Notes
to Consolidated Financial Statements
Three
Months Ended March 31, 2022
(Unaudited)
Note
1 - Basis of Presentation
The
accompanying unaudited condensed financial statements of American International Holdings Corp. (“AMIH” or the “Company”)
have been prepared in accordance with the generally accepted accounting principles in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information
or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant
to the applicable rules and regulations for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Annual Report on Form 10-K for the year
ended December 31, 2021. The interim results for the three months ended March 31, 2022 are not necessarily indicative of the results
to be expected for the year ending December 31, 2022 or for any future interim periods.
Impact
of COVID-19 Pandemic on Consolidated Financial Statements. The outbreak of the 2019 novel coronavirus disease (“COVID-19”),
which was declared a global pandemic by the World Health Organization on March 11, 2020, and the related responses by public health and
governmental authorities to contain and combat its outbreak and spread has severely impacted the U.S. and world economies, the market
for health spa services, nutrition supplements and our other business offerings during the end of the first quarter of 2020, and continuing
through the end of 2020 and into 2021. Government mandated ‘stay-at-home’ and similar orders have to date, and may in the
future, prevent us from operating. In late 2020, we made the decision to discontinue operations of our VISSIA Waterway, Inc. (“VISSIA
Waterway”) and VISSIA McKinney (“VISSA McKinney”) MedSpa locations due to declines in customers and issues staffing
such facilities, each as a result of the pandemic. Additionally, our Legend Nutrition store saw a deep decline in sales due to social
distancing orders and decreases in customers who were willing to venture out to brick-and-mortar establishments during 2020. Legend Nutrition’s
lease was up January 31, 2021, and the Company chose to not renew the lease, closed the store, and will not continue in this line of
business moving forward. We also decided to cease offering construction services around July 2021.
As
of the date of this Report, our operations are limited, and consist mainly of ZipDoctor, Inc., Life Guru, Inc., Mangoceuticals, Inc.,
EPIQ Scripts, LLC, 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.
As
discussed in greater detail under Note 16 – Subsequent Events, below, effective on May 12, 2022, the Company affected a 1-for-60
reverse stock split of its issued and outstanding common stock by the filing of a Certificate of Amendment to the Company’s Articles
of Incorporation with the Secretary of State of Nevada (filed on May 6, 2022 and effective on May 12, 2022)(the “Reverse Stock
Split”). The Reverse Stock Split has been retroactively reflected throughout this Report. Also on May 6, 2022, a Second Amended
and Restated designation of the Company’s Series A Preferred Stock was filed and became effective with the Secretary of State of
Nevada, whereby, among other things, a 1,000-for-1 forward stock split of the outstanding Series A Preferred Stock of the Company was
effected, which has also been retroactively reflected throughout this Report.
Note
2 - Organization, Ownership and Business
Prior
to May 31, 2018, the Company was a 93.2%
owned subsidiary of American International Industries, Inc. (“American” or “AMIN”) (OTCQB: AMIN).
Effective May 31, 2018, the Company issued 168,333
shares of restricted common stock. As a result
of the issuance of the common shares, a change in control occurred. American International Industries, Inc. ownership decreased from
93.2%
to 6.4%.
Effective April 12, 2019, the Company changed its business focus to the services of medical spas.
On
April 12, 2019, the Company entered into a Share Exchange Agreement (the “Agreement”) with Novopelle Diamond, LLC
(“Novopelle”) and all three members of Novopelle, pursuant to which the Company issued 300,000 shares of the Company
common stock to the members (three individuals) of Novopelle Diamond, LLC (“Novopelle”), a Texas limited company,
to acquire 100% of the membership interests of Novopelle. The issuance of these shares represents a change in control of the Company.
Concurrent with the issuance, Jacob Cohen, Esteban Alexander and Alan Hernandez, representing the three former members of Novopelle,
were elected to the board of directors and to the office of Chief Executive Officer, Chief Operating Officer and Chief Marketing officer
of the Company, respectively (provided that Mr. Alexander and Mr. Hernandez no longer serve as officers or directors of the Company).
Everett Bassie and Charles Zeller resigned as board members of the Company. This transaction was treated as a reverse acquisition for
accounting purposes, with the Company remaining the parent company and Novopelle (which has since been renamed VISSIA McKinney, LLC)
becoming a wholly-owned subsidiary of the Company.
On
April 28, 2020, the Company incorporated a wholly-owned subsidiary, ZipDoctor, Inc. (“ZipDoctor”) in the State of
Texas. ZipDoctor plans to provide its customers with unlimited, 24/7 access to board certified physicians and licensed mental and behavioral
health counselors and therapists via a newly developed, monthly subscription based online telemedicine platform. ZipDoctor was launched
in August 2020 and has generated nominal revenues through the quarter ended March 31, 2022.
On
May 15, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with Global Career Networks Inc,
a Delaware corporation (the “GCN”), the sole owner of Life Guru, Inc., a Delaware corporation (“Life Guru”).
Pursuant to the SPA, the Company acquired a 51% interest in Life Guru from GCN. As consideration for the purchase of the 51% ownership
interest in Life Guru, the Company issued to GCN 500,000 shares of its then newly designated Series B Convertible Preferred Stock, which
had an agreed upon value of $500,000 ($1.00 per share), and agreed to issue GCN up to an additional 1,500,000 shares of Series B Convertible
Preferred Stock (with an agreed upon value of $1,500,000) upon reaching certain milestones, of which 500,000 shares of Series B Convertible
Preferred Stock were issued and which other 1,000,000 shares of contingently issuable shares are no longer issuable.
