ITEM
1. FINANCIAL STATEMENTS
American
International Holdings Corp.
Condensed
Consolidated Balance Sheets
The
accompanying notes are an integral part of these consolidated financial statements.
American
International Holdings Corp.
Condensed
Consolidated Statements of Operations
(Unaudited)
The
accompanying notes are an integral part of these consolidated financial statements.
American
International Holdings Corp.
Consolidated
Statement of Changes in Stockholders’ Deficit
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
Retained
|
|
|
|
|
|
Total
|
|
|
|
Preferred
Stock A
|
|
|
Preferred
Stock B
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Earnings
|
|
|
Treasury
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
(Deficit)
|
|
|
Stock
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2020
|
|
|
1
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
55,066,855
|
|
|
$
|
5,507
|
|
|
$
|
9,167,038
|
|
|
$
|
-
|
|
|
$
|
(10,559,658
|
)
|
|
$
|
(3,894
|
)
|
|
$
|
(1,391,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed
interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
539
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
of derivative liabilities due to note conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
763,241
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
763,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of Series B preferred shares for In Process Research and Development
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
50
|
|
|
|
-
|
|
|
|
-
|
|
|
|
601,802
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
601,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares for Series B preferred shares conversion
|
|
|
|
|
|
|
|
|
|
|
(500,000
|
)
|
|
|
(50
|
)
|
|
|
2,057,613
|
|
|
|
206
|
|
|
|
(156
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares under private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
20
|
|
|
|
99,980
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares for note conversion and settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,730,548
|
|
|
|
273
|
|
|
|
501,777
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
502,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for services - related parties
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,500,000
|
|
|
|
650
|
|
|
|
2,510,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,510,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,300,000
|
|
|
|
530
|
|
|
|
1,712,210
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,712,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares for debt settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
708,750
|
|
|
|
71
|
|
|
|
119,454
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
119,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,372,606
|
)
|
|
|
-
|
|
|
|
(7,372,606
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2021
|
|
|
1
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
72,563,766
|
|
|
$
|
7,257
|
|
|
$
|
15,475,885
|
|
|
$
|
-
|
|
|
$
|
(17,932,264
|
)
|
|
$
|
(3,894
|
)
|
|
$
|
(2,453,016
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed
interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
477
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
of derivative liabilities due to note conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
219,222
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
219,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares for note conversion and settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,800,894
|
|
|
|
380
|
|
|
|
416,256
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
416,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(57,172
|
)
|
|
|
-
|
|
|
|
(57,172
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2021
|
|
|
1
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
76,364,660
|
|
|
$
|
7,637
|
|
|
$
|
16,111,840
|
|
|
$
|
-
|
|
|
$
|
(17,989,436
|
)
|
|
$
|
(3,894
|
)
|
|
$
|
(1,873,853
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imputed
interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
481
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
of derivative liabilities due to note conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
57,745
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
57,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares for note conversion and settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,049,304
|
|
|
|
305
|
|
|
|
155,899
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
156,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
915,000
|
|
|
|
91
|
|
|
|
68,518
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
68,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,652
|
|
|
|
-
|
|
|
|
100,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
September 30, 2021
|
|
|
1
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
80,328,964
|
|
|
$
|
8,033
|
|
|
$
|
16,394,483
|
|
|
$
|
-
|
|
|
$
|
(17,888,784
|
)
|
|
$
|
(3,894
|
)
|
|
$
|
(1,490,162
|
)
|
The
accompanying notes are an integral part of these consolidated financial statements.
American
International Holdings Corp.
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
The
accompanying notes are an integral part of these financial statements.
American
International Holdings Corp.
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2021
(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, 2020. The interim results for the nine months ended September 30, 2021 are not necessarily indicative
of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Impact
of COVID-19 Pandemic on Consolidated Financial Statements. The outbreak of the 2019 novel coronavirus disease
(“COVID-19”), which was declared a global pandemic by the World Health Organization on March 11, 2020, and the
related responses by public health and governmental authorities to contain and combat its outbreak and spread has severely impacted
the U.S. and world economies, the market for health spa services, nutrition supplements and our other business offerings during the
end of the first quarter of 2020, and continuing through the end of 2020 and into 2021. Government mandated
‘stay-at-home’ and similar orders have to date, and may in the future, prevent us from operating. In late 2020, we made
the decision to discontinue operations of our VISSIA Waterway, Inc. and VISSIA McKinney MedSpa locations due to declines in
customers and issues staffing such facilities, each as a result of the pandemic. Additionally, our Legend Nutrition store saw a deep
decline in sales due to social distancing orders and decreases in customers who were willing to venture out to brick-and-mortar
establishments during 2020. Legend Nutrition’s lease was up January 31, 2021, and the Company chose to not renew the lease, closed the
store, and will not continue in this line of business moving forward. We also decided to cease offering construction services around
July 2021.
As of the date of this Report,
our operations are limited, and consist mainly of ZipDoctor, Inc., Life Guru, Inc., and EPIQ MD, Inc.
Moving forward, economic recessions, including
those brought on by the continued COVID-19 outbreak may have a negative effect on the demand for our services and our operating results.
Any prolonged disruption to our operations or work force availability is likely to have a significant adverse effect on our results of operations,
cash flows and ability to meet continuing debt service requirements. All of the above may be exacerbated in the future as the COVID-19
outbreak and the governmental responses thereto continues.
Note
2 - Organization, Ownership and Business
Prior
to May 31, 2018, the Company was a 93.2%
owned subsidiary of American International Industries, Inc. (“American” or “AMIN”) (OTCQB: AMIN).
Effective May 31, 2018, the Company issued 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%.
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 (provided that Mr. Alexander and Mr. Hernandez no longer serve as officers or directors of the Company).
Everett Bassie and Charles Zeller resigned as board members of the Company. This transaction was treated as a reverse acquisition for
accounting purposes, with the Company remaining the parent company and Novopelle (which has since been renamed VISSIA McKinney, LLC)
becoming a wholly-owned subsidiary of the Company.
On
April 28, 2020, the Company incorporated a wholly-owned subsidiary, ZipDoctor, Inc. (“ZipDoctor”) in the State of
Texas. ZipDoctor plans to provide its customers with unlimited, 24/7 access to board certified physicians and licensed mental and behavioral
health counselors and therapists via a newly developed, monthly subscription based online telemedicine platform. ZipDoctor was launched
in August 2020 and has generated nominal revenues through the quarter ended September 30, 2021.
