capital of $2,750 and carries a lump-sum interest payment for
the entire twelve (12) months of the note, at eight percent (8%) per annum, equal to $4,000 which was capitalized upon the entry
into the note. The note converts into common stock of the Company at a discount to market.
On
October 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.
On
October 12, 2020, the Company issued 136,687 common shares to an investor in exchange for $12,818 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
October 19, 2020, the Company issued 323,322 common shares to an investor in exchange for $18,682 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
October 21, 2020, the Company issued 416,667 common shares to an investor in exchange for $30,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to GHS Investments, LLC, dated October 10, 2020.
On
October 26, 2020, the Company issued 340,716 common shares to an investor in exchange for $20,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth Remark Holdings, Inc., dated April 20, 2020.
On
November 3, 2020, the Company issued 520,833 common shares to an investor in exchange for $26,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
November 3, 2020, the Company issued 492,126 common shares to an investor in exchange for $20,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth Remark Holdings, Inc., dated April 20, 2020.
On
November 9, 2020, the Company issued 688,976 common shares to an investor in exchange for $20,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth Remark Holdings, Inc., dated April 20, 2020.
On
November 10, 2020, the Company issued 721,154 common shares to an investor in exchange for $36,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
November 13, 2020, the Company issued 480,769 common shares to an investor in exchange for $24,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
Management
has evaluated all subsequent events from September 30, 2020 through the issuance date of the financial statements for subsequent
event disclosure consideration. No change to the financial statements for the nine months ended September 30, 2020 is deemed necessary
as a result of this evaluation.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Shareholders
of American International Holdings Corp.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of American International Holdings Corp. (the Company) as of December
31, 2019 and 2018, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and
cash flows for the year ended December 31, 2019 and the period from January 31, 2018 (inception) through December 31, 2018, and
the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations
and its cash flows for the year ended December 31, 2019 and the period from January 31, 2018 (inception) through December 31,
2018, in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were engaged to perform, an audit of its internal control over financial reporting. As
part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 13 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a going concern. Management’s plans about these matters are
also described in Note 13. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
/s/
M&K CPAS. PLLC
|
|
We
have served as the Company’s auditors since 2017.
|
|
|
|
Houston,
Texas
|
|
June
26, 2020
|
|
AMERICAN
INTERNATIONAL HOLDINGS CORP.
Consolidated
Balance Sheets
As
of December 31, 2019 and 2018
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,258,710
|
|
|
$
|
18,796
|
|
Inventory
|
|
|
16,484
|
|
|
|
-
|
|
Prepayment and deposits
|
|
|
365,520
|
|
|
|
8,866
|
|
TOTAL CURRNET ASSETS
|
|
|
1,640,714
|
|
|
|
27,662
|
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
|
Licenses
|
|
|
95,000
|
|
|
|
-
|
|
Goodwill
|
|
|
29,689
|
|
|
|
-
|
|
NET INTANGIBLE ASSETS
|
|
|
124,689
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of $19,744 and $0
|
|
|
154,815
|
|
|
|
86,478
|
|
Right-of-use asset - operating lease
|
|
|
267,482
|
|
|
|
-
|
|
Rent deposits
|
|
|
4,777
|
|
|
|
9,210
|
|
NET NON-CURRENT ASSETS
|
|
|
427,074
|
|
|
|
95,688
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
2,192,477
|
|
|
$
|
123,350
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
63,315
|
|
|
$
|
-
|
|
Accrued interest payable
|
|
|
42,564
|
|
|
|
-
|
|
Accrued compensation - related parties
|
|
|
58,500
|
|
|
|
-
|
|
Right-of-use liability - operating lease
|
|
|
80,629
|
|
|
|
7,650
|
|
Convertible notes payable, net of debt discount of $282,144 and $0
|
|
|
144,106
|
|
|
|
-
|
|
Loans payable
|
|
|
98,500
|
|
|
|
-
|
|
Loans payable to related parties, net of discount of $69,126 and $0
|
|
|
133,854
|
|
|
|
121,084
|
|
Derivative liabilities
|
|
|
458,745
|
|
|
|
-
|
|
Billing in excess of costs and estimated earnings
|
|
|
1,657,998
|
|
|
|
-
|
|
TOTAL CURRENT LIABILITIES
|
|
|
2,738,211
|
|
|
|
128,734
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES
|
|
|
|
|
|
|
|
|
Right-of-use liability - operating lease
|
|
|
200,074
|
|
|
|
-
|
|
Long-term debt - related parties
|
|
|
363,125
|
|
|
|
-
|
|
TOTAL LONG-TERM LIABILITIES
|
|
|
563,199
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
$
|
3,301,410
|
|
|
$
|
128,734
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding
|
|
$
|
-
|
|
|
$
|
-
|
|
Common stock (par value $.0001, 195,000,000 shares authorized, of which
27,208,356 and 18,000,000 shares issued and outstanding as of December 31, 2019 and 2018, respectively)
|
|
|
2,721
|
|
|
|
1,800
|
|
Treasury stock, at cost;
|
|
|
(103,537
|
)
|
|
|
-
|
|
Common stock payable
|
|
|
25,000
|
|
|
|
-
|
|
Additional paid in capital
|
|
|
2,186,651
|
|
|
|
336
|
|
Retained earnings (deficit)
|
|
|
(3,219,768
|
)
|
|
|
(7,520
|
)
|
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
(1,108,933
|
)
|
|
|
(5,384
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
2,192,477
|
|
|
$
|
123,350
|
|
The
accompanying notes are an integral part of these financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
Consolidated
Statements of Operations
For
the Year Ended December 31, 2019 and for the Period from
January 31, 2018 (Inception) to December 31, 2018
|
|
For the Year Ended
December 31, 2019
|
|
|
For the Period from
January 31, 2018 (Inception) to December 31, 2018
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,913,987
|
|
|
$
|
35,913
|
|
Cost of revenues
|
|
|
1,627,136
|
|
|
|
8,895
|
|
Gross profit
|
|
|
286,851
|
|
|
|
27,018
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
3,223,191
|
|
|
|
23,947
|
|
Total operating expenses
|
|
|
3,223,191
|
|
|
|
23,947
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations
|
|
|
(2,936,340
|
)
|
|
|
3,071
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
|
(69,916
|
)
|
|
|
(10,591
|
)
|
Amortization of debt discount
|
|
|
(76,230
|
)
|
|
|
-
|
|
Change in derivative liabilities
|
|
|
(147,495
|
)
|
|
|
-
|
|
Other income
|
|
|
17,733
|
|
|
|
-
|
|
Total other income (expenses)
|
|
|
(275,908
|
)
|
|
|
(10,591
|
)
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(3,212,248
|
)
|
|
|
(7,520
|
)
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(3,212,248
|
)
|
|
$
|
(7,520
|
)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.13
|
)
|
|
$
|
(0.00
|
)
|
Dilutive
|
|
$
|
(0.13
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,622,733
|
|
|
|
18,000,000
|
|
Dilutive
|
|
|
25,622,733
|
|
|
|
18,000,000
|
|
The
accompanying notes are an integral part of the financial statements
AMERICAN
INTERNATIONAL HOLDINGS CORP.