On
October 23, 2020, the Company incorporated a wholly-owned subsidiary, EPIQ MD, Inc. (“EPIQ MD”) in the state of Nevada. EPIQ
MD is a direct-to-consumer, telemedicine and healthcare company targeting Americans who are uninsured or underinsured. The EPIQ MD service
offering is a convergence of primary care telemedicine, preventative care services and wellness programs – under the EPIQ MD brand
and on a single platform. EPIQ MD markets and sells its services direct to end-use consumers, as well as through business-to-business
(B2B) efforts, by focusing on employers in the targeted industries.
On
October 7, 2021, the Company incorporated a wholly-owned subsidiary, Mangoceuticals, Inc. (“Mangoceuticals”) in the state
of Texas with the intent of focusing on developing, marketing and selling a variety of men’s wellness products and services via
a telemedicine platform. To date, the Company has identified men’s wellness telemedicine services and products as a growing sector
in the most recent years and especially related to the areas of erectile dysfunction and hair loss products. In this regard, Mangoceuticals
is currently in the process of developing and preparing to market a new brand of erectile dysfunction (ED) products that delivers fast
acting results through a proprietary combination of FDA approved ingredients.
On
January 24, 2022, the Company formed EPIQ Scripts, LLC (“EPIQ Scripts”) in the state of Texas. EPIQ Scripts has been
established with the intent of operating as a close-door online mail order pharmacy with a specific target and vision to obtain licenses
in all 50 states across the U.S., of which no state licenses have been obtained as of the date of this Report. EPIQ Scripts also plans
to seek to become accredited with the most respected and highly recognized authorities in the industry, such as Utilization Review Accreditation
Commission (URAC), Legit Script, Accreditation Commission for Health Care (ACHC), and National Association of Boards of Pharmacy (NABP)
Digital Pharmacy. EPIQ Scripts also intends to obtain in-network contracts with all major Pharmacy Benefit Managers (PBM) and insurance
payors.
The
unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: VISSIA McKinney, LLC
(f/k/a Novopelle Diamond, LLC), VISSIA Waterway, Inc. (f/k/a Novopelle Waterway, Inc.), Novopelle Tyler, Inc., Legend Nutrition, Inc.,
Capitol City Solutions USA, Inc. EPIQ MD, Inc., ZipDoctor, Inc., Mangoceuticals, Inc. and its majority-owned subsidiary, Life Guru, Inc
and EPIQ Scripts, LLC. 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 March 31, 2022, and December 31, 2021:
Schedule of Property and Equipment
| | |
|
March 31, 2022 | | |
|
December 31, 2021 | |
| Leasehold
improvements | |
| - | | |
| - | |
| Furniture
& fixtures | |
| 26,388 | | |
| - | |
| Equipment | |
| | | |
| | |
| Gross
property and equipment | |
| 26,388 | | |
| - | |
| Less
accumulated depreciation and amortization | |
| (440 | ) | |
| - | |
| Net
property and equipment | |
$ | 25,948 | | |
$ | - | |
Property
and equipment from discontinued operations were as follows on March 31, 2022, and December 31, 2021:
Schedule of Property and Equipment
| | |
|
March 31, 2022 | | |
|
December 31, 2021 | |
| Leasehold
improvement | |
| 4,262 | | |
| 4,262 | |
| Furniture
& fixtures | |
| 18,830 | | |
| 18,830 | |
| Equipment | |
| - | | |
| - | |
| Gross
property and equipment | |
| 23,092 | | |
| 23,092 | |
| Less
accumulated depreciation and amortization | |
| (9,993 | ) | |
| (8,823 | ) |
| Net
property and equipment | |
$ | 13,099 | | |
$ | 14,269 | |
Depreciation
and amortization expense from continuing operations for the three months ended March 31, 2022, and 2021 was $440 and $1,071, respectively.
Depreciation and amortization expense from discontinued operations for the three months ended March 31, 2022, and 2021 was $1,171 and
$4,294, respectively.
Note
5 – Goodwill
As
of March 31, 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 27, 2019, the Company executed an exclusive license agreement with Novo MedSpa Addison Corp (“Novo Medspa”) providing
the Company with the exclusive rights to the Novopelle brand and to establish new Novopelle branded MedSpa locations on a worldwide basis
(the “Exclusive License”). In consideration for the Exclusive License, the Company paid Novo MedSpa a one-time cash
payment of $40,000
and issued to Novo MedSpa 4,167
shares of the Company’s common stock. The
4,167
post-reverse
stock split shares of the Company’s common stock were valued at $6.00
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. Life Guru owns and operates the LifeGuru.me website which
is currently in development and is anticipated to be fully launched in the fourth quarter of 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 were to be issuable to the Seller upon Life Guru meeting
certain milestones, provided that such milestones are met prior to the earlier of (i) one (1) year after closing; and (ii) thirty (30)
days after the Company has provided the Seller written notice of a breach by the Seller of any provision of the SPA, which breach has
not been reasonably cured within such thirty (30) day period (such earlier date of (i) and (ii), the “Milestone Termination
Date”):
(a)
500,000 Series B Preferred Stock shares upon completion of the fully operational LifeGuru.me website;
(b)
500,000 Series B Preferred Stock shares upon such time as 300 coaches have signed up at LifeGuru.me; and
(c)
500,000 Series B Preferred Stock shares upon such time as 1,000 coaches have signed up at LifeGuru.me.