On
May 15, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with Global Career Networks Inc,
a Delaware corporation (the “GCN”), the sole owner of Life Guru, Inc., a Delaware corporation (“Life Guru”).
Pursuant to the SPA, the Company acquired a 51% interest in Life Guru from GCN. As consideration for the purchase of the 51% ownership
interest in Life Guru, the Company issued to GCN 500,000 shares of its then newly designated Series B Convertible Preferred Stock, which
had an agreed upon value of $500,000 ($1.00 per share), and agreed to issue GCN up to an additional 1,500,000 shares of Series B Convertible
Preferred Stock (with an agreed upon value of $1,500,000) upon reaching certain milestones.
The
unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: VISSIA McKinney, LLC
(f/k/a Novopelle Diamond, LLC), VISSIA Waterway, Inc. (f/k/a Novopelle Waterway, Inc.), Novopelle Tyler, Inc., Legend Nutrition, Inc.,
Capitol City Solutions USA, Inc. EPIQ MD, Inc., 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 adopted ASU 2019-12 effective on January 1, 2021,
and it did not have an effect on the Company’s consolidated financial statements.
In
August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”).
ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible
instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims
to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15,
2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2020-06 on its financial statements.
Note
4 – Property and Equipment
Property
and equipment from continuing operations were as follows on September 30, 2021, and December 31, 2020:
Schedule of Property and Equipment
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Leasehold improvements
|
|
|
4,262
|
|
|
|
4,262
|
|
Furniture & fixtures
|
|
|
18,830
|
|
|
|
18,830
|
|
Equipment
|
|
|
|
|
|
|
|
|
|
|
|
23,092
|
|
|
|
23,092
|
|
Less accumulated depreciation and amortization
|
|
|
7,651
|
|
|
|
4,238
|
|
Net property and equipment
|
|
$
|
15,441
|
|
|
$
|
18,854
|
|
Property
and equipment from discontinued operations were as follows on September 30, 2021, and December 31, 2020:
Schedule of Property and Equipment
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Leasehold improvements
|
|
$
|
-
|
|
|
$
|
-
|
|
Furniture & fixtures
|
|
|
2,273
|
|
|
|
11,072
|
|
Equipment
|
|
|
37,987
|
|
|
|
83,917
|
|
|
|
|
40,260
|
|
|
|
94,989
|
|
Less accumulated depreciation and amortization
|
|
|
7,306
|
|
|
|
6,184
|
|
Net property and equipment
|
|
$
|
32,954
|
|
|
$
|
88,805
|
|
As
a result of discontinued operations, the leasing equipment of $67,336 was returned in the first quarter of 2021, the Company incurred
a loss of $5,902 on the disposition, and no liabilities are due currently.
Depreciation
and amortization expense from continuing operations for the nine months ended September 30, 2021, and 2020 was $3,412 and $3,073, respectively.
Depreciation and amortization expense from discontinued operations for the nine months ended September 30, 2021, and 2020 was $12,122
and $38,283, respectively.
Note
5 – Goodwill
As
of September 30, 2021, the goodwill 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 was $0.
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 impairment adjustment was necessary for the year ended December 31, 2020, since the goodwill was
not substantiating a future cash flow. Hence, goodwill of $29,689 was impaired in full during the fourth quarter of 2020.
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
then desire to establish and develop its own brand and have the flexibility to offer additional products and services that were
not then 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. Up to an additional
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 as of December
31, 2020.
The
51% owned subsidiary is a consolidated entity which requires the presentation of noncontrolling interest in the consolidated statements
of operations for the nine months ended September 30, 2021. As there was minimal activity for the entity as of September 30, 2021, minimal
assets and liabilities and, no noncontrolling interest were presented at the period ended September 30, 2021. Since
the asset is not substantiating a future cash flow, the Company determined an impairment adjustment was necessary for the periods presented.
Investment in LifeGuru of $605,488 was impaired in full during the fourth quarter of 2020.
During
the first quarter of 2021, the Company issued 500,000 Series B Preferred Stock shares for reaching the second milestone (milestone (b)).
The fair value of 500,000 shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $601,852,
which equaled the market price per common share on the grant multiplied by the equivalent number of common shares which would be issuable
upon conversion of Series B Preferred Stock. This amount was expensed as in process research and development.
The
Company did not recognize any liabilities related to the milestone shares due to the uncertainty surrounding such milestones.
Since
more than one year has elapsed since closing, the right of the Seller to earn the milestone shares set forth in (a) and (c) above has
expired.
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 December 31, 2020. Due to the discontinued operation, the Company returned equipment in the first
quarter of 2021. The Company impaired $1,455 to bring the asset down to the value of the liability.
On
July 14, 2020, the Company entered into an agreement with a vendor to purchase equipment used in its spa operations. Pursuant to the
agreement, the Company agreed to pay a total amount of $44,722 in 24 installments, or $1,819 per month plus tax. The outstanding balance
of this capital lease was $31,457 as of December 31, 2020. Due to the discontinued operation, the Company returned equipment in the first
quarter of 2021. The Company impaired $5,991 to bring the asset down to the value of the liability.
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, 2021, the Company had three (3) leasing agreements subject to Accounting Standards Codification (ASC) 842.
Location
1 – 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 1. 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, 2021:
Schedule
of Maturities of Lease Liabilities
|
|
|
1
|
|
2021
|
|
|
6,822
|
|
2022
|
|
|
27,288
|
|
2023
|
|
|
27,288
|
|
2024
|
|
|
27,288
|
|
2025
|
|
|
2,274
|
|
Total undiscounted cash flows
|
|
|
90,960
|
|
Less imputed interest (8%)
|
|
|
(21,590
|
)
|
Present value of lease liability
|
|
$
|
69,370
|
|
Total
rental expense related to this location for the nine months ended September 30, 2021 was $20,466. The operating lease right-of-use asset
net balance at December 31, 2020 related to this location was $81,437.
Due
to discontinued operations of VISSIA Waterway, Inc. and Vissia Mckinney LLC, the related right-of-use asset of $186,162
and $179,495,
respectively, net of amortization was impaired in full, as of December 31, 2020. Legend Nutrition’s lease was up January
31, 2021, and the Company chose not to renew the lease, and closed the store. Hence, Legend Nutrition’s right-of use asset
and liabilities are fully amortized as of December 31, 2020.