Consolidated
Statement of Changes in Stockholders’ Equity (Deficit)
For
the Year Ended December 31, 2019 and for the Period from
January 31, 2018 (Inception) to December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
Retained
|
|
|
|
|
|
Total
|
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Earnings
|
|
|
Treasury
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
(Deficit)
|
|
|
Stock
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 31, 2018 (Inception)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
18,000,000
|
|
|
$
|
1,800
|
|
|
$
|
336
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(7,520
|
)
|
|
|
|
|
|
|
(7,520
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
18,000,000
|
|
|
$
|
1,800
|
|
|
$
|
336
|
|
|
$
|
-
|
|
|
$
|
(7,520
|
)
|
|
$
|
-
|
|
|
$
|
(5,384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Reverse Merger
4/12/2019
|
|
|
-
|
|
|
|
-
|
|
|
|
10,933,356
|
|
|
|
1,093
|
|
|
|
(15,885
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,894
|
)
|
|
|
(18,686
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed interest
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
8,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares
under private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
10
|
|
|
|
9,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common
shares for long-term debt
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,250,000
|
)
|
|
|
(425
|
)
|
|
|
(249,932
|
)
|
|
|
|
|
|
|
|
|
|
|
(99,643
|
)
|
|
|
(350,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares
for discount on loan
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
|
|
15
|
|
|
|
104,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares
for licensing agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
|
|
|
25
|
|
|
|
24,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares
for note conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares
for services
|
|
|
-
|
|
|
|
-
|
|
|
|
2,025,000
|
|
|
|
203
|
|
|
|
2,303,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,303,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,212,248
|
)
|
|
|
|
|
|
|
(3,212,248
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
27,208,356
|
|
|
$
|
2,721
|
|
|
$
|
2,186,651
|
|
|
$
|
25,000
|
|
|
$
|
(3,219,768
|
)
|
|
$
|
(103,537
|
)
|
|
$
|
(1,108,933
|
)
|
The
accompanying notes are an integral part of these financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
Consolidated
Statements of Cash Flows
For
the Year Ended December 31, 2019 and for the Period from
January 31, 2018 (Inception) to December 31, 2018
|
|
For the Year Ended
December 31, 2019
|
|
|
For the Period from
January 31, 2018 (Inception) to December 31, 2018
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(3,212,248
|
)
|
|
$
|
(7,520
|
)
|
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
19,744
|
|
|
|
-
|
|
Amortization of debt discount
|
|
|
76,230
|
|
|
|
-
|
|
Change in derivative liabilities
|
|
|
147,495
|
|
|
|
-
|
|
Convertible notes issued for services rendered
|
|
|
75,000
|
|
|
|
-
|
|
Stock issued for services rendered
|
|
|
2,303,390
|
|
|
|
-
|
|
Imputed interest expense
|
|
|
8,995
|
|
|
|
2,136
|
|
Non-cash lease expense
|
|
|
88,058
|
|
|
|
|
|
(Increase) decrease in operating assets:
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
1,327
|
|
|
|
-
|
|
Prepaid expenses
|
|
|
(346,654
|
)
|
|
|
(8,866
|
)
|
(Decrease) increase in operating liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
58,102
|
|
|
|
-
|
|
Accrued interest payable
|
|
|
42,564
|
|
|
|
-
|
|
Accrued compensation - related parties
|
|
|
58,488
|
|
|
|
-
|
|
Lease Liabilities, net
|
|
|
(82,487
|
)
|
|
|
7,650
|
|
Rent Deposit
|
|
|
4,433
|
|
|
|
(9,210
|
)
|
Billing in excess of costs and estimated earnings
|
|
|
1,657,998
|
|
|
|
-
|
|
NET CASH (USED IN) OPERATING ACTIVITIES
|
|
|
900,435
|
|
|
|
(15,810
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Cash paid for license
|
|
|
(70,000
|
)
|
|
|
-
|
|
Capital expenditures for property and equipment
|
|
|
(33,554
|
)
|
|
|
(42,276
|
)
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
(103,554
|
)
|
|
|
(42,276
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from borrowings - related parties
|
|
|
165,571
|
|
|
|
119,306
|
|
(Repayment) to borrowings - related parties
|
|
|
(121,038
|
)
|
|
|
(42,424
|
)
|
Proceeds from borrowings
|
|
|
370,000
|
|
|
|
7,000
|
|
(Repayment) to borrowings
|
|
|
(6,500
|
)
|
|
|
(7,000
|
)
|
Proceeds from sales of stock
|
|
|
35,000
|
|
|
|
-
|
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
443,033
|
|
|
|
76,882
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
1,239,914
|
|
|
|
18,796
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
18,796
|
|
|
|
-
|
|
End of period
|
|
$
|
1,258,710
|
|
|
$
|
18,796
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest
|
|
$
|
27,352
|
|
|
$
|
8,455
|
|
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
Leasehold improvement purchases financed
|
|
$
|
-
|
|
|
$
|
44,202
|
|
Equipment purchases financed with long-term debt
|
|
$
|
37,027
|
|
|
$
|
-
|
|
Common shares issued for notes payable
|
|
$
|
350,000
|
|
|
$
|
-
|
|
Common shares issued for licensing agreement
|
|
$
|
25,000
|
|
|
$
|
-
|
|
Common shares issued for debt inducement
|
|
$
|
105,000
|
|
|
$
|
-
|
|
Note issued for acquisition
|
|
$
|
75,000
|
|
|
$
|
-
|
|
Reverse acquisition
|
|
$
|
18,686
|
|
|
$
|
-
|
|
Discounts on convertible notes
|
|
$
|
311,250
|
|
|
$
|
-
|
|
Adoption of ASC 842
|
|
$
|
355,540
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial statements.
AMERICAN
INTERNATIONAL HOLDINGS CORP.
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.
AMERICAN
INTERNATIONAL HOLDINGS CORP
14,750,000
SHARES OF COMMON STOCK
PROSPECTUS
_______________,
2021
Neither
we nor the selling stockholders have authorized any dealer, salesperson or other person to give any information or to make any
representations not contained in this prospectus or any prospectus supplement. You must not rely on any unauthorized information.
This prospectus is not an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. The information
in this prospectus is current as of the date of this prospectus. You should not assume that this prospectus is accurate as of
any other date.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth an estimate of the registrant’s expenses, other than any sales commissions or discounts, in connection
with the issuance and distribution of the securities being registered hereby. All amounts are estimates except the SEC registration
fee.
Securities and Exchange Commission registration fee
|
|
$
|
563.23
|
|
Accounting fees and expenses
|
|
|
5,000.00
|
*
|
Legal fees and expenses
|
|
|
37,500.00
|
*
|
Miscellaneous
|
|
|
10,000.00
|
*
|
Total
|
|
$
|
52,563.23
|
|
*
|
Indicates
expenses that have been estimated for filing purposes only.
|
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As
authorized by Section 78.751 of the Nevada Revised Statutes, we may indemnify our officers and directors against expenses
incurred by such persons in connection with any threatened, pending or completed action, suit or proceedings, whether civil, criminal,
administrative or investigative, involving such persons in their capacities as officers and directors, so long as such persons
acted in good faith and in a manner which they reasonably believed to be in our best interests. If the legal proceeding, however,
is by or in our right, the director or officer may not be indemnified in respect of any claim, issue or matter as to which he
is adjudged to be liable for negligence or misconduct in the performance of his duty to us unless a court determines otherwise.
Under
Nevada law, corporations may also purchase and maintain insurance or make other financial arrangements on behalf of any person
who is or was a director or officer (or is serving at our request as a director or officer of another corporation) for any liability
asserted against such person and any expenses incurred by him in his capacity as a director or officer. These financial arrangements
may include trust funds, self-insurance programs, guarantees and insurance policies.
Additionally,
our Bylaws, as amended and restated (“Bylaws”), state that we shall indemnify every (i) present or former director,
advisory director or officer of us, (ii) any person who while serving in any of the capacities referred to in clause (i) served
at our request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person
nominated or designated by (or pursuant to authority granted by) the Board of Directors or any committee thereof to serve in any
of the capacities referred to in clauses (i) or (ii) (each an “Indemnitee”).
Our
Bylaws provide that we shall indemnify an Indemnitee against all judgments, penalties (including excise and similar taxes), fines,
amounts paid in settlement and reasonable expenses actually incurred by the Indemnitee in connection with any proceeding in which
he was, is or is threatened to be named as a defendant or respondent, or in which he was or is a witness without being named a
defendant or respondent, by reason, in whole or in part, of his serving or having served, or having been nominated or designated
to serve, if it is determined that the Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the case of
conduct in his official capacity, that his conduct was in our best interests and, in all other cases, that his conduct was at
least not opposed to our best interests, and (c) in the case of any criminal proceeding, had no reasonable cause to believe that
his conduct was unlawful; provided, however, that in the event that an Indemnitee is found liable to us or is found liable on
the basis that personal benefit was improperly received by the Indemnitee, the indemnification (i) is limited to reasonable expenses
actually incurred by the Indemnitee in connection with the proceeding and (ii) shall not be made in respect of any proceeding
in which the Indemnitee shall have been found liable for willful or intentional misconduct in the performance of his duty to us.
Except
as provided above, the Bylaws provide that no indemnification shall be made in respect to any proceeding in which such Indemnitee
has been (a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted
from an action taken in the Indemnitee’s official capacity, or (b) found liable to us. The termination of any proceeding
by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative
that the Indemnitee did not meet the requirements set forth in clauses (a) or (b) above. An Indemnitee shall be deemed to have
been found liable in respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of
competent jurisdiction after exhaustion of all appeals therefrom. Reasonable expenses shall include, without limitation, all court
costs and all fees and disbursements of attorneys’ fees for the Indemnitee. The indemnification provided shall be applicable
whether or not negligence or gross negligence of the Indemnitee is alleged or proven.