The
fair value of 500,000 shares of the Company’s Series B Preferred Stock issued at closing, valued on such grant date was $605,488,
which equaled the market price per common share on the grant multiplied by the equivalent number of common shares which would be issuable
upon conversion of Series B Preferred Stock.
The
Company did not recognize any liabilities related to the milestone shares due to the uncertainty surrounding such milestones.
The
51% owned subsidiary is a consolidated entity which requires the presentation of noncontrolling interest in the consolidated statements
of operations for the three months ended March 31, 2022. As there was minimal activity for the entity as of March 31, 2022, minimal assets
and liabilities and, no noncontrolling interest were presented at the period ended March 31, 2022. Since the asset is not substantiating
a future cash flow, the Company determined an impairment adjustment was necessary for the periods presented. Investment in Life Guru
of $605,488 was impaired in full during the fourth quarter of 2020.
During
the first quarter of 2021, the Company issued 500,000
Series B Preferred Stock shares for reaching
the first milestone (milestone (a)). The fair value of 500,000
shares of the Company’s Series B Preferred
Stock issued at closing, valued on such grant date was $601,852,
which equaled the market price per common share on the grant multiplied by the equivalent number of common shares which would be issuable
upon conversion of Series B Preferred Stock. This amount was expensed as in process research and development.
Since
more than one year has elapsed since closing, the right of the Seller to earn the milestone shares set forth in (b) 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. As of December 31, 2021, the Company
was released from the capital lease with outstanding balance of $0.
On
July 14, 2020, the Company entered into an agreement with a vendor to purchase equipment used in its spa operations. Pursuant to the
agreement, the Company agreed to pay a total amount of $44,722 in 24 installments, or $1,819 per month plus tax. The outstanding balance
of this capital lease was $31,457 as of December 31, 2020. Due to the discontinued operation, the Company returned equipment in the first
quarter of 2021. The Company impaired $5,991 to bring the asset down to the value of the liability. As of December 31, 2021, the Company
was released from the capital lease with outstanding balance of $0.
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 March 30, 2021, the Company had one leasing agreement subject to Accounting Standards Codification (ASC) 842.
Location
1 – EPIQ Scripts, LLC
On
February 15, 2022, the Company recognized an operating right-of-use asset in the amount of $113,794 and an operating lease liability
in the amount of $69,439 in connection with Location 1. The lease term is seventeen (17) months and expires in July 2023.
The
following is a schedule, by year, of maturities of lease liabilities as of March 31, 2022:
Schedule
of Maturities of Lease Liabilities
| | |
| | |
| 2022 | |
| 36,960 | |
| 2023 | |
| 28,747 | |
| Total
undiscounted cash flow | |
| 65,707 | |
| Less
imputed interest (8%) | |
| (4,399 | ) |
| Present
value of lease liabilities | |
$ | 61,308 | |
The
operating lease right-of-use asset net balance at March 31, 2022 related to this location was $61,308.
Note
10 – Accrued Compensation for Related Parties
At
March 31, 2022, 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 March 31, 2022:
Schedule of Notes
Payable
| | |
| | |
| | |
| 40,000 | |
| Note
payable to an individual dated July 8, 2019 for $40,000, with interest at 8% per annum and due on July 8, 2020. The Note is currently
past due. | |
| 40,000 | |
| | |
| | |
| Note
payable dated July 7, 2020 for $50,000, with interest at 5% per annum and due on July 7, 2021. The Note is unsecured. | |
$ | 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 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $105,000
dated August 11, 2020 for cash of $100,000,
net of original issue discount of $5,000,
with one-time interest charge of 8%
payable and due on May
11, 2021. The outstanding balance of the
Note will be increase by 135%
if in default. The Note is a convertible promissory note. The conversion price equals the lower of $30 per share (as adjusted
for the reverse stock split) or 60%
of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10)
trading day period prior to the conversion date, representing a discount rate of 40%.
The note and accrued interest totaling $111,466
was settled by the issuance of 11,813
post-reverse
split common shares of the Company and $50,000
in cash. The note and accrued interest were
converted at $9.68
per share (as adjusted for the reverse
stock split) and settled with additional shares valued at $27
(as adjusted for the reverse stock split)
per share. Accordingly, the Company recorded
a loss on loan settlement of $58,059
during the three months ended March 31, 2021. | |
$ | 105,000 | |
| Less:
Repayment | |
| (105,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $53,000 dated September 14, 2020 for cash of $53,000, with interest at 8% per annum and due on December 14, 2021. The
annual interest rate will increase to 22% if in default. The Note is a convertible promissory note. The conversion price equals 61%
of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10) trading day period prior to the
conversion date, representing a discount rate of 39%. The note, accrued interest and early payment penalty totaling $70,736 was paid
during the three months ended March 31, 2021. | |
$ | 53,000 | |
| Less:
Repayment | |
| (53,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable to an unrelated party dated September 11, 2020 for $4,000, with no interest and due on demand. | |
$ | 4,000 | |
| | |
| | |
| Note
payable to an unrelated party dated September 16, 2020 for $5,000, with no interest and due on demand. | |
$ | 5,000 | |
| | |
| | |
| Note
payable of $56,750
dated October 12, 2020, for cash of $52,750,
with interest at 8%
per annum and due on October
12, 2021. The annual interest rate will increase
to 24%
if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $3.00
per share or 60%
of the lowest daily volume weighted average price (VWAP) for the common stock during the ten (10)
trading day period prior to the conversion date, representing a discount rate of 40%.