Location
2 – 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, 2021:
Schedule of Maturities of Lease Liabilities
|
|
|
1
|
|
2021
|
|
|
54,951
|
|
2022
|
|
|
55,854
|
|
2023
|
|
|
56,776
|
|
2024
|
|
|
57,715
|
|
2025
|
|
|
53,828
|
|
Total undiscounted cash flows
|
|
|
279,124
|
|
Less imputed interest (8%)
|
|
|
(83,144
|
)
|
Present value of lease liability
|
|
$
|
195,980
|
|
On
September 5, 2021, Vissia Mckinney, LLC entered into a Release Agreement with its landlord for the leased premises located at 5000
Collin Mckinney Parkway, Mckinney, Texas 75070 whereby the landlord agreed to release Vissia Mckinney from its remaining obligations
under the lease in exchange for a total of $22,500, of which $10,000 was paid to the landlord with furniture and fixtures located at
the property and the remaining $12,500 was paid in cash. Total
rental expense related to this location for the nine months ended September 30, 2021, was $0.
The operating lease right-of-use asset net balance on September 30, 2021, related to this location was $0,
which was impaired in full due to discontinued operations.
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 2. 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, 2021:
Schedule
of Maturities of Lease Liabilities
|
|
|
1
|
|
2021
|
|
|
55,540
|
|
2022
|
|
|
57,206
|
|
2023
|
|
|
58,922
|
|
2024
|
|
|
60,690
|
|
Total undiscounted cash flows
|
|
|
232,358
|
|
Less imputed interest (8%)
|
|
|
(49,529
|
)
|
Present value of lease liability
|
|
$
|
182,829
|
|
Total
rental expense related to this location for the nine months ended September 30, 2021, was $0. The operating lease right-of-use asset
net balance on September 30, 2021 related to this location was $0, which was impaired in full due to discontinued operations.
Note
10 – Accrued Compensation for Related Parties
At September 30, 2021, accrued compensation
was $103,500, representing $53,500 as owed
to Jacob Cohen, the Company’s CEO and $25,000 owed to each of Alan Hernandez and Esteban Alexander, the Company’s former
officers and directors.
Note
11 – Notes Payable
Notes payable represents the following at September 30, 2021:
Schedule of Notes
Payable
|
|
|
|
|
Note payable to an individual dated July 8, 2019 for $40,000, with interest at 8% per annum and due on July 8, 2020. The Note is currently past due.
|
|
|
40,000
|
|
|
|
|
|
|
Note payable dated July 7, 2020 for $50,000, with interest at 5% per annum and due on July 7, 2021. The Note is unsecured.
|
|
$
|
50,000
|
|
|
|
|
|
|
Note payable of $53,000 dated August 5, 2020 for cash of $53,000, with interest at 8% per annum and due on November 5, 2021. The annual interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $70,736 was paid during the three months ended March 31, 2021.
|
|
|
53,000
|
|
Less: Repayment
|
|
|
(53,000
|
)
|
|
|
|
0
|
|
|
|
|
|
|
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%. The note and accrued interest totaling $111,466 was settled by the issuance of 708,750 common shares of the Company and $50,000 in cash. The note and accrued interest were converted at $0.1614 per share and settled with additional shares valued at $0.45 per shares. Accordingly, the Company recorded a loss on loan settlement of $58,059 during the three months ended March 31, 2021.
|
|
$
|
105,000
|
|
Less: Repayment
|
|
|
(105,000
|
)
|
|
|
|
0
|
|
Note payable of $53,000 dated September 14, 2020 for cash of $53,000, with interest at 8% per annum and due on December 14, 2021. The annual interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $70,736 was paid during the three months ended March 31, 2021.
|
|
$
|
53,000
|
|
Less: Repayment
|
|
|
(53,000
|
)
|
|
|
|
0
|
|
|
|
|
|
|
Note payable to an unrelated party dated September 11, 2020 for $4,000, with no interest and due on demand.
|
|
$
|
4,000
|
|
|
|
|
|
|
Note payable to an unrelated party dated September 16, 2020 for $5,000, with no interest and due on demand.
|
|
$
|
5,000
|
|
|
|
|
|
|
Note payable of $56,750 dated October 12, 2020, for cash of $52,750, with interest at 8% per annum and due on October 12, 2021. The annual interest rate will increase to 24% if in default. The Note is a convertible promissory note. The conversion price equals the lessor 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%. The Note and accrued interest totaling $56,750 was converted into 760,928 common shares of the Company within the terms of the note during the quarter ended June 30, 2021.
|
|
$
|
56,750
|
|
Less: Repayment
|
|
|
(56,750
|
)
|
|
|
|
0
|
|
Note payable of $138,00 dated November 13, 2020 for cash of $138,000, with interest at 8% per annum and due on November 13, 2021. The annual interest rate will increase to 18% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $183,483 was paid during the three months ended March 31, 2021.
|
|
$
|
138,000
|
|
Less: Repayment
|
|
|
(138,000
|
)
|
|
|
|
0
|
|
|
|
|
|
|
Note payable of $83,500 dated December 2, 2020 for cash of $83,500, with interest at 8% per annum and due on March 2, 2022. The annual interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61% of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $104,527 was paid during the three months ended March 31, 2021.
|
|
$
|
83,500
|
|
Less: Repayment
|
|
|
(83,500
|
)
|
|
|
|
0
|
|
Note payable of $425,000 dated January 6, 2021 for cash of $400,000, with interest at 6% per annum and due on January 7, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.50 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. The note and accrued interest totaling $437,359 was converted into 2,549,999 common shares of the Company within the terms of the note during the quarter ended June 30, 2021.
|
|
$
|
425,000
|
|
Less: Conversion
|
|
|
(425,000
|
)
|
|
|
|
0
|
|
|
|
|
|
|
Note payable of $425,000 dated January 6, 2021 for cash of $400,000, with interest at 6% per annum and due on January 7, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.50 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. The note and accrued interest totaling $437,297 was converted into 3,220,515 common shares of the Company within the terms of the note during the quarter ended June 30, 2021.
|
|
$
|
425,000
|
|
Less: Conversion
|
|
|
(425,000
|
)
|
|
|
|
0
|
|
|
|
|
|
|
Note payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%.
|
|
$
|
300,000
|
|
|
|
|
|
|
Note payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%.
|
|
$
|
300,000
|
|
Less: Conversion
|
|
|
(50,000
|
)
|
|
|
|
250,000
|
|
|
|
|
|
|
Note payable of $265,958 dated June 24, 2021 for cash of $250,000, with interest at 6% per annum and due on June 24, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%.
|
|
$
|
265,958
|
|
Less: Conversion
|
|
|
(25,088
|
)
|
|
|
|
240,870
|
|
Note payable of $271,958 dated June 24, 2021 for cash of $256,000, with interest at 6% per annum and due on June 24, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%.
|
|
$
|
271,958
|
|
Less: Conversion
|
|
|
(76,442
|
)
|
|
|
|
195,516
|
|
|
|
|
|
|
As of September 30, 2021 the Company had a short-term Advance payable in amount of $50,000 to
a unrelated party, with no interest and due on demand.