Neither
our Bylaws nor our Articles of Incorporation include any specific indemnification provisions for our officers or directors against
liability under the Securities Act. Additionally, insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
On
May 31, 2018, the Company issued 4,300,000 shares of restricted common stock to Daniel Dror, valued $2,150,000, for organizational
and acquisition consulting services.
On
May 31, 2018, the Company issued 750,000 shares of restricted common stock to Everett Bassie, valued at $375,000, for the positions
as CFO and Director.
On
May 31, 2018, the Company issued 500,000 shares of restricted common stock to Charles Zeller, valued at $250,000, for Director
Fees.
On
May 31, 2018, the Company issued 750,000 shares of restricted common stock to Winfred Fields, valued at $375,000, for financial
and acquisition consulting services.
On
May 31, 2018, the Company issued 3,800,000 shares of restricted common stock to Robert Holden, valued at $1,900,000 in consideration
for services rendered as President, CEO and Director.
On
or around May 31, 2018, the Company sold an aggregate of 86,000 shares of restricted common stock to four accredited investors
in private transactions at $0.50 per share for gross proceeds of $43,000.
On
April 12, 2019, the Company issued 18,000,000 shares of the Company common stock to the members of Novopelle Diamond, LLC (“Novopelle”),
a Texas limited company, to acquire 100% of the membership interests of Novopelle. The three members of Novopelle Diamond who
received shares pursuant to the Share Exchange Agreement were (1) Jacob D. Cohen; (2) Esteban Alexander; and (3) Luis Alan Hernandez,
who each received six million shares pursuant to the Share Exchange.
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 a promissory note with a principal amount of $40,000 to a related party (the father of the Company’s
CEO, Jacob D. Cohen) in exchange for $40,000 in cash. The promissory note is unsecured, has a maturity date of June 21, 2020 and
accrues interest at the rate of 8% per annum until paid in full by the Company. Furthermore, the Company issued 50,000 shares
of the Company’s restricted common stock to the related party investor as further consideration to enter into the loan with
the Company.
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
June 27, 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 restricted common
stock.
On
July 8, 2019, the Company issued a convertible promissory note with a principal amount of $40,000 to a non-related third party
in exchange for $40,000 in cash. The promissory note is unsecured, has a maturity date of July 8, 2020 and accrues interest at
the rate of 8% per annum until paid in full by the Company. In the event that the Company filed, and had qualified by the SEC,
an offering Statement under Regulation A (“Offering Statement”) of the Securities Act in order to sell shares
of its common stock, the holder of the note had the right to convert all or any portion of the principal amount and interest due
on the note into shares of common stock through the Offering Statement during the term of the Offering Statement, which Offering
Statement has been qualified.
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 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”). Pursuant
to the Employment Agreement, Mr. Dickens will receive an annual base salary of $120,000 and shall receive an equity grant in the
amount of 1,000,000 shares of the Company’s common stock (the “Equity Shares”) pursuant to a vesting
period of one-year, of which: 500,000 shares on January 1, 2020, 250,000 shares on May 22, 2020, and 250,000 shares on July 1,
2020.
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.
On
November 1, 2019, the Company issued 300,000 shares of the Company’s common stock to eligible persons under the Plan.
On
November 11, 2019, the Company issued 30,000 shares of the Company’s common stock to eligible persons under the Plan.
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 (less $7,500
of Adar Alef’s legal fees as discussed below)(the “Adar Alef Note”). The Adar Alef Note accrues interest
at a rate of 8% per annum (24% upon the occurrence of an event of default) and has a maturity date of February 24, 2021. Adar
Alef may in its option, convert the outstanding principal and interest on the Adar Alef Note into shares of our common stock at
a conversion price per share equal to 60% of the lowest daily volume weighted average price (“VWAP”) of our
common stock during the 10 days trading days prior to, and including, the date of conversion. The 40% discount discussed above
is automatically increased to 50% in the event we experience a depository trust company ‘chill’ on our common stock.
Additionally, in the event that we are not ‘current’ in our filings with the Securities and Exchange Commission, six
months after the date of the note, the conversion price decreases to the lowest closing bid price of our common stock during the
delinquency period, less the applicable percentage discount discussed above. The conversion discount, look back period and other
terms of the Adar Alef Note are adjustable on a ratchet basis if the Company offers any more favorable terms to any other note
holder after the date of the Adar Alef Note. At no time may the Adar Alef Note be converted into shares of our common stock if
such conversion would result in Adar Alef and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding
shares of our common stock, which amount may be increased to 9.9% upon 60 days’ prior written notice.
On
January 13, 2020, the Company executed a Data Delivery and Ancillary Services Agreement with a third party, pursuant to which
the Company issued 357,142 shares of the Company’s restricted common stock to the third party in exchange of sector-specific
consumer records and data to be utilized for marketing purposes provided by the third party and the ancillary advisory services
such as data cleaning, data emailing, lead generation campaigns, social media management. The shares were valued at $0.56 per
share or $200,000 based on the market price at the grant date.
On
January 17, 2020, the Company issued 62,500 shares of restricted common stock 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 cash of $25,000 on November 26, 2019 which was recorded as common stock payable as of December
31, 2019. The shares issued to the investor are part of the 10,000,000 shares qualified and registered in connection with the
Company, Regulation A offering, in which the Company offered for sale up to 10,000,000 shares of common stock at $0.50 per share
(the “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 28, 2020, the Company issued 160,000 common shares to an investor in exchange for $46,500 in cash, net of offering costs,
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 the 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 2, 2020, the Company issued 40,000 shares of common stock 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. The shares issued
to the investor are part of the 10,000,000 Shares offered and registered by the Company under the Offering Statement.
On
April 20, 2020, the Company entered into a Securities Purchase Agreement with Geneva Roth Remark Holdings, Inc. (“Geneva
Roth”), an accredited investor, pursuant to which the Company sold Geneva Roth a convertible promissory note in the
principal amount of $88,000 (the “Geneva Roth Note”). The Geneva Roth Note 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. Geneva Roth may in its option,
at any time beginning 180 days after the date of the note, convert the outstanding principal and interest on the Geneva Roth Note
into shares of our common stock at a conversion price per share equal to 61% of the lowest daily volume weighted average price
(“VWAP”) of our common stock during the 10 days trading days prior to the date of conversion. We agreed to
reserve a number of shares of our common stock equal to 6 times the number of shares of common stock which may be issuable upon
conversion of the Geneva Roth Note at all times. At no time may the Geneva Roth Note be converted into shares of our common stock
if such conversion would result in Geneva Roth and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding
shares of our common stock.
On
April 30, 2020, we 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. FirstFire may in its option, at any time, convert the outstanding principal and interest
on the FirstFire Note into shares of our common stock at a conversion price per share equal to $0.50 per share for the first 180
days that the FirstFire Note is outstanding and the lower of (a) $0.50 per share; and (b) 60% of the lowest VWAP of our common
stock during the 10 days trading days prior to the date of conversion (the “Variable Conversion Rate”), thereafter,
subject to adjustment in the case of certain fundamental transactions. In the event we have a DTC “Chill” on
our shares, an additional discount of 10% will apply to the Variable Conversion Rate while that “Chill” is
in effect. The FirstFire Note includes anti-dilution protection such that if we, at any time while the note is outstanding, issue
any shares or are deemed to have issued any shares at a price per share less than the applicable conversion price of such FirstFire
Note, then FirstFire has the option to reduce such conversion price to such lower price, subject to certain exceptions. The conversion
discount of the Variable Conversion Rate of the FirstFire Note is adjustable upward by 15% (cumulative for the occurrence of each
such event) upon the occurrence of certain events described in the FirstFire Note including in the event (a) our common stock
cannot be delivered via DWAC; (b) we cease to report with the Securities and Exchange Commission; (c) we fail to maintain DTC
eligibility; (d) the conversion price is below $0.01 per share; (e) we do not have sufficient authorized shares to allow for any
conversion; and (f) certain other events described in the FirstFire Note occur. In addition, upon the occurrence of any events
described in the immediately preceding sentence (and after each such event), FirstFire can increase the amount of the FirstFire
Note by $10,000. At no time may the FirstFire Note be converted into shares of our common stock if such conversion would result
in FirstFire and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock,
which amount may be increased to 9.9% upon 60 days’ prior written notice.