The Note and accrued interest totaling $56,750
was converted into 12,682
post-reverse
split common shares of the Company within the terms of the note during the quarter ended June 30, 2021. | |
$ | 56,750 | |
| Less:
Repayment | |
| (56,750 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $138,00 dated November 13, 2020 for cash of $138,000, with interest at 8% per annum and due on November 13, 2021. The
annual interest rate will increase to 18% if 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 | ) |
| | |
| - | |
| | |
| | |
| 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 | ) |
| | |
| - | |
| | |
| | |
| 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 $3.00
or 75%
of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7)
trading day period prior to the conversion date, representing a discount rate of 25%.
The note and accrued interest totaling $437,359
was converted into 42,500
post-reverse
stock split common shares of the Company within the terms of the note during the quarter ended June 30, 2021. | |
$ | 425,000 | |
| Less:
Conversion | |
| (425,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $425,000
dated January 6, 2021 for cash of $400,000,
with interest at 6%
per annum and due on January
7, 2022. The annual interest rate will increase
to 15%
if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $3.00
or 75%
of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7)
trading day period prior to the conversion date, representing a discount rate of 25%.
The note and accrued interest totaling $437,297
was converted into 53,675
post-reverse
stock split common shares of the Company within the terms of the note during the quarter ended June 30, 2021. | |
$ | 425,000 | |
| Less:
Conversion | |
| (425,000 | ) |
| | |
| - | |
| | |
| | |
| Note
payable of $300,000
dated March 30, 2021 for cash of $282,000,
with interest at 6%
per annum and due on March
30, 2022. The annual interest rate will increase
to 15%
if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $14.62
(as adjusted for the reverse stock split)
or 75%
of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7)
trading day period prior to the conversion date, representing a discount rate of 25%. | |
$ | 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 $14.62
(as adjusted for the reverse stock split)
or 75%
of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7)
trading day period prior to the conversion date, representing a discount rate of 25%.
A partial conversion of the Note and accrued interest totaling $175,233
was converted into 53,041
post-reverse
stock split common shares of the Company within the terms of the note as of the quarter ended March 31, 2022. | |
$ | 300,000 | |
| Less:
Conversion | |
| (150,000 | ) |
| | |
| 150,000 | |
| | |
| | |
| Note
payable of $265,958
dated June 24, 2021 for cash of $250,000,
with interest at 6%
per annum and due on June
24, 2022. The annual interest rate will increase
to 15%
if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $14.62
(based on post-reverse stock split)
or 75%
of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7)
trading day period prior to the conversion date, representing a discount rate of 25%.
A partial conversion of note totaling $169,356
was converted into 59,833
post-reverse
stock split common shares of the Company within the terms of the note as of the quarter ended March 31, 2022. | |
$ | 265,958 | |
| Less:
Conversion | |
| (169,356 | ) |
| | |
| 96,602 | |
| 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 $14.62
(as adjusted for the reverse stock split)
or 75%
of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7)
trading day period prior to the conversion date, representing a discount rate of 25%.
A partial conversion of the note and accrued interest totaling $170,000
was converted into 57,544
post-reverse
stock split shares of the Company within the terms of the note as of quarter ended March 31, 2022. |
|
$ |
271,958 |
|
| Less:
Conversion |
|
|
(163,115 |
) |
| |
|
|
108,843 |
|
| |
|
|
|
|
| The
Company had a short-term advance payable in amount of $50,000 to an unrelated party, with no interest and due on demand. As of March
31, 2022, the short term advance was repaid in full. |
|
$ |
50,000 |
|
| Less:
Repayment |
|
$ |
(50,000 |
) |
| |
|
|
- |
|
| Note
payable of $750,000
dated November 22, 2021 for cash of $750,000,
with interest at 10%
per annum and due on June
24, 2022. The annual interest rate will increase
to 16%
or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the
lessor of $4,50
(as adjusted for the reverse stock split)
or 80%
of the offering price per share of Common Stock at which the Company offers shares of Common Stock in a public offering which results
in the Common Stock being uplisted on a national stock exchange or Nasdaq, that occurs within 220 days from the date the Notes are
issued (an “Uplist Offering”). |
|
$ |
750,000 |
|
| |
|
|
|
|
| Note
payable of $500,000
dated November 30, 2021 for cash of $500,000,
with interest at 10%
per annum and due on November
30, 2022. The annual interest rate will increase
to 16%
or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the
lessor of $4.50
(as adjusted for the reverse stock split)
or 80%
of the offering price per share of Common Stock at which the Uplist Offering is made. |
|
$ |
500,000 |
|
| |
|
|
|
|
| Note
payable of $250,000
dated December 1, 2021 for cash of $250,000,
with interest at 10%
per annum and due on December
1, 2022. The annual interest rate will increase
to 16%
or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the
lessor of 4.50
(as adjusted for the reverse stock split)
or 80%
of the offering price per share of Common Stock at which the Uplist Offering is made. |
|
$ |
250,000 |
|
| |
|
|
|
|
| Note
payable of $500,000
dated December 2, 2021 for cash of $500,000,
with interest at 10%
per annum and due on December
2, 2022. The annual interest rate will increase
to 16%