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
$
|
1,135,386
|
|
Less: unamortized discount
|
|
|
(935,398
|
)
|
Total
|
|
$
|
199,988
|
|
Short term convertible notes, net of discount of $935,398
|
|
$
|
90,988
|
|
Long-term convertible notes, net of discount of $0
|
|
$
|
0
|
|
Short-term non-convertible notes – continuing operations
|
|
$
|
105,000
|
|
Short-term non-convertible notes – discontinued operations
|
|
$
|
4,000
|
|
Long-term non-convertible notes
|
|
$
|
0
|
|
Note
12 – Loans from Related Parties
Schedule of Loans from Related Parties
|
|
|
1
|
|
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 $7,506 on these notes during the year ended December 31, 2020. The accrued interest on these notes was $18,982 as of December 31, 2020. The Note and accrued interest totaling $ 280,108 was settled by the issuance of 3,476,495 common shares of the Company. The shares were valued at $0.31 and $0.27 per share based on the market price at the settlement date. Accordingly, the Company recorded a loss on loan settlement of $758,601 during the year ended December 31, 2020.
|
|
$
|
350,000
|
|
Less: Conversion
|
|
|
(240,000
|
)
|
|
|
|
110,000
|
|
|
|
|
|
|
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 of $40,000 and accrued interest of $2,214 was paid with cash 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 were 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, 2021, 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
|
|
|
|
|
|
|
As of September 30, 2021, outstanding loan balances payable to the Company’s
CEO and board member, Jacob Cohen, were $50,050 with no interest and due on demand
|
|
|
50,050
|
|
|
|
$
|
173,523
|
|
Less: unamortized discount
|
|
|
0
|
|
Total
|
|
$
|
173,523
|
|
Long-term loan from related parties
|
|
$
|
0
|
|
Short-term loan from related parties – continuing operations
|
|
$
|
173,523
|
|
Short-term loan from related parties – discontinued operations
|
|
$
|
50
|
|
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 $1,575,083 and represent a freestanding derivative instrument
that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument
in the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument of
the convertible note was measured using the Lattice Model at the inception date of the note and will do so again on each subsequent balance
sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense
at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion.
The
Convertible Note derivatives were valued as of December 31, 2020, at issuance, at conversion and at September 30, 2021, as set forth
in the table below.
Schedule of Convertible Note Derivatives
|
|
|
|
|
Derivative liabilities as of December 31, 2020
|
|
$
|
517,366
|
|
Initial derivative liabilities at new note issuance
|
|
|
3,278,584
|
|
Initial loss
|
|
|
(0
|
)
|
Conversion
|
|
|
(1,040,208
|
)
|
Mark to market changes
|
|
|
(1,918,386
|
)
|
|
|
|
|
|
Derivative liabilities as of September 30, 2021
|
|
$
|
837,350
|
|
As
of September 30, 2021, the Company had derivative liabilities of $837,350, and recorded changes in derivative liabilities in the amount
of $508,808 during the nine months ended September 30, 2021.
The
following assumptions were used for the valuation of the derivative liability related to the Notes:
|
-
|
The
stock price would fluctuate with the Company’s projected volatility;
|
|
-
|
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 116% through 206% at issuance, conversion, and quarters ends;
|
|
-
|
The
Company would not redeem the notes;
|
|
-
|
An
event of default adjusting the interest rate would occur initially 0% of the time for all notes with increases 1% per month to a
maximum of 10% with the corresponding penalty;
|
|
-
|
The
Company would raise capital quarterly at market, which could trigger a reset event; and
|
|
-
|
The
Holder would convert the note monthly if the Company was not in default.
|
The
following assumptions were used for the valuation of the warrant derivative liability related to the Notes:
|
-
|
The
stock price would fluctuate with the Company’s projected volatility;
|
|
-
|
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 166% through 166.9% at issuance, conversion, and quarters ends.
|
|
-
|
The
Warrants with the fixed $0.20, $0.35, and $0.50 exercise prices are subject to full ratchet reset provisions;
|
|
-
|
The
Company would raise capital quarterly at market, which could trigger a reset event;
|
|
-
|
The
cash flows are discounted to net present values using risk free rates; discount rates were based on risk free rates in effect based
on the remaining term.
|
|
-
|
The
occurrence of a fundamental transaction by a public company was estimated at 2.5% after 2.5 years and 5% prior to maturity; and
|
|
-
|
The
Holder would hold the warrant to maturity (5-year terms) at which point it could exercise the warrant if the warrant were in the
money.
|
Note
14 – Costs and estimated earnings in excess of billings on uncompleted contract
The
Company had two major long-term contracts in progress which were completed during the year ended December 31, 2020. Work has started
on the long-term contracts that will have costs and earnings in the following periods:
Schedule of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contract
Job
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
Contract Revenues
|
|
|
-
|
|
|
|
5,640,707
|
|
Other Revenue
|
|
|
-
|
|
|
|
156,922
|
|
Total Revenues
|
|
|
-
|
|
|
|
5,797,629
|
|
|
|
|
|
|
|
|
|
|
Contract COGS
|
|
|
-
|
|
|
|
4,184,033
|
|
Other COGS
|
|
|
-
|
|
|
|
668,598
|
|
Total COGS
|
|
|
-
|
|
|
|
4,852,631
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
-
|
|
|
|
944,998
|
|
Percentage of completion (POC)
|
|
|
-
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
Revenues – POC
|
|
|
-
|
|
|
|
7,358,273
|
|
|
|
|
|
|
|
|
|
|
Bill to Date
|
|
$
|
-
|
|
|
$
|
7,358,273
|
|
|
|
|
|
|
|
|
|
|
Costs and estimated earnings in excess of billings on uncompleted contract
|
|
$
|
-
|
|
|
$
|
-
|
|
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 December 31, 2020. The Company recognized revenue of $5,640,707 for the two construction projects, Normandy
and Gateway during the year ended December 31, 2020 in connection with such contract assets. All incurred costs associated with contract
assets as of December 31, 2020 were billed and collected. No activities were incurred during the nine months ended September 30, 2021.