On
May 15, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with Global Career Networks
Inc, a Delaware corporation (the “Seller”), 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 the Seller. Life Guru owns the website
www.LifeGuru.me – a website dedicated to providing an online platform to connect consumers to a variety of mentors, professionals,
life coaches and career coaches, which was under development. As consideration for the purchase of the 51% ownership interest
in Life Guru, the Company issued the Seller 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 the Seller up to an additional 1,500,000 shares of
Series B Convertible Preferred Stock (with an agreed upon value of $1,500,000) upon the following milestones, provided that such
milestones are met prior to the earlier of (i) May 15, 2021; 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 a thirty
(30) day period:
(a)
500,000 Series B Convertible Preferred Stock shares upon completion of the fully operational LifeGuru.me website;
(b)
500,000 Series B Convertible Preferred Stock shares upon such time as 300 coaches have signed up at LifeGuru.me; and
(c)
500,000 Series B Convertible Preferred Stock shares upon such time as 1,000 coaches have signed up at LifeGuru.me.
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 of the Company’s
common, for the five trading days immediately preceding the date the notice of conversion is received, with any remainder rounded
to the hundredths place.
Notwithstanding
the above, at no time may the Series B Preferred Stock be converted into shares of our common stock by any holder, if such conversion
would result in such holder thereof and its affiliates owning an aggregate of in excess of 4.999% of the then outstanding shares
of our common stock, which amount may be increased to 9.999% on a per holder basis, upon 61 days’ prior written notice.
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, owned in aggregate 68% of the Company’s outstanding common stock prior to such issuance, and therefore controlled
the Company prior to such issuance.
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. Geneva Roth may in its option, at any time beginning 180 days after the date of the note, convert the outstanding
principal and interest on the Geneva Roth Note #2 into shares of our common stock at a conversion price per share equal to 61%
of the lowest daily volume weighted average price of our common stock during the 10 days trading days prior to the date of conversion.
At no time may the Geneva Roth Note #2 be converted into shares of our common stock if such conversion would result in Geneva
Roth and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.
On
May 22, 2020, (a) in consideration for Mr. Jacob D. Cohen’s past services rendered as President and Chief Executive Officer
of the Company, and in further consideration of the liability he has incurred in his capacity as President and Chief Executive
Officer of the Company, and (b) in consideration for Mr. Esteban Alexander’s past services rendered as Chief Operating Officer
of the Company, and in further consideration of the liability he has incurred in his capacity as Chief Operating Officer of the
Company, the Company issued Mr. Cohen and Mr. Alexander each a one-time bonus of 3,000,000 shares of the Company’s restricted
common stock (6,000,000 in total), which shares vested immediately.
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 into common 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.
On
July 27, 2020, the Company issued 1,030,808 restricted common shares to an investor in exchange for $77,929 of principal and accrued
interest owed under the terms and conditions of that convertible note as issued to Fourth Man, LLC dated October 28, 2019. After
this conversion, the balance owed under the convertible note is $0.
On
July 27, 2020, the Company issued 1,119,309 restricted common shares to an investor in exchange for $84,620 of principal and accrued
interest owed under the terms and conditions of that convertible note as issued to Armada Capital Partners, LLC dated October
28, 2019. After this conversion, the balance owed under the convertible note is $0.
On
July 27, 2020, the Company issued 1,119,309 restricted common shares to an investor in exchange for $84,620 of principal and accrued
interest owed under the terms and conditions of that convertible note as issued to BHP Capital NY, Inc. dated October 28, 2019.
After this conversion, the balance owed under the convertible note is $0.
On
June 8, 2020, the Company issued 125,000 shares of the Company’s common stock to eligible persons under the 2019 Stock Option
and Incentive Plan (the “Plan”). The shares were valued at $0.27 per share or $33,750.
On
August 5, 2020, we entered into a Securities Purchase Agreement with Geneva Roth Remark Holdings, Inc., an accredited investor,
pursuant to which the Company sold Geneva Roth a convertible promissory note in the principal amount of $53,000 (the “Geneva
Roth Note #3”). The Geneva Roth Note #3 accrues interest at a rate of 8% per annum (22% upon the occurrence of an event
of default) and has a maturity date of November 5, 2021. Geneva Roth may in its option, at any time beginning 180 days after the
date of the note, convert the outstanding principal and interest on the Geneva Roth Note #3 into shares of our common stock at
a conversion price per share equal to 61% of the lowest daily volume weighted average price of our common stock during the 10
days trading days prior to the date of conversion. We agreed to reserve a number of shares of our common stock equal to the number
of shares of common stock which may be issuable upon conversion of the Geneva Roth Note #3 at all times. At no time may the Geneva
Roth Note #3 be converted into shares of our common stock if such conversion would result in Geneva Roth and its affiliates owning
an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.
On
August 11, 2020, we sold LGH Investments, LLC (“LGH”) a convertible promissory note in the principal amount
of $105,000 (the “LGH Note”). The LGH Note included a $5,000 originally issuance discount. The LGH Note 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 11, 2021. LGH
may in its option, at any time convert the outstanding principal and interest on the LGH Note into shares of our common stock
at a conversion price per share equal to the lesser of (a) $0.50 per share; and (b) 60% of the lowest daily volume weighted average
price of the Company’s common stock on the ten trading days prior to the date of conversion. We agreed to reserve a number
of shares of our common stock equal to three times the number of shares of common stock which may be issuable upon conversion
of the LGH Note at all times. At no time may the LGH Note be converted into shares of our common stock if such conversion would
result in LGH and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock,
provided that such percentage automatically increases to 9.99% if our market capitalization falls below $2.5 million.
On
August 21, 2020, the Company issued 330,689 common shares to an investor in exchange for $25,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to GHS Investments, LLC dated October 10, 2019.
On
August 24, 2020, the Company issued 895,722 common shares to an investor in exchange for $109,278 of principal and accrued interest
owed under the terms and conditions of that promissory note as issued to Isaak Cohen (the father of our Chief Executive Officer
and director, Jacob D. Cohen), dated September 9, 2019. After this conversion, the balance owed under the promissory note is $0.
On
August 26, 2020, the Company issued 242,407 common shares to an investor in exchange for $31,792 of principal and accrued interest
owed under the terms and conditions of that promissory note as issued to Bradley Stewart, dated May 17, 2019. After this conversion,
the balance owed under the promissory note is $0.
On
August 28, 2020, the Company issued 895,722 common shares to settle a Note with an unrelated party. The shares were valued at
$0.33 per share based on the market price at the settlement date.
On
September 8, 2020, the Company issued 330,689 common shares to an investor in exchange for $25,000 of principal and accrued interest
owed under the terms and conditions of that convertible note, dated October 15, 2019. After this conversion, the balance owed
under the convertible note is $33,888.
On
September 14, 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 #4”). The
Geneva Roth Note #4 accrues interest at a rate of 8% per annum (22% upon the occurrence of an event of default) and has a maturity
date of December 14, 2021. Geneva Roth may in its option, at any time beginning 180 days after the date of the note, convert the
outstanding principal and interest on the Geneva Roth Note #4 into shares of our common stock at a conversion price per share
equal to 61% of the average of the two lowest daily volume weighted average prices of our common stock during the 10 days trading
days prior to the date of conversion. At no time may the Geneva Roth Note #4 be converted into shares of our common stock if such
conversion would result in Geneva Roth and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares
of our common stock.
On
October 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.