or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the
lessor of $4.50
(as adjusted for the reverse stock split)
or 80%
of the offering price per share of Common Stock at which the Uplist Offering is made. |
|
$ |
500,000 |
|
| |
|
|
|
|
| As
of March 31, 2022 the Company had a short-term Advance payable in amount of $20,000 to a unrelated party, with no interest and due
on demand. |
|
$ |
20,000 |
|
| |
|
|
|
|
| Notes payable, gross |
|
$ |
2,774,445 |
|
| Less:
unamortized discount |
|
|
(1,771,620 |
) |
| Total |
|
$ |
1,002,825 |
|
| Short
term convertible notes, net of discount of $1,771,620 |
|
$ |
923,825 |
|
| Long-term
convertible notes, net of discount of $0 |
|
$ |
- |
|
| Short-term
non-convertible notes – continuing operations |
|
$ |
75,000 |
|
| Short-term
non-convertible notes – discontinued operations |
|
$ |
4,000 |
|
| Short-term
non-convertible notes |
|
$ |
4,000 |
|
| Long-term
non-convertible notes |
|
$ |
0 |
|
Note
12 – Loans from Related Parties
Schedule of Loans from Related Parties
| | |
| | |
| On
April 12, 2019, the Company entered into individual share exchange agreements and promissory notes with each of Daniel Dror, Winfred
Fields and former Directors Everett Bassie and Charles Zeller (the “AMIH Shareholders”), whereby the AMIH Shareholders
agreed to cancel and exchange a total of 98,334
post-reverse
stock split shares of their AMIH common stock. The Company issued individual promissory notes with an aggregate principal amount
of $350,000
(the “Promissory Notes”)
for cancellation of the 98,334
post-reverse
stock split common shares. The Promissory Notes have a term of two
years and accrue interest at the rate of 10%
per annum until paid in full by the Company. The Company recorded interest of $7,506
on these notes during the year ended December
31, 2020. The accrued interest on these notes was $18,982
as of December 31, 2020. The Note and accrued
interest totaling $ 280,108
was settled by the issuance of 57,942
post-reverse
stock split common shares of the Company. The shares were valued at $18.60
and $16.20
(as adjusted for the reverse stock split)
per share based on the market price at the settlement
date. Accordingly, the Company recorded a loss on loan settlement of $758,601
during the year ended December 31, 2020. | |
$ | 350,000 | |
| Less:
Conversion | |
| (240,000 | ) |
| Loans
from related parties, gross | |
| 110,000 | |
| As
of March 31, 2022, 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 March 31, 2022, outstanding loan balances payable to the Company’s CEO and board member, Jacob Cohen, were $0 with no interest
and due on demand | |
| 50 | |
| Loans from related
parties, before conversion or payment | |
| 50 | |
| Less:
payment | |
| (50 | ) |
| Loans
from related parties, gross | |
| - | |
| | |
| | |
| Loans
from related parties, gross | |
$ | 123,473 | |
| Less:
unamortized discount | |
| 0 | |
| Total | |
$ | 123,473 | |
| Long-term
loan from related parties | |
$ | - | |
| Short-term
loan from related parties – continuing operations | |
$ | 123,473 | |
| Short-term
loan from related parties – discontinued operations | |
$ | - | |
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, 2021, at issuance, at conversion and at March 31, 2022, as set forth in the
table below.
Schedule of Convertible Note Derivatives
| | |
| | |
| Derivative
liabilities as of December 31, 2021 | |
$ | 4,141,272 | |
| Derivative
liabilities, beginning | |
$ | 4,141,272 | |
| Initial
derivative liabilities at new note issuance | |
| - | |
| Initial
loss | |
| - | |
| Conversion | |
| (89,638 | ) |
| Mark
to market changes | |
| (398,555 | ) |
| Derivatives
liabilities as of March 31, 2022 | |
$ | 3,653,079 | |
| Derivatives
liabilities, ending | |
$ | 3,653,079 | |
As
of March 31, 2022, the Company had derivative liabilities of $3,653,079, and recorded changes in derivative liabilities in the amount
of $398,555 during the three months ended March 31, 2022.
The
following assumptions were used for the valuation of the derivative liability related to the Notes:
| |
- |
The
stock price would fluctuate with the Company’s projected volatility; |
| |
- |
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 116% through 206% at issuance, conversion, and quarters ends; |
| |
- |
The
Company would not redeem the notes; |
| |
- |
An
event of default adjusting the interest rate would occur initially 0% of the time for all notes with increases 1% per month to a
maximum of 10% with the corresponding penalty; |
| |
- |
The
Company would raise capital quarterly at market, which could trigger a reset event; and |
| |
- |
The
Holder would convert the note monthly if the Company was not in default. |
The
following assumptions were used for the valuation of the warrant derivative liability related to the Notes:
| |
- |
The
stock price would fluctuate with the Company’s projected volatility; |
| |
- |
The
projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company
and the term remaining for each note ranged from 166% through 166.9% at issuance, conversion, and quarters ends. |
| |
- |
The
Warrants with the fixed $12.00,
$21.00,
and $30.00
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 – Capital Stock
Preferred
Stock
The
Company is authorized to issue up to 5,000,000 shares of preferred stock, $0.0001 par value, of which 1,000,000 shares were designated
as Series A Preferred Stock and 2,000,000 were designated as Series B Preferred stock, the balance of 2,000,000 shares of preferred stock
were undesignated as of March 31, 2022.
The
holders of Series A Preferred Stock have no dividend rights, liquidation preference and conversion rights. As long as any shares of Series
A Preferred Stock remain issued and outstanding, the holders of Series A Preferred Stock have the right to vote on all shareholder matters
equal to sixty percent (60%) of the total vote. At the option of the Company, Series A Preferred Stock is redeemable at $1.00 per share.