Note
15 – Capital Stock
Preferred
Stock
The
Company is authorized to issue up to 5,000,000
shares of preferred stock, $0.0001
par value, of which 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 December 31, 2020 and September 30, 2021.
The
holders of Series A Preferred Stock have no dividend rights, liquidation preference and conversion rights. As long as any shares of Series
A Preferred Stock remain issued and outstanding, the holders of Series A Preferred Stock have the right to vote on all shareholder matters
equal to sixty percent (60%) of the total vote. At the option of the Company, Series A Preferred Stock is redeemable at $1.00 per share.
The
holders of Series B Preferred Stock have the same dividend rights as common stockholders on a fully converted basis, are entitled to
receive pari passu with any distribution of any of the assets of the Company to the holders of the Company’s common stock, but
not prior to any holders of senior securities. Each share of Series B Preferred Stock may be converted, at the option of the holder
thereof, into that number of shares of common stock of the Company as equals $1.00 divided by 90% of the average of the volume
weighted average prices (“VWAP”) of the Company’s common stock, for the five trading days immediately preceding
the date the notice of conversion is received, subject to the limit of 4.999% of the Company’s outstanding shares of common
stock. The holders of Series B Preferred Stock have no voting rights.
In the first quarter of 2021, the Company issued 500,000 shares of
Series B Preferred Shares to a third party for services related to research and development. The shares were subsequently converted to
2,057,613 shares of common stock. The shares were valued at $601,582.
The
Company has one
share of Series A Preferred Stock outstanding
as of September 30, 2021 and December 31, 2020. As of September 30, 2021, and December 31, 2020, no
shares of Series B Preferred Stock were issued
and outstanding.
Common
Stock
The
Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, of which 80,328,964 shares were issued and
outstanding at September 30, 2021 and 55,066,855 were issued and outstanding at December 31, 2020.
On
January 12, 2021, the Company issued 708,750 common shares and paid $50,000 to settle a note with an unrelated party, dated August 11,
2020. The Company recorded a loss on loan settlement of $58,059.
On
February 2, 2021, the Company issued 200,000 shares of the Company’s common stock to a non-related third-party investor in exchange
for $100,000 in cash.
In
the first quarter of 2021, the Company issued 11,800,000
shares of the Company’s common stock in
consideration for services performed by employee and non-employee consultants. The shares were valued at $4,223,390
based on the market price on the date of agreement.
In
the first quarter of 2021, the Company issued 2,730,548 common shares to investors in exchange for $502,050 of principal and accrued
interest owed under the terms and conditions of convertible notes as issued.
In the first quarter of 2021, the Company issued
500,000 shares of Series B Preferred Shares to a third party for services related to research and development. The shares were subsequently
converted to 2,057,613 shares of common stock. The shares were valued at $601,582.
In
the second quarter of 2021, the Company issued 3,800,894 common shares to investors in exchange for $416,636 of principal and accrued
interest owed under the terms and conditions of convertible notes as issued.
In
the third quarter of 2021, the Company issued 915,000 shares
of the Company’s common stock in consideration for services performed by employee and non-employee consultants. The shares
were valued at $68,609 based
on the market price on the date of agreement
In
the third quarter of 2021, the Company issued 3,049,304
common shares to investors in exchange for $156,204
of principal and accrued interest owed under
the terms and conditions of convertible notes outstanding.
Note
16 – Going Concern
These
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the
realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As
reflected in the accompanying financial statements, the Company has a net loss from continuing operation of $7,498,626
for the nine months ended September 30, 2021,
and net loss from continuing operation of $3,191,810
for the nine months ended September 30, 2020,
a net income (loss) from discontinued operation of $169,501
and $(352,908)
for the nine months ended September 30, 2021
and 2020, respectively, and an accumulated deficit of $17,888,784
as of September 30, 2021. 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
17 – 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 12 – Loans from Related Parties”). The Exchange Agreement required that Mr. Fields immediately return
the stock certificates for the Exchanged Shares to the Company or its designated agent for immediate cancellation and for Mr. Fields
to retain the remaining 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.
Asher
Park, LLC vs. Novopelle Tyler
On
August 11, 2021, Asher Park, LLC (“Asher Park”) filed a petition against the Company and its subsidiary, Novopelle Tyler,
Inc. (“Novopelle Tyler”) seeking to recover damages in the amount of $66,651 against that commercial lease and commercial
lease guaranty agreement that was signed between the parties on or around January 8, 2020 to occupy retail premises located at 1058 Asher
Way, Suite 100, in Tyler, Texas. As this commercial lease was executed prior to the COVID-19 pandemic, and due to the uncertainty of
the effects on retail establishments during the pandemic, Novopelle Tyler never officially took possession of the retail premise. On
September 23, 2021, the Company and Novopelle Tyler filed an Original Answer and Affirmative Defense denying the allegations made by
Asher Park. The Company disputes Asher Park’s allegations of wrongdoing and intends to vigorously defend itself in this matter.
Stanley
Tate d/b/a Triangle Cabinets vs. Capitol City Solutions USA, Inc.
On
September 10, 2021, Stanley Tate d/b/a Triangle Cabinets (“Tate”), a materials supplier and subcontractor that was hired
by the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against the Company, CCS, and CCS’s
construction client, PC Gateway, LLC (“PC Gateway”) seeking payment in the amount of $77,681 for services Tate claimed to
provide CCS and PC Gateway. The Company and CCS were not officially served until on or around October 21, 2021. On October 25, 2021,
the Company and CCS filed an Original Answer denying the allegations made by Tate as Tate had failed to provide the services in which
they were hired to perform and demanding strict proof by a preponderance of credible evidence. The Company disputes Tate’s allegations
of wrongdoing and intends to vigorously defend itself in this matter.
Capitol
City Solutions USA, Inc. vs. Peak Living, LLC and PC Gateway, LLC
On
November 1, 2021, the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against PC Gateway and Peak
Living, LLC (“Peak Living”) demanding the payment of the final invoice as delivered to Peak Living in the amount of $2,069,908
representing the balance as owed to CCS for substantial supplemental charges (including but not limited to dehumidifiers, various material
cost and labor increases, code compliance costs, and additional profit and overhead). Throughout the term of a project completed by CCS
for Peak Living, Peak Living instructed CCS to perform additional work beyond the original scope of the contracted agreement and fully
understood that CCS expected to be compensated at the fair market value for the additional labor and materials. In addition to seeking
actual and statutory damages, CCS is seeking to recover attorney’s fees, prejudgment and post judgement interest, costs of court
and has further placed a constitutional lien on the PC Gateway property, known as Gateway Village, located at 2825 12th Street, Beaumont,
Texas, 77705 and which is the subject of the lawsuit.