On
October 12, 2020, the Company issued 136,687 common shares to an investor in exchange for $12,818 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
October 12, 2020, the Company entered into a Securities Purchase Agreement with Quick Capital LLC an accredited investor (“Quick
Capital”), pursuant to which the Company sold Quick Capital a convertible promissory note in the principal amount of
$56,750 (the “Quick Capital Note”) in consideration for a $52,750 payment. The principal amount of the Quick
Capital Note includes an advancement of legal fees equal to Quick Capital of $2,750 and carries a lump-sum interest payment for
the entire twelve (12) months of the note, at eight percent (8%) per annum, equal to $4,000 which was capitalized upon the entry
into the note. The Quick Capital Note has a maturity date of October 12, 2021. Among other requirements, the Securities Purchase
Agreement requires us to cause the par value of our common stock to be reduced below $0.00001, if the closing bid price of our
common stock shall ever fall below $0.001 per share. Upon an event of default, the Quick Capital Note accrues interest at the
lesser of 24% per annum and the highest rate provided by law. Quick Capital may in its option, at any time after the date of the
note, convert the outstanding principal and interest on the Quick Capital Note into shares of our common stock at a conversion
price per share equal to the lesser of a) $0.50 per share, b) 60% (the “Discount”) of the lowest daily volume
weighted average price per share of our common stock during the 10 days trading days prior to the date of conversion; and c) 60%
of the lowest daily VWAP of our common stock during the 10 days trading days prior to the date of the Quick Capital Note. The
conversion price is adjustable downward if within three business days of the date of any conversion notice, the Company’s
common stock has a closing bid price 5% or lower than the conversion rate set forth in the notice of conversion. The Discount
decreases by 10% in the event the Company’s common stock is not eligible to be delivered via DWAC and decreases by an additional
15% if the Company’s common stock is ‘chilled’ by the DTC system (while such ‘chill is in place’).
Separately, if the Company ceases to be a reporting company or the note cannot be converted into free trading shares 181 days
after the date of the note, the Discount decreases by an additional 15%. Quick Capital can deduct $750 from each conversion amount
to cover its deposit fees. The conversion rate is also subject to a favored nations provision (subject to certain exceptions),
allowing Quick Capital to use any more favorable conversion terms of other parties converting securities of the Company. The conversion
rate is also further adjustable in the event of the occurrence of certain major transaction announcements. In the event the conversion
price falls below $0.01 per share at any time, the Discount is lowered to 40% and $15,000 is added to the principal amount of
the note. We are also required to pay certain penalties in the event we fail to timely deliver stock upon conversion of the Quick
Capital Note. At no time may the Quick Capital Note be converted into shares of our common stock if such conversion would result
in Quick Capital and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.
On
October 12, 2020, the Company issued 136,687 common shares to an investor in exchange for $12,818 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
October 19, 2020, the Company issued 323,322 common shares to an investor in exchange for $18,682 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
October 21, 2020, the Company issued 416,667 common shares to an investor in exchange for $30,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to GHS Investments, LLC, dated October 10, 2020.
On
October 26, 2020, the Company issued 340,716 common shares to an investor in exchange for $20,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth Remark Holdings, Inc., dated April 20, 2020.
On
November 3, 2020, the Company issued 520,833 common shares to an investor in exchange for $26,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
November 3, 2020, the Company issued 492,126 common shares to an investor in exchange for $20,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth, dated April 20, 2020.
On
November 9, 2020, the Company issued 688,976 common shares to an investor in exchange for $20,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth, dated April 20, 2020.
On
November 10, 2020, the Company issued 721,154 common shares to an investor in exchange for $36,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
November 13, 2020, the Company issued 480,769 common shares to an investor in exchange for $24,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
November 22, 2020, the Company issued 480,000 common shares to an investor in exchange for $25,000 of principal and accrued interest
owed under the terms and conditions of that certain convertible note as issued to FirstFire Global Opportunities Fund LLC, dated
April 30, 2020.
On
December 2, 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 $83,000 (the “Geneva Roth Note #5”). The
Geneva Roth Note #5 accrues interest at a rate of 8% per annum (22% upon the occurrence of an event of default) and has a maturity
date of March 2, 2022. Geneva Roth may in its option, at any time beginning 180 days after the date of the note, convert the outstanding
principal and interest on the Geneva Roth Note #5 into shares of our common stock at a conversion price per share equal to 61%
of the average of the two lowest daily volume weighted average prices of our common stock during the 10 days trading days prior
to the date of conversion. At no time may the Geneva Roth Note #5 be converted into shares of our common stock if such conversion
would result in Geneva Roth and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our
common stock.
On
December 2, 2020, the Company issued 716,527 common shares to an investor in exchange for $35,769 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to GHS Investments, LLC, dated October 10, 2020.
On
December 2, 2020, the Company issued 889,054 common shares to an investor in exchange for $40,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Adar Alef, LLC, dated February 24, 2020.
On
December 2, 2020, the Company issued 622,000 common shares to an investor in exchange for $31,100 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to GreenTree Financial Group, Inc., dated August 26, 2019.
On
December 2, 2020, the Company issued 1,031,000 common shares to an investor in exchange for $84,200 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to FirstFire Global Opportunities Fund LLC, dated April
30, 2020.
On
December 12, 2020, the Company issued 2,501,378 common shares to an investor in exchange for $195,108 of principal and accrued
interest owed under the terms and conditions of that promissory note as issued to Daniel Dror, dated April 12, 2019.
On
December 12, 2020, the Company issued 412,580 common shares to an investor in exchange for $35,000 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth, dated April 20, 2020.
On
December 18, 2020, the Company issued 297,900 common shares to an investor in exchange for $25,968 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth, dated April 20, 2020.
On
December 18, 2020, the Company issued 975,117 common shares to an investor in exchange for $85,000 of principal and accrued interest
owed under the terms and conditions of that promissory note as issued to Daniel Dror, dated April 12, 2019.
On
December 18, 2020, the Company issued 500,000 shares of the Company’s common stock in consideration for consulting services.
The shares were valued at $0.08 per share, or $40,000 based on the market price on the date of issuance.
On
December 30, 2020, the Company issued 683,791 common shares to an investor in exchange for $86,217 of principal and accrued interest
owed under the terms and conditions of that convertible note as issued to Geneva Roth, dated May 19, 2020.
On
December 30, 2020, the Company issued 889,979 common shares to an investor in exchange for $72,657 of principal and accrued interest
owed under the terms and conditions of that promissory note as issued to David Morales, dated October 18, 2019.
On
December 30, 2020, the Company issued 376,704 common shares to an investor in exchange for $30,777 of principal and accrued interest
owed under the terms and conditions of that promissory note as issued to Asia Pacific Partners, Inc., dated June 24, 2020.
On
January 6, 2021 (the “Closing Date”), the Company closed the transactions contemplated by a Securities Purchase
Agreement dated January 6, 2021 (the “Purchase Agreement”), which was entered into with a group of accredited
institutional investors (collectively, the “Investors”), for the sale of convertible promissory notes. Pursuant
to the Purchase Agreement, the Company agreed to sell 6% Original Issue Discount Senior Secured Convertible Promissory Notes in
an aggregate principal amount of $1,450,000 (the “Notes”) and warrants to purchase up to an aggregate of 6,750,000
shares of the Company’s common stock (the “Warrants”) to the Investors and entered into a Security Agreement,
a Guaranty Agreement, a Pledge Agreement, and a Registration Rights Agreement (the foregoing, collectively with the Purchase Agreement,
Notes and Warrant, the “Transaction Documents”). The Purchase Agreement includes indemnification obligations
of the Company, requirements for the Company to reserve three times the number of shares of common stock issuable upon conversion
of the Notes and exercise of the Warrants, the right of the Investors to participate up to 30% in any future equity or debt offering
made by the Company in the 12 months after the Closing Date, a prohibition on the Company selling any shares of common stock or
common stock equivalents until 30 days after the Closing Date, subject to certain exceptions, a one year prohibition on the Company
entering into any equity line transaction or variable rate transaction (including convertible notes with adjustable conversion
prices), and a one year prohibition, without the approval of the Investors, of a reverse or forward stock split.
A
total of $850,000 in Notes (the “First Tranche Notes”) were sold on the Closing Date, and a total of $600,000
in Notes (the “Second Tranche Notes”), are required to be purchased by the Investors 50 days after the effective
date of a Registration Statement filed by the Company with the Securities and Exchange Commission to register the resale of the
shares of common stock issuable upon exercise of the Warrants, subject to certain other closing conditions, including, the Company
maintaining at least a $0.12 per share stock price and $50,000 per day trading volume (each during the 10 prior trading days prior
to the second closing), and that prior to the trading day before the closing date for the sale of the Second Tranche Notes, the
outstanding balance of principal and interest due under the Notes which would be outstanding immediately after the closing of
the sale of the Second Tranche Notes, do not exceed 15% of the market capitalization of the Company. In connection with the sale
of the First Tranche Notes, the Company paid $25,000 of the Investors’ legal fees and certain other amounts in expense reimbursements.
The
First Tranche Notes mature on January 7, 2022 and accrue interest at a rate of 6% per annum (15% upon the occurrence of an event
of default) payable to the Investors in cash on a calendar quarterly basis (which changes to monthly upon the occurrence of an
event of default). Each of the Notes contained a 6% original issue discount.