The
holders of Series B Preferred Stock have the same dividend rights as common stockholders on a fully converted basis, are entitled to
receive pari passu with any distribution of any of the assets of the Company to the holders of the Company’s common stock, but
not prior to any holders of senior securities. Each share of Series B Preferred Stock may be converted, at the option of the holder thereof,
into that number of shares of common stock of the Company as equals $1.00 divided by 90% of the average of the volume weighted average
prices (“VWAP”) of the Company’s common stock, for the five trading days immediately preceding the date the notice
of conversion is received, subject to the limit of 4.999% of the Company’s outstanding shares of common stock. The holders of Series
B Preferred Stock have no voting rights.
In
the first quarter of 2021, the Company issued 500,000
shares of Series B Preferred Shares to a third
party for services related to research and development. The shares were subsequently converted into 572
post-reverse
stock split shares of common stock. The shares were valued at $601,582.
The
Company has one million post forward split shares of Series A Preferred Stock outstanding as of March 31, 2022 and December 31, 2021.
As of March 31, 2022, and December 31, 2021, no shares of Series B Preferred Stock were issued and outstanding.
Common
Stock
The
Company is authorized to issue up to 195,000,000
shares of common stock, $0.0001
par value, of which 1,604,782
post-reverse
stock split shares were issued and outstanding as of March 31, 2022 and 1,407,418
post-reverse stock split common stock shares
were issued and outstanding at December 31, 2021.
In
the first quarter of 2022, the Company issued 112,485
post-reverse
stock split shares of the Company’s common stock in consideration for services performed by employee, directors and non-employee
consultants. The shares were valued at $101,124
based on the market price on the date of agreement.
In
the first quarter of 2022, the Company issued 84,878
post-reverse
stock split common shares to investors in exchange for $204,805
of principal and accrued interest owed under
the terms and conditions of convertible notes as issued.
Note
15 – Going Concern
These
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the
realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As
reflected in the accompanying financial statements, the Company has a net loss from continuing operations of $1,429,191 for the three
months ended March 31, 2022, and net loss from continuing operations of $7,354,994 for the three months ended March 31, 2021, a loss
from discontinued operation of $1,101 and $17,612 for the three months ended March 31, 2022 and 2021, respectively, and an accumulated
deficit of $21,970,862 as of March 31, 2022. The ability to continue as a going concern is dependent upon the Company generating profitable
operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. These financials do not include any adjustments relating to the recoverability and reclassification
of recorded asset amounts or amounts and classifications of liabilities that might result from this uncertainty. There can be no assurance
that the Company will become commercially viable without additional financing, the availability, and terms of which are uncertain. If
the Company cannot secure necessary capital when needed on commercially reasonable terms, its business, condition (financial and otherwise)
and commercial viability may be harmed. Although management believes that it will be able to successfully execute its business plan,
which includes third party financing and the raising of capital to meet the Company’s future liquidity needs, there can be no assurances
in this regard. These matters raise substantial doubt about the Company’s ability to continue as a going concern.
Note
16 – Commitments and Contingencies
In
the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation,
if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm
its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on
our continued financial position, results of operations or cash flows.
Robert
Holden vs AMIH
On
October 14, 2019, Robert Holden, the Company’s former CEO, filed a Petition and Application for Temporary Restraining Order in
the District Court of Harris County, Texas, against the Company stating that the Company is blocking Mr. Holden’s legal right to
trade his shares in the open market and further attempting to stake his claim that he maintains his rights to the 3,800,000 shares he
received in connection with his acceptance as CEO of the Company on or around May 31, 2018. The Company is maintaining the position that
Mr. Holden does not have the right to those shares as he was in breach of his obligation to convey a digital marketing business to the
Company and subsequently resigned from the Company shortly thereafter, on or around August 15, 2018 and that he procured the shares through
fraud. On November 11, 2019, the Company issued a response with a Motion to Dismiss Under the Texas Citizen’s Participation Act
(TCPA) citing that any declaratory judgment and breach of contract claims be dismissed unless Mr. Holden can, through “clear
and specific evidence”, establish a prima facie case for each essential element of his claims. After an attempt to remand the
case to federal court, the Company filed an amended notice of submission for its TCPA motion for submission on May 18, 2020, whereby
Holden failed to respond to the motion in a timely manner. On May 18, 2020, the Company filed a response in support of its motion to
dismiss under the TCPA, which was denied on June 3, 2020. Immediately thereafter, on June 4, 2020, the Company filed a notice of accelerated
interlocutory appeal to appeal the denial of the motion to dismiss under the TCPA and the trial court’s failure to rule on the
Company’s objection to the timeliness of Holden’s response. The outcome of this action, and the ultimate outcome of the lawsuit
is currently unknown at this time, provided that the Company intends to vehemently defend itself against the claims made in the lawsuit.
AMIH
vs. Winfred Fields
On
November 11, 2019, the Company filed an original petition and jury demand against Winfred Fields, a shareholder, in the 458th Judicial
District Court of Fort Bend County seeking damages related to breach of contract and fraud related charges. The Company executed an exchange
agreement with Mr. Fields on or around April 12, 2019 whereby Mr. Fields was required to tender to the Company a total of 10,833
of the 12,500
shares
of the Company’s common stock that Mr. Fields then owned (the “Exchanged Shares”) in exchange for a promissory
note with a maturity date of April 12, 2021 payable in the amount of $42,500
(the
“Fields Note”) (see also “Note 12 – Loans from Related Parties”). The Exchange Agreement required
that Mr. Fields immediately return the stock certificates for the Exchanged Shares to the Company or its designated agent for immediate
cancellation and for Mr. Fields to retain the remaining 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”) in the 241st Judicial District Court of Smith County, Texas seeking to recover damages
in the amount of $66,651 against that commercial lease and commercial lease guaranty agreement that was signed between the parties on
or around January 8, 2020 to occupy retail premises located at 1058 Asher Way, Suite 100, in Tyler, Texas. As this commercial lease was
executed prior to the COVID-19 pandemic, and due to the uncertainty of the effects on retail establishments during the pandemic, Novopelle
Tyler never officially took possession of the retail premise. On September 23, 2021, the Company and Novopelle Tyler filed an Original
Answer and Affirmative Defense denying the allegations made by Asher Park.