Note
18 – Discontinued Operations
During
2020, the Company decided to discontinue the operation of its VISSIA McKinney, VISSIA Waterway, and Legend Nutrition. VISSIA McKinney,
VISSIA Waterway, and Legend Nutrition have been presented as discontinued operations in the accompanying consolidated financial statements.
The operating results for VISSIA McKinney, VISSIA Waterway, and Legend Nutrition have been presented in the accompanying consolidated
statement of operations for the nine months ended September 30, 2021, and 2020 as discontinued operations and are summarized below:
Schedule
of Discontinued Operations
|
|
2021
|
|
|
2020
|
|
|
|
Nine Month Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenue
|
|
$
|
2,530
|
|
|
$
|
269,842
|
|
Cost of revenue
|
|
|
0
|
|
|
|
153,254
|
|
Gross profit
|
|
|
2,530
|
|
|
|
116,588
|
|
Operating expenses
|
|
|
46,208
|
|
|
|
436,521
|
|
Loss from operations
|
|
|
(43,678
|
)
|
|
|
(319,933
|
)
|
Other income (expenses)
|
|
|
213,179
|
|
|
|
(32,975
|
)
|
Net loss
|
|
$
|
169,501
|
|
|
$
|
(352,908
|
)
|
Note
19 – Subsequent Events
On
October 5, 2021, the Company issued 800,000 shares of common stock to an investor in exchange for $33,680 of principal and accrued interest
owed under the terms and conditions of the 6% convertible promissory note as issued to FirstFire Global, dated June 24, 2021.
On
November 11, 2021, the Company issued 500,000 shares of common stock to an investor in exchange for $22,100 of principal and accrued
interest owed under the terms and conditions of the 6% convertible promissory note as issued to FirstFire Global, dated June 24, 2021.
Management
has evaluated all subsequent events from September 30, 2021, 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, 2021, is deemed necessary as
a result of this evaluation.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
The
following discussion should be read in conjunction with the American International Holdings Corp. financial statements and accompanying
notes included elsewhere in this Report.
All
references to years relate to the fiscal year ended December 31 of the particular year.
This
information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly
Report on Form 10-Q, and the audited financial statements and notes thereto and “Part II. Other Information - Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the
year ended December 31, 2020, filed with the Securities and Exchange Commission on April 15, 2021 (the “Annual Report”).
Certain
capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated
financial statements included above under “Part I - Financial Information - Item 1. Financial Statements”.
Our
logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service
marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to in this Report may
appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate
in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if
any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their
rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with,
or endorsement or sponsorship of us by, any other companies.
The
market data and certain other statistical information used throughout this Report are based on independent industry publications, reports
by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third-party research,
surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do
not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosures contained in this Report,
and we believe these industry publications and third-party research, surveys and studies are reliable. While we are not aware of any
misstatements regarding any third-party information presented in this Report, their estimates, in particular, as they relate to projections,
involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those
discussed under, and incorporated by reference in, the section entitled “Risk Factors”, below. These and other factors could
cause our future performance to differ materially from our assumptions and estimates. Some market and other data included herein, as
well as the data of competitors as they relate to American International Holdings Corp., is also based on our good faith estimates.
Unless
the context requires otherwise, references to the “Company,” “we,” “us,” “our,”
“American International”, “AMIH” and “American International Holdings Corp.”
refer specifically to American International Holdings Corp. and its consolidated subsidiaries.
In
addition, unless the context otherwise requires and for the purposes of this Report only:
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“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended;
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●
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“SEC”
or the “Commission” refers to the United States Securities and Exchange Commission; and
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●
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“Securities
Act” refers to the Securities Act of 1933, as amended.
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Where
You Can Find Other Information
We
file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the
public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge, soon after
such reports are filed with or furnished to the SEC, on our website at https://amihcorp.com/investors/. Copies of documents filed
by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at
the address and telephone number set forth on the cover page of this Report. Our website address is https://amihcorp.com. The
information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered
a part of this Report.
Summary
of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the
accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash
flows. MD&A is organized as follows:
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Business
of the Company and Recent Events. Discussion of our business and recent events affecting us, to provide context for the remainder
of MD&A.
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Plan
of Operations. Discussion of our strategy moving forward and how we plan to seek to increase stockholder value.
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Results
of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2021, and 2020.
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Liquidity
and Capital Resources. A discussion of our financial condition, including descriptions of balance sheet information and cash
flows.
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●
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Critical
Accounting Policies and Estimates. Critical accounting policies and estimates that we believe are important to understanding
the assumptions and judgments incorporated in our reported financial results and forecasts.
|
Business
of the Company and Recent Events
A
description of the Company’s business operations, assets and divisions can be found in the Company’s Annual Report on Form
10-K for the year ended December 31, 2020, as filed with the SEC on April 15, 2021, under the heading “Item 1. Business”.
Except as set forth below under “Recent Events” such information as set forth in the Form 10-K remains accurate and
current.
Recent
Events
COVID-19
Outlook
The outbreak of the 2019 novel
coronavirus disease (“COVID-19”), which was declared a global pandemic by the World Health Organization on March 11,
2020, and the related responses by public health and governmental authorities to contain and combat its outbreak and spread has severely
impacted the U.S. and world economies, the market for health spa services, nutrition supplements and our other business offerings during
the end of the first quarter of 2020, and continuing through the end of 2020 and into 2021. Government mandated ‘stay-at-home’
and similar orders have to date, and may in the future, prevent us from operating. In late 2020, we made the decision to discontinue
operations of our VISSIA Waterway, Inc. and VISSIA McKinney MedSpa locations, due to declines in customers and issues staffing such facilities, each
as a result of the pandemic. Additionally, our Legend Nutrition store saw a deep decline
in sales due to social distancing orders and decreases in customers who are willing to venture out to brick-and-mortar establishments.
Legend Nutrition’s lease was up January 31, 2021, and the Company chose to not renew the lease, closed the store, and will not
continue in this line of business moving forward. We also decided to cease offering construction services around July 2021.
As of the date of this Report,
our operations are limited, and consist mainly of ZipDoctor, Inc., Life Guru, Inc., and EPIQ MD, Inc.
Moving forward, economic recessions,
including those brought on by the continued COVID-19 outbreak may have a negative effect on the demand for our services and our operating
results. Any prolonged disruption to our operations or work force available is likely to have a significant adverse effect on our results
of operations, cash flows and ability to meet continuing debt service requirements. All of the above may be exacerbated in the future
as the COVID-19 outbreak and the governmental responses thereto continues.