The
First Tranche Notes are convertible into shares of the Company’s common stock at any time, at a rate equal to the lesser
of (i) $0.50 per share and (ii) 75% of the lowest daily volume-weighted average price (VWAP) of the Company’s common stock
during the seven consecutive trading days prior to the delivery of a conversion notice (the “Market Price”),
but not less than 75% of the VWAP on the Closing Date. The Second Tranche Notes are convertible into shares of the Company’s
common stock at a rate equal to the lesser of (1) the VWAP on the closing date of the Second Tranche Notes or (2) the Market Price,
but not less than 75% of the VWAP on the Second Tranche closing date. However, if while any Notes are outstanding and the daily
VWAP on any of seven consecutive trading days is less than the applicable floor price(s), such floor price(s) are reduced (but
not increased) to 75% of the VWAP on the seventh trading day.
The
conversion price of the Notes may be adjusted upon the occurrence of certain events and the Notes may be declared immediately
due and payable by the Investors in the event the Company defaults on any terms of the Notes or the other Transaction Documents.
Additionally, at the option of the Investors, upon the occurrence of any event of default, the Investors can elect to convert
the Notes at the lower of the stated conversion price and a conversion price equal to 70% of the lowest closing bid price of the
common stock during the 10 consecutive trading day period ending and including the date of delivery or deemed delivery of any
applicable conversion notice (the “Alternative Conversion Price”). The Notes contain penalties for the Company’s
failure to timely deliver shares due upon conversion thereof. The Notes contain provisions limiting each Investor’s ability
to convert any portion of its individual Note if such conversion would cause the Investor’s (or any affiliate of any such
Investor) holdings in the Company to exceed 9.99% of the Company’s issued and outstanding shares of common stock. The Notes
contain customary events of default, which include any default of $30,000 of more of indebtedness of the Company, final judgements
equal to or greater than $75,000 rendered against the Company, and the Company’s failure to comply with the reporting obligations
of the Securities Exchange Act of 1934, as amended. Upon the occurrence of an event of default, at the option of the holder thereof,
the amount of the Note increases by 110% (including principal and accrued interest) (plus 2% additional for each event of default
that occurs thereafter). The Notes contain certain rights of the holders thereof upon the occurrence of a change of control or
fundamental transaction, each as described in greater detail therein.
The
Warrants are exercisable at various prices with (i) Warrants to purchase 2,250,000 shares of common stock exercisable at $0.20
per share, (ii) Warrants to purchase 2,250,000 shares of common stock exercisable at $0.35 per share, and (iii) Warrants to purchase
2,250,000 shares of common stock exercisable at $0.50 per share. All of the Warrants may be exercised via cashless exercise in
the event that the shares underlying the Warrants are not registered within 180 days of the closing of the transaction. The Warrants,
if not exercised by such date, terminate on January 7, 2026. The Warrants contain provisions limiting each Investor’s ability
to exercise the Warrants if such exercise would cause the Investor’s (or any affiliate of any such Investor) holdings in
the Company to exceed 9.99% of the Company’s issued and outstanding shares of common stock. The Warrants are only exercisable
by each applicable Investor if such Investor purchases its applicable Second Tranche Note. We may prepay the Notes (provided we
treat all Note holders equally) by paying 110% of the principal and interest thereon at any time (provided we are required to
provide the holders 15 days prior written notice of such repayment, and during which time period the holder may convert the Note
into common stock). Unless the Company’s common stock is listed on the NYSE, the NYSE American, the Nasdaq Capital Market,
Nasdaq Global Market or Nasdaq Global Select, at any time the Company issues common stock or common stock equivalents, subject
to certain exceptions, below the then exercise price, the exercise price of the Warrants reset to the lower of such dilutive issuance
or the VWAP on the next trading day following the first public disclosure of such dilutive issuance. Upon an event of default,
the exercise price of the Warrants, at the option of the Investors, is the Alternative Conversion Price. If the Company undertakes
a fundamental transaction and the successor entity is not a publicly-traded company, the holders of the Warrants have the right
to require the Company to pay the greater of (a) the Black Scholes Value of the warrants; and (b) the positive difference between
the consideration payable in such fundamental transaction minus the exercise price.
On
January 12, 2021, the Company issued 708,750 common shares to an investor in exchange for $114,392 of principal and accrued interest
owed under the terms and conditions of that promissory note as issued to LGH Investments, LLC., dated August 11, 2020.
On
January 13, 2021, the Company issued 105,000 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
January 21, 2021, the Company agreed to issue 4,000,000 shares of common stock to Mr. Rodriquez under the terms of his employment
agreement, 1,500,000 million shares of common stock to Mr. Bowen under the terms of his employment agreement and 1,000,000 shares
to David M. Loev, the managing partner of The Loev Law Firm, PC, the Company’s securities counsel, who is also the brother-in-law
of Jacob D. Cohen, the Company’s sole officer and director, under the terms of the reduced fee agreement. The securities
issued to the Company’s legal counsel are subject to a two-year lock-up agreement, preventing the sale or transfer of such
shares without the written approval of the Company, except to affiliates of the holder, who agree to be bound by the same terms.
On
January 22, 2021, Mr. Jacob D. Cohen, as the sole member of the Board of Directors of the Company, approved the issuance to himself,
in consideration for services rendered as the sole officer and director of the Company, of 2,500,000 shares of restricted common
stock. The securities are subject to a two-year lock-up agreement, preventing the sale or transfer of such shares without the
written approval of the Company, except to affiliates of the holder, who agree to be bound by the same terms.
On
January 22, 2021, the Company issued 400,000 shares of the Company’s common stock in consideration for consulting services.
The shares were valued at $0.38 per share, or $152,000 based on the market price on the date of issuance.
On
January 22, 2021, the Company issued 200,000 common shares to an investor in exchange for $94,500 in cash, net of offering costs.
The shares issued to the investor are part of the 10,000,000 Shares offered and registered by the Company under the Offering Statement.
*
* * * * * *
The
issuances and grants described above, except as otherwise disclosed, or set forth below, were exempt from registration pursuant
to Section 4(a)(2), Rule 506 of Regulation D and/or Regulation S of the Securities Act, since the foregoing issuances and grants
did not involve a public offering, the recipients took the securities for investment and not resale, we took take appropriate
measures to restrict transfer, and the recipients were (a) “accredited investors”; (b) had access to similar
documentation and information as would be required in a Registration Statement under the Securities Act; (c) were non U.S. persons;
and/or (d) were officers or directors of the Company. The securities are subject to transfer restrictions, and the certificates
evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities
Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. The securities were not registered
under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption
from registration under the Securities Act and any applicable state securities laws.
We
claim an exemption from registration afforded by Section 3(a)(9) of the Securities Act, for the above conversions, as the securities
were exchanged by the Company with its existing security holders exclusively in transactions where no commission or other remuneration
was paid or given directly or indirectly for soliciting such exchange.
ITEM
16. EXHIBITS
(a)
Exhibits Pursuant to Item 601 of Regulation S-K:
EXHIBIT
INDEX
|
|
|
|
Incorporated by Reference
|
Exhibit
No.
|
|
Description
|
|
Form
|
|
File
No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
2.1
|
|
Share Exchange Agreement, dated as of April 12, 2019 by and among American Holdings International Corp., Novopelle Diamond, LLC and the Novopelle Members
|
|
8-K
|
|
000-50912
|
|
1.1
|
|
6/7/2019
|
|
|
2.2
|
|
Securities Purchase Agreement dated May 15, 2020, by and between American International Holdings Corp., as purchaser and Global Career Networks Inc, as seller, relating to the sale of 51% of Life Guru, Inc.
|
|
8-K
|
|
000-50912
|
|
2.1
|
|
5/21/2020
|
|
|
3.1
|
|
Articles of Incorporation, as amended
|
|
10-K
|
|
000-50912
|
|
3.1
|
|
6/26/2020
|
|
|
3.2
|
|
Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock of International American Technologies, Inc.
|
|
SB-2
|
|
333-138902
|
|
4(iii)1
|
|
11/22/2006
|
|
|
3.3
|
|
Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock of International American Technologies, Inc.
|
|
SB-2
|
|
333-138902
|
|
4(iiii)2
|
|
11/22/2006
|
|
|
3.4
|
|
Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock of Hammons Industries, Inc.