On
January 26, 2022, Novopelle Tyler and the Company entered into a Settlement Agreement & Mutual Release with Asher Park whereby Novopelle
Tyler and the Company agreed to pay Asher Park a total of $35,000 in full and final settlement of all of the Asher Park’s claims.
Accordingly, Asher Park, in consideration for the execution of the Settlement Agreement agreed to dismiss the lawsuit against both Novopelle
Tyler and the Company.
Stanley
Tate d/b/a Triangle Cabinets vs. Capitol City Solutions USA, Inc.
On
September 10, 2021, Stanley Tate d/b/a Triangle Cabinets (“Tate”), a materials supplier and subcontractor that was hired
by the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against the Company, CCS, and CCS’s
construction client, PC Gateway, LLC (“PC Gateway”) in the 136th Judicial District Court of Jefferson County,
Texas seeking payment in the amount of $77,681 for services Tate claimed to provide CCS and PC Gateway. The Company and CCS were not
officially served until on or around October 21, 2021. On October 25, 2021, the Company and CCS filed an Original Answer denying the
allegations made by Tate as Tate had failed to provide the services in which they were hired to perform and demanding strict proof by
a preponderance of credible evidence.
On
December 29, 2021, Tate dismissed all claims against both the Company and CCS.
Capitol
City Solutions USA, Inc. vs. Peak Living, LLC and PC Gateway, LLC
On
November 1, 2021, the Company’s subsidiary, Capitol City Solutions USA, Inc. (CCS), filed a petition against PC Gateway and Peak
Living, LLC (“Peak Living”) in the 58th Judicial District Court of Jefferson County Texas demanding the payment
of the final invoice as delivered to Peak Living in the amount of $2,069,908 representing the balance as owed to CCS for substantial
supplemental charges (including but not limited to dehumidifiers, various material cost and labor increases, code compliance costs, and
additional profit and overhead). Throughout the term of a project completed by CCS for Peak Living, Peak Living instructed CCS to perform
additional work beyond the original scope of the contracted agreement and fully understood that CCS expected to be compensated at the
fair market value for the additional labor and materials. In addition to seeking actual and statutory damages, CCS is seeking to recover
attorney’s fees, prejudgment and post judgment interest, costs of court and has further placed a constitutional lien on the PC
Gateway property, known as Gateway Village, located at 2825 12th Street, Beaumont, Texas, 77705 and which is the subject of the lawsuit.
Based on information received through the discovery process, CCS entered into a Settlement Agreement and Release on March 29, 2022, with
Peak Living whereby CCS agreed to dismiss Peak Living of all claims under the lawsuit.
Note
17 – Discontinued Operations
During
2021, the Company decided to discontinue the operation of its VISSIA McKinney, VISSIA Waterway, Legend Nutrition, Capitol City Solutions
USA, Inc. subsidiaries. VISSIA McKinney, VISSIA Waterway, Legend Nutrition, Capitol City Solutions USA, Inc. have been presented as discontinued
operations in the accompanying consolidated financial statements and are summarized below:
Schedule of Discontinued Operations
| | |
|
| | |
|
| |
| | |
Three
Months Ended March 31, | |
| | |
2022 | | |
2021 | |
| Revenue | |
$ | - | | |
$ | 2,530 | |
| Cost
of revenue | |
| - | | |
| - | |
| Gross
profit | |
| - | | |
| 2,530 | |
| Operating
expenses | |
| (1,101 | ) | |
| (20,142 | ) |
| Loss
from operations | |
| (1,101 | ) | |
| (17,612 | ) |
| Other
income (expenses) | |
| - | | |
| - | |
| Loss | |
$ | (1,101 | ) | |
$ | (17,612 | ) |
Note
18 – Subsequent Events
On
April 15, 2022, the Company issued 16,667 shares of the Company’s common stock to eligible persons under the Plan for compensation
rendered. The shares were valued at $2.40 per share or $40,000.
On
August 4, 2021, effective on July 30, 2021, Cohen Enterprises, Inc, which is beneficially owned by our Chief Executive Officer and director,
Jacob D. Cohen, and Mr. Cohen directly, the holders of 375,000
shares of the Company’s common stock, representing
29.4%
of the outstanding shares of the Company’s common stock as of such date, and holders of one
(1) share of the Company’s Series A Preferred Stock, representing 1,913,242 voting shares as of such date (collectively, the “Majority
Stockholders”), representing an aggregate of 2,288,242 total voting shares or 71.8% of the 3,188,736 total voting shares as
of such date, executed a written consent in lieu of the fiscal 2021 annual meeting of stockholders (the “Majority Stockholder
Consent”), approving among other things,
the grant of discretionary authority for our Board of Directors, without further shareholder approval, to effect a reverse stock split
of all of the outstanding common stock of the Company, by the filing of an amendment to our Articles of Incorporation with the Secretary
of State of Nevada, in a ratio of between one-for-two and one-for-sixty, with the Company’s Board of Directors having the discretion
as to whether or not the reverse split is to be effected, and with the exact exchange ratio of any reverse split to be set at a whole
number within the above range as determined by the Board of Directors in its sole discretion, at any time before the earlier of (a) July
30, 2022; and (b) the date of the Company’s 2022 annual meeting of stockholders (the “Shareholder Authority”).