Plan
of Operations
The
Company is headquartered in Plano, Texas and is an investor, developer and asset manager diversified across the healthcare supply chain.
The Company’s portfolio encompasses telemedicine and other virtual health platforms, subscriber based primary care and concierge
medicine plans, preventative care solutions and wellness related assets such as mental & behavioral health services as well as its
own proprietary life coaching platform. The Company provides its various services through direct-to-consumer and business-to-business
distribution channels and is focused on developing, acquiring and bringing to market technologies and solutions that we believe can advance
the quality of life for the global community. Additionally, 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 intends to continue to grow its business both organically and through identifying acquisition targets over the next 12 months
in the technology, health and wellness space. Specifically, the Company plans to continue to make additional and ongoing technology
enhancements to its LifeGuru life coaching platform, further develop, market and advertise its telemedicine platform, and identify strategic
acquisitions that complement the Company’s vision of bridging the gap between primary care, preventative care and wellness. As
these opportunities arise, the Company will determine the best method for financing such acquisitions and growth which may include
the issuance of additional debt instruments, common stock, preferred stock, or a combination thereof, all of which may result in significant
dilution to existing shareholders.
Results
of Operations
Revenues
We
had revenues of $3,831 for the three months ended September 30, 2021, compared to revenues of $559,493 for the three months ended September
30, 2020. We had revenues of $17,198 for the nine months ended September 30, 2021, compared to revenues of $5,711,380, for the nine months
ended September 30, 2020. The significant decrease in revenues in 2021 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 which were completed
during the nine months ended September 30, 2020. There were no active construction contracts for the first nine months of 2021
and there are no current plans to obtain additional construction contracts in the future.
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, 2021, we recognized revenues of $3,831 and $17,198 in connection with membership income from ZipDoctor. The revenues
during the three and nine months ended September 30, 2020, were primarily generated from two construction contracts for an apartment
and clubhouse rebuild at Gateway Village, Texas and the replacement of a roof in Port Arthur, Texas.
Cost
of Revenues
We
had cost of revenues of $10,500 and $585,215 for the three months ended September 30, 2021 and 2020, respectively. We had cost of revenues
of $25,738, for the nine months ended September 30, 2021, compared to cost of revenues of $3,944,528, for the nine months ended June
30, 2020. 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, 2021, were primarily associated with the membership income from ZipDoctor.
The
cost of revenues in the three and nine months ended September 30, 2020 were primarily attributable to our two construction contracts
for an apartment and clubhouse rebuild at Gateway Village, Texas and the replacement of a roof in Port Arthur, Texas.
Cost
of revenues as a percentage of revenues was 274% and 105% for the three months ended September 30, 2021 and 2020 and 150% for the nine
months ended September 30, 2021, compared to 69% the nine months ended September 30, 2020. Cost of revenues as a percentage of revenue
increased for the three and nine months ended September 30, 2021, compared to the prior periods in 2020, as a result of reduction of
revenue. During 2020, two construction contracts for an apartment and clubhouse rebuilt at Gateway Village, Texas and the replacement
of a roof in Port Arthur, Texas, were our primary source of cost of revenues. During 2021, costs of revenues were associated with the
membership income from ZipDoctor, Inc.
Operating
Expenses
General
and administrative expenses were $592,283 and $644,754 for the three months ended September 30, 2021 and 2020 and $6,344,163 and $4,034,686
for the nine months ended September 30, 2021 and 2020, respectively. The increase in 2021 was due primarily to stock-based compensation
in the amount of $68,609 for the three months ended September 30, 2021 and $4,223,390 for the nine months ended September 30,
2021, and professional expenses incurred as a public company such as legal in the amount of $25,440 and $154,033 for the three months
and nine months ended September 30, 2021 respectively and financial reporting, accounting and auditing compliance in amount of $12,321
and $71,370 for the three months and nine months ended September 30, 2021, respectively.
Other
Expenses
During
the three months ended September 30, 2021, and 2020, we incurred interest expense of $19,621 and $34,726, respectively, of
which $481 and $1,066, respectively, were recorded as imputed interest in connection with related party loans. During the nine
months ended September 30, 2021, and 2020, we incurred interest expense of $139,003 and $87,406, respectively, of which $1,498 and
$3,345, respectively, were recorded as imputed interest in connection with related party loans.
Amortization
of debt discount was $186,521 and $263,534 and $1,501,923 and $444,810 during the three months ended September 30, 2021 and 2020 and
the nine months ended September 30, 2021 and 2020, respectively.
We
had income of $679,988 and a loss of $132,977 during the three months ended September 30, 2021, and 2020, respectively, due to
change in derivative liabilities. We had income of $508,808 and a loss of $157,547 during the nine months ended September 30, 2021, and
2020, respectively, due to change in derivative liabilities. See also “Note 13 – Derivative Liabilities”, to the notes
to unaudited financial statements included above for a more detailed discussion of gain (loss) in derivative liabilities which is non-cash.
We
had a settlement gain of $45,500 compared to a settlement loss of $234,513 for the three months ended September 30, 2021, compared
to the three months ended September 30, 2020, and a settlement loss of $12,559 for the nine months ended September 30, 2021 compared
to a settlement loss of $234,513 for the nine months ended September 30, 2020, each, in connection with debt settlements that
occurred during the respective periods.
Discontinued
operations
Customer
traffic and demand at our VISSIA Waterway, Inc. and VISSIA McKinney MedSpa locations which were re-opened after mandatory closures associated
with COVID-19 in June and August 2020, respectively, failed to rebound to pre-closure levels due to COVID-19 and the pandemic’s
effects on the economy, and because we are unable to predict the length of the pandemic or ultimate outcome thereof, and further due
to our limited capital resources, effective in October 2020, we made the decision to close both our VISSIA Waterway, Inc. and VISSIA
McKinney locations and discontinued such operations. While such locations are closed, they are not generating any revenue. The continuing
expenses, without corresponding revenues, may have a significant negative affect on our results of operations and cash flows. Separately,
Legend Nutrition’s lease was up January 31, 2021, and the Company chose not to renew the lease, closed the store, and not continue
in that line of business moving forward.