|
|
8-K
|
|
000-50912
|
|
4(iii)3
|
|
9/26/2007
|
|
|
3.5
|
|
Amended and Restated Certificate of Designations of American International Holdings Corp. Establishing the Designations, Preferences, Limitations and Relative Rights of Its Series a Preferred Stock, filed with the Secretary of State of Nevada on May 18, 2020
|
|
8-K
|
|
000-50912
|
|
3.1
|
|
5/21/2020
|
|
|
3.6
|
|
Amended and Restated Certificate of Designation of American International Holdings Corp. Establishing the Designation, Preferences, Limitations and Relative Rights of Its Series B Convertible Preferred Stock, filed with the Secretary of State of Nevada on May 18, 2020
|
|
8-K
|
|
000-50912
|
|
3.2
|
|
5/21/2020
|
|
|
3.7
|
|
Certificate of Withdrawal of Certificate of Designation of Series C Convertible Preferred Stock filed with the Secretary of State of Nevada on May 18, 2020
|
|
8-K
|
|
000-50912
|
|
3.3
|
|
5/21/2020
|
|
|
3.8
|
|
Bylaws of Unlimited Coatings Corporation
|
|
10-SB/12G
|
|
000-50912
|
|
3(ii)
|
|
8/18/04
|
|
|
5.1
|
|
Form of Opinion and consent of The Loev Law Firm, PC re: the legality of the securities being registered
|
|
|
|
|
|
|
|
|
|
X
|
10.1
|
|
Exclusive License Agreement, dated as of June 27, 2019 by and among American Holdings International Corp., and Novo MedSpa Addison Corporation
|
|
8-K
|
|
000-50912
|
|
1.1
|
|
7/05/2019
|
|
|
10.2***
|
|
American Holdings International Corp. 2019 Employee Stock Option Plan, dated July 5, 2019
|
|
8-K
|
|
000-50912
|
|
1.1
|
|
7/8/2019
|
|
|
10.3***
|
|
Employment Agreement, dated as of October 1, 2019 by and among American Holdings International Corp., and Jesse L. Dickens, Jr.
|
|
8-K
|
|
000-50912
|
|
1.1
|
|
10/8/2019
|
|
|
10.4
|
|
Asset Purchase Agreement and Promissory Note, dated as of October 18, 2019 by and among Legend Nutrition, Inc. and David Morales.
|
|
8-K
|
|
000-50912
|
|
1.1
|
|
11/13/2019
|
|
|
10.5***
|
|
Employment Agreement, dated as of October 18, 2019 by and among Legend Nutrition, Inc. and Michael Ladner
|
|
8-K
|
|
000-50912
|
|
1.2
|
|
11/13/2019
|
|
|
10.6
|
|
Lease Agreement, dated as of November 6, 2019 by and among Novopelle Waterway, Inc. and 20 & 25 Waterway Holdings, LLC
|
|
8-K
|
|
000-50912
|
|
1.1
|
|
11/15/2019
|
|
|
10.7
|
|
Share Exchange Agreement and Promissory Note, dated as of April 12, 2019, by and between American Holdings International Corp. and Daniel Dror
|
|
8-K
|
|
000-50912
|
|
10.1
|
|
6/7/2019
|
|
|
10.8
|
|
Share Exchange Agreement and Promissory Note, dated as of April 12, 2019, by and between American Holdings International Corp. and Winfred Fields
|
|
8-K
|
|
000-50912
|
|
10.2
|
|
6/7/2019
|
|
|
10.9
|
|
Share Exchange Agreement and Promissory Note, dated as of April 12, 2019, by and between American Holdings International Corp. and Everett Bassie
|
|
8-K
|
|
000-50912
|
|
10.3
|
|
6/7/2019
|
|
|
10.10
|
|
Share Exchange Agreement and Promissory Note, dated as of April 12, 2019, by and between American Holdings International Corp. and Charles Zeller
|
|
8-K
|
|
000-50912
|
|
10.4
|
|
6/7/2019
|
|
|
10.11***
|
|
Executive Employment Agreement, dated as of April 12, 2019, by and between American Holdings International Corp. and Jacob D. Cohen
|
|
8-K
|
|
000-50912
|
|
10.5
|
|
6/7/2019
|
|
|
10.12***
|
|
Executive Employment Agreement, dated as of April 12, 2019, by and between American Holdings International Corp. and Esteban Alexander
|
|
8-K
|
|
000-50912
|
|
10.6
|
|
6/7/2019
|
|
|
10.13***
|
|
Executive Employment Agreement, dated as of April 12, 2019, by and between American Holdings International Corp. and Alan Hernandez
|
|
8-K
|
|
000-50912
|
|
10.7
|
|
6/7/2019
|
|
|
10.14***
|
|
Financial and Accounting Consulting Agreement, dated as of May 3, 2019, by and between American Holdings International Corp. and Everett Bassie
|
|
8-K/A
|
|
000-50912
|
|
10.8
|
|
8/15/2019
|
|
|
10.15***
|
|
Sample Stock Option Award and Stock Option Agreement under 2019 Employee Stock Option Plan
|
|
S-8
|
|
333-232638
|
|
4.2
|
|
7/12/2020
|
|
|
10.16
|
|
$78,750 Convertible Promissory Note dated October 28, 2019 payable to Armada Capital Partners LLC
|
|
1-A Pos
|
|
024-11080
|
|
6.11
|
|
12/16/2019
|
|
|
10.17
|
|
$78,750 Convertible Promissory Note dated October 28, 2019 payable to Fourth Man LLC
|
|
1-A Pos
|
|
024-11080
|
|
6.11
|
|
12/16/2019
|
|
|
10.18
|
|
$78,750 Convertible Promissory Note dated October 28, 2019 payable to BHP Capital NY Inc.
|
|
1-A Pos
|
|
024-11080
|
|
6.11
|
|
12/16/2019
|
|
|
10.19
|
|
Jesse L. Dickens, Jr. employment agreement with Capitol City Solutions USA, Inc. dated October 1, 2019
|
|
8-K
|
|
024-11080
|
|
1.1
|
|
10/8/2019
|
|
|
10.20
|
|
Legend Nutrition, Inc. Asset Acquisition Agreement and Related Promissory Note dated October 18, 2019
|
|
8-K
|
|
000-50912
|
|
1.1
|
|
11/13/2019
|
|
|
10.21***
|
|
Employment Agreement between Legend Nutrition, Inc. and Michael Ladner dated October 18, 2019
|
|
8-K
|
|
000-50912
|
|
1.2
|
|
11/13/2019
|
|
|
10.22
|
|
$75,000 Promissory Note Issued October 11, 2019, evidencing amounts owed to GHS Investments, LLC
|
|
1-A Pos
|
|
024-11080
|
|
6.15
|
|
12/16/2019
|
|
|
10.23
|
|
Services Agreement and Promissory Note dated August 26, 2019 with Greentree Financial Group, Inc.
|
|
1-A Pos
|
|
024-11080
|
|
6.17
|
|
1/9/2019
|
|
|
10.24
|
|
$40,000 Promissory Note with Isaak Cohen dated June 21, 2019
|
|
1-A Pos
|
|
024-11080
|
|
6.18
|
|
1/9/2019
|
|
|
10.25
|
|
$40,000 Promissory Note with Megan Amason dated July 8, 2019
|
|
1-A Pos
|
|
024-11080
|
|
6.19
|
|
1/9/2019
|
|
|
10.26
|
|
Form of Subscription Agreement for the Company’s Regulation A Offering
|
|
1-A
|
|
024-11080
|
|
4.1
|
|
9/23/2019
|
|
|
10.27
|
|
Securities Purchase Agreement between Adar Alef, LLC and American International Holdings Corp., dated February 24, 2020
|
|
8-K
|
|
000-50912
|
|
10.1
|
|
3/4/2020
|
|
|
10.28
|
|
Convertible Promissory Note between Adar Alef, LLC and American International Holdings Corp., dated February 24, 2020
|
|
8-K
|
|
000-50912
|
|
10.2
|
|
3/4/2020
|
|
|
10.29
|
|
Securities Purchase Agreement between Geneva Roth Remark Holdings, Inc. and American International Holdings Corp., dated April 20, 2020
|
|
8-K
|
|
000-50912
|
|
10.1
|
|
5/18/2020
|
|
|
10.30
|
|
$88,000 Convertible Promissory Note between Geneva Roth Remark Holdings, Inc. and American International Holdings Corp., dated April 20, 2020
|
|
8-K
|
|
000-50912
|
|
10.2
|
|
5/18/2020
|
|
|
10.31
|
|
Securities Purchase Agreement between FirstFire Global Opportunities Fund LLC and American International Holdings Corp., dated April 30, 2020
|
|
8-K
|
|
000-50912
|
|
10.3
|
|
5/18/2020
|
|
|
10.32
|
|
$105,000 Convertible Promissory Note between FirstFire Global Opportunities Fund LLC and American International Holdings Corp., dated April 30, 2020
|
|
8-K
|
|
000-50912
|
|
10.4
|
|
5/18/2020
|
|
|
10.33
|
|
Data Delivery and Ancillary Services Agreement between American International Holdings Corp. and Cicero Transact Group, Inc., dated January 13, 2020
|
|
10-Q
|
|
000-50912
|
|
10.8
|
|
7/24/2020
|
|
|
10.34
|
|
Securities Purchase Agreement between Geneva Roth Remark Holdings, Inc. and American International Holdings Corp., dated August 5, 2020
|
|
10-Q
|
|
000-50912
|
|
10.9
|
|
8/19/2020
|
|
|
10.35
|
|
$53,000 Convertible Promissory Note between Geneva Roth Remark Holdings, Inc. and American International Holdings Corp., dated August 5, 2020
|
|
10-Q
|
|
000-50912
|
|
10.10
|
|
8/19/2020
|
|
|
10.36
|
|
$105,000 Convertible Promissory Note between LGH Investments, LLC and American International Holdings Corp., dated August 11, 2020
|
|
10-Q
|
|
000-50912
|
|
10.11
|
|
8/19/2020
|
|
|
10.37
|
|
Securities Purchase Agreement between Geneva Roth Remark Holdings, Inc. and American International Holdings Corp., dated September 14, 2020
|
|
8-K
|
|
000-50912
|
|
10.1
|
|
10/5/2020
|
|
|
10.38
|
|
$53,000 Convertible Promissory Note between Geneva Roth Remark Holdings, Inc. and American International Holdings Corp., dated September 14, 2020
|
|
8-K
|
|
000-50912
|
|
10.2
|
|
10/5/2020
|
|
|
10.39
|
|
Stock Purchase Agreement dated October 2, 2020, by and between Jacob Cohen and Luis Alan Hernandez
|
|
8-K
|
|
000-50912
|
|
10.1
|
|
11/17/2020
|
|
|
10.40
|
|
Stock Purchase Agreement dated October 2, 2020, by and between Jacob Cohen and Estaban Alexander
|
|
8-K
|
|
000-50912
|
|
10.2
|
|
10/5/2020
|
|
|
10.41
|
|
Securities Purchase Agreement between Quick Capital, LLC and American International Holdings Corp., dated October 12, 2020
|
|
8-K
|
|
000-50912
|
|
10.3
|
|
11/17/2020
|
|
|
10.42
|
|
$56,750 Convertible Promissory Note between Quick Capital, LLC and American International Holdings Corp., dated October 12, 2020
|
|
8-K
|
|
000-50912
|
|
10.4
|
|
11/17/2020
|
|
|
10.43
|
|
$138,000 Convertible Promissory Note between JSJ Investments, Inc. and American International Holdings Corp., dated November 13, 2020
|
|
10-Q
|
|
000-50912
|
|
10.18
|
|
11/20/2020
|
|
|
10.44#
|
|
Securities Purchase Agreement dated January 6, 2021, by and between American International Holdings Corp., and the Investors party thereto
|
|
8-K
|
|
000-50912
|
|
10.1
|
|
1/12/2021
|
|
|
10.45
|
|
Form of 6% Original Issue Discount Secured Convertible Promissory Note dated January 6, 2021, by American International Holdings Corp. in favor of the holders thereof
|
|
8-K
|
|
000-50912
|
|
10.2
|
|
1/12/2021
|
|
|
10.46
|
|
Form of Warrant to Purchase Common Stock dated January 6, 2021, by American International Holdings Corp. in favor of the holders thereof
|
|
8-K
|
|
000-50912
|
|
10.3
|
|
1/12/2021
|
|
|
10.47#
|
|
Security Agreement date January 6, 2021, between American International Holdings Corp., VISSIA McKinney, LLC, VISSIA Waterway, Inc., EPIQ MD, Inc., Legend Nutrition, Inc., Life Guru, Inc and ZipDoctor, Inc., and in favor of the debtors named therein and collateral agent set forth therein
|
|
8-K
|
|
000-50912
|
|
10.4
|
|
1/12/2021
|
|
|
10.48#
|
|
Pledge Agreement dated January 6, 2021, by American International Holdings Corp. in favor of the collateral agent set forth thereof
|
|
8-K
|
|
000-50912
|
|
10.5
|
|
1/12/2021
|
|
|
10.49#
|
|
Registration Rights Agreement dated January 6, 2021, by American International Holdings Corp. in favor of the investors named thereof
|
|
8-K
|
|
000-50912
|
|
10.6
|
|
1/12/2021
|
|
|
10.50#
|
|
Subsidiary Guaranty Agreement between American International Holdings Corp., VISSIA McKinney, LLC, VISSIA Waterway, Inc., EPIQ MD, Inc., Legend Nutrition, Inc., Life Guru, Inc and ZipDoctor, Inc., and in favor of the purchasers named therein and collateral agent set forth therein
|
|
8-K
|
|
000-50912
|
|
10.7
|
|
1/12/2021
|
|
|
10.51***
|
|
January 21, 2021 Employment Agreement between American International Holdings Corp. and Alejandro Rodriquez
|
|
8-K
|
|
000-50912
|
|
10.1
|
|
1/22/2021
|
|
|
10.52***
|
|
January 21, 2021 Employment Agreement between American International Holdings Corp. and Verdie Bowen
|
|
8-K
|
|
000-50912
|
|
10.2
|
|
1/22/2021
|
|
|
10.53
|
|
Reduced Fee Agreement between American International Holdings Corp. and The Loev Law Firm, PC dated January 22, 2021
|
|
8-K
|
|
000-50912
|
|
10.3
|
|
1/22/2021
|
|
|
10.54
|
|
Lock-Up Agreement dated January 22, 2021, between American International Holdings Corp. and the shareholders party thereto
|
|
8-K
|
|
000-50912
|
|
10.4
|
|
1/22/2021
|
|
|
10.55
|
|
Securities Purchase Agreement dated December 2, 2020, between American International Holdings Corp. and Geneva Roth Remark Holdings, Inc.
|
|
8-K/A
|
|
000-50912
|
|
10.5
|
|
1/27/2021
|
|
|
10.56
|
|
$83,000 Convertible Promissory Note date dated December 2, 2020, issued by American International Holdings Corp. to Geneva Roth Remark Holdings, Inc.
|
|
8-K/A
|
|
000-50912
|
|
10.6
|
|
1/27/2021
|
|
|
23.1*
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
23.2*
|
|
Consent of The Loev Law Firm, PC (included in Exhibit 5.1)
|
|
|
|
|
|
|
|
|
|
X
|
24.1*
|
|
Power of Attorney (included on signature page)
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
*
|
Filed
herewith.
|
|
|
***
|
Indicates
management contract or compensatory plan or arrangement.
|
#
Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule
or Exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that American
International Holdings Corp. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934,
as amended, for any schedule or Exhibit so furnished.
ITEM
17. UNDERTAKINGS
The
undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement
to:
(i)
Include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii)
Reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)
Include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser each prospectus filed by the
registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus
was deemed part of and included in the registration statement; and each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i),
(vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed
to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided
in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed
to be a new effective date of the registration statement relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part
of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede
or modify any statement that was made in the registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such effective date.
(5)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of Addison, State of Texas on the 28th day of January 2021.
|
AMERICAN
INTERNATIONAL HOLDINGS CORP.
|
|
|
|
|
/s/
Jacob D. Cohen
|
|
By:
|
Jacob
D. Cohen, Chief Executive Officer, President, Director (Principal Executive Officer and Principal Financial/Accounting Officer)
|
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Jacob D. Cohen
|
|
Chief
Executive Officer, President, Director
|
|
January
28, 2021
|
Jacob
D. Cohen
|
|
(Principal
Executive Officer and Principal Financial/Accounting Officer)
|
|
|
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