VISSIA
Waterway, Inc., VISSIA McKinney LLC and Legend Nutrition (collectively referred to as “Discontinued Subsidiaries”)
have been presented as discontinued operations in the accompanying consolidated financial statements for the nine months ended September
30, 2021, and 2020, and are summarized below:
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenue
|
|
$
|
2,530
|
|
|
$
|
269,842
|
|
Cost of revenue
|
|
|
-
|
|
|
|
153,254
|
|
Gross Profit
|
|
|
2,530
|
|
|
|
116,588
|
|
Operating expenses
|
|
|
46,208
|
|
|
|
436,521
|
|
Loss from operations
|
|
|
(43,678
|
)
|
|
|
(319,933
|
)
|
Other Expenses
|
|
|
213,179
|
|
|
|
(32,975
|
)
|
Net loss
|
|
$
|
(169,501
|
)
|
|
$
|
(352,908
|
)
|
|
|
As of
|
|
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
Assets of discontinued operations - current
|
|
$
|
9,991
|
|
|
$
|
10,061
|
|
Assets of discontinued operations - intangible
|
|
|
-
|
|
|
|
-
|
|
Assets of discontinued operations – non-current
|
|
|
53,015
|
|
|
|
113,645
|
|
Net liabilities of discontinued operations
|
|
$
|
298,646
|
|
|
$
|
566,552
|
|
Net
Loss
We
had a net loss from continuing operations of $79,606, or ($0.00) per share and $1,336,226 or ($0.03) per share, for the three
months ended September 30, 2021 and 2020, respectively. We had net a net income of $181,504 from discontinued operations and a
net loss of $135,161 from discontinued operations during the three months ended September 30, 2021 and 2020, respectively. The increase
in loss from continuing operations during the three months ended September 30, 2020, was mainly due to stock-based compensation
and general and administrative expenses. The decrease in loss from continuing operations during the three months ended September 30,
2021, was due to the change in fair value of derivatives liabilities associated with convertible debt and warrants.
We
had a net loss of $7,498,626 or $0.10 per share from continuing operations and income of $169,501 or $0.00 per share from
discontinued operations during the nine months ended September 30, 2021, for a total net loss of $7,327,879 or $0.10 per share.
We had a net loss of $3,191,810 , or $0.10 per share from continuing operations and $352,908 or $0.01 per share from
discontinued operations during the nine months ended September 30, 2020, totaling an aggregate of $3,544,718 or $0.11 per share in total
net loss. The increase in net loss in 2021 was primarily attributable to non-cash expenses in connection with stock-based compensation,
amortization of debt discount, the change in derivative values associated with outstanding convertible debt, impairment loss due to the
investment in Life Guru, and settlement loss in connection with the common shares issued for notes settlement, offset by the increase
in gross profit, each as discussed above.
Liquidity
and Capital Resources
As
of September 30, 2021, and December 31, 2020, the Company had total assets of $274,781 and $265,522, respectively, including $63,006
and $123,706 of assets of discontinued operations, respectively.
As
of September 30, 2021, and December 31, 2020, the Company had total liabilities of $1,763,697 and $1,656,529, respectively, which
consisted of accounts payable, accrued liabilities, accrued interest and accrued compensation in the amount of $190,115
and $214,721, respectively, rights-of-use liability of $69,370 and $87,653, respectively, convertible notes payable (net of discount)
and loans payable to related parties and non-related parties (net of discount) in the amounts of $90,988, $172,228 and $105,000,
and $74,827, $25,392 and $55,000, respectively, and derivative liabilities of $837,350 and $517,366, respectively. We also had $298,646
and $566,552 of net liabilities related to discontinued operations as of September 30, 2021 and December 31, 2020. We also had $5,018
of convertible notes payable, net of debt discount and $110,000 of long-term debt as of December 31, 2020. The Company had a total
stockholders’ deficit of $1,488,917 and $1,391,007 as of September 30, 2021, and December 31, 2020, respectively.
During
the nine months ended September 30, 2021, net cash used in operating activities was $1,576,555, compared to net cash used in operating
activities of $1,001,669 for the nine months ended September 30, 2020. Negative cash flows during the nine months ended September 30,
2021, were due primarily to the net loss of $7,327,879 and change in derivative liabilities of $1,779,896, partially offset
by non-cash expenses, including stock-based compensation of $4,291,999, amortization of debt discount of $1,501,923, derivative
gain of $1,271,088, loss on loans settlement of $58,059 and in process research and development of $601,852. Comparatively,
negative cash flows during the nine months ended September 30, 2020, were due primarily to a net loss of $3,544,719 partially
offset by non-cash expenses, including stock-based compensation of $2,798,950, and amortization of debt discount of $444,810.
During
the nine months ended September 30, 2021 and 2020, we had cash provided by investing activities of $10,000 and $91,649
used in investing activities, respectively. The net cash used in investing activities in 2020 was solely attributable to capital
expenditures for property and equipment.
During
the nine months ended September 30, 2021, and 2020, net cash flows provided by financing activities were $1,666,336 and $670,325,
respectively, primarily attributable to the proceeds from notes payable to related parties and non-related parties during the respective
periods. We had proceeds of $59,820 from related party borrowings and proceeds of $1,919,000 from non-related party borrowings
in the nine months ended September 30, 2021, compared to proceeds of $0 and $690,000, respectively, in the nine months ended September
30, 2020. We made repayments of $34,984 to related party borrowings and repayments of $377,500 to non-related party borrowings in the
nine months ended September 30, 2021, compared to repayments of $40,000 and $15,421, respectively, in the nine months ended September
30, 2020. We had proceeds of $100,000 from sales of stock in 2021 (which shares of stock were sold in connection with our Regulation
A offering (discussed below)), which was $46,500 in 2020.
We
had cash of $112,360 and a working capital deficit of $1,590,541, as of September 30, 2021. 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 (a) sold 200,000 shares of our common stock in consideration for $100,000 in cash through our 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; and (b) issued 2,730,548 shares of
our common stock in exchange for the conversion of $502,050 in debt.
On
October 29, 2021, November 2, 2021, and November 12, 2021, Jacob Cohen, our Chief Executive Officer, advanced the Company, $15,000, $10,000,
and $40,000, respectively, which loans are payable upon demand and not bearing interest. As of the filing of this Report, we owe Mr.
Cohen an aggregate of $115,000 for outstanding loans which are payable upon demand.
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.
Off-Balance
Sheet Arrangements
As
of September 30, 2021, and December 31, 2020, 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.
Critical
Accounting Policies and Estimates
Our
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.
See “Note 1 – Summary of Significant Accounting Policies” to the audited financial statements included in Part II,
Item 8, “Financial Statements And Supplementary Data”, of our Annual Report on Form 10-K for the year ended December 31,
2020. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for
the year ended December 31, 2020.