On
January 25, 2022, our board of directors, pursuant to such shareholder authority, approved a stock split ratio of 1-for-60 (“Reverse
Stock Split”), provided that such approval was subject in all cases to approval of such Reverse Stock Split by the Financial
Industry Regulatory Authority (FINRA), and the filing of an amendment to the Articles of Incorporation of the Company with the Secretary
of State of Nevada. On May 6, 2022, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with
the Secretary of Nevada to affect the Reverse Stock Split (the “Amendment”), which became effective at 1:00 A.M.,
Eastern Standard Time, on May 12, 2022.
The
Reverse Stock Split became effective at 1:00 A.M., Eastern Standard Time, on May 12, 2022 (the “Effective Date”),
and at the start of trading on May 13, 2022, the shares of common stock began trading on a split-adjusted basis. On the Effective Date,
the total number of shares of the Company’s common stock held by each shareholder will be converted automatically into the number
of whole shares of common stock equal to (i) the number of issued and outstanding shares of common stock held by such shareholder immediately
prior to the Reverse Stock Split, divided by (ii) sixty (60).
On
May 6, 2022, the Company’s Board of Directors and its Chief Executive Officer, President, and Director, Jacob D. Cohen, as
the then sole shareholder of the Company’s Series A Preferred Stock (pursuant to a written consent to action without meeting of
the sole Series A Preferred Stock shareholder), approved the adoption of, and filing of, a Second Amended and Restated Certificate of
Designations of American International Holdings Corp. Establishing the Designations, Preferences, Limitations and Relative Rights of
its Series A Convertible Preferred Stock (the “Second Amended and Restated Designation”), which was filed with, and
became effective with, the Secretary of State of Nevada on the same date. The Second Amended and Restated Designation designated 1,000,000
shares of Series A Convertible Preferred Stock. The Board of Directors approved the terms of the Second Amended and Restated Designation
as additional consideration to Mr. Cohen for his services to the Company.
Upon
the filing and effectiveness of the Second Amended and Restated Designation with the Secretary of State of the State of Nevada, each
outstanding share of Series A Preferred Stock of the Company (the “Old Stock”) was automatically split, reclassified
and converted into 1,000,000 shares of Series A Preferred Stock having the rights and privileges described in the Second Amended and
Restated Designation (the “New Stock”), as described below. As a result, Mr. Cohen, as the sole holder of the one
outstanding share of the Old Stock prior to the filing of the Second Amended and Restated Designation, became the holder of all 1,000,000
authorized, issued, and outstanding shares of the New Stock immediately upon the effectiveness of such filing. Notwithstanding such reverse-stock
split, there was no change to the immediate voting rights of such Series A Convertible Preferred Stock as a result of such reverse-stock
split.
The
Second Amended and Restated Designation provides for the Series A Convertible Preferred Stock (the “Series A Preferred Stock”)
to have the following rights:
Dividend
Rights. The Series A Preferred Stock do not accrue dividends.
Liquidation
Preference. The Series A Preferred Stock have no liquidation preference.
Conversion
Rights. Each holder of Series A Preferred Stock may, at its option, convert its shares of Series A Preferred Stock (each a “Series
A Conversion”) into that number of shares of common stock equal to the holder’s pro rata share of all Series A
Preferred Stock then issued and outstanding, multiplied by (i) 60%, minus the aggregate percentage of the Company’s outstanding
common stock previously converted by holders of the Series A Preferred Stock, through such applicable date (for example, if prior to
the applicable date of determination, shares of Series A Preferred Stock have been converted into 3% of the outstanding shares of common
stock as of such date of determination, the Series A Preferred Stock would, in aggregate, be convertible into 57% of the then outstanding
shares of common stock of the Company), multiplied by (ii) the outstanding shares of our common stock outstanding immediately after such
conversion, divided by (iii) the total number of shares of Series A Preferred Stock then outstanding. No individual conversion by any
individual holder shall be in an amount greater than 9.99% of the outstanding common stock of the Company on the date on which the holder
delivers notice of such conversion to the Company (the “Individual Conversion Limitation”). The result of the above,
is that such Series A Preferred Stock is convertible into 60% of the Company’s outstanding common stock (on a post-conversion basis,
i.e., 150% of the Company’s outstanding common stock on a pre-conversion basis) currently.
Voting
Rights.Each holder of Series A Preferred Stock is entitled to vote its shares of Series A Preferred Stock on an as-converted
basis as to all shareholder matters, without regard to the Individual Conversion Limitation.
Additionally,
so long as Series A Preferred Stock is outstanding, the Company shall not, without the affirmative vote of the holders of at least 66-2/3%
of all outstanding shares of Series A Preferred Stock, voting separately as a class (i) amend, alter or repeal any provision of the Articles
of Incorporation or the Bylaws of the Company so as to adversely affect the designations, preferences, limitations and relative rights
of the Series A Preferred Stock, (ii) effect any reclassification of the Series A Preferred Stock, (iii) designate any additional series
of preferred stock, the designation of which adversely effects the rights, privileges, preferences or limitations of the Series A Preferred
Stock; or (iv) amend, alter or repeal any provision of the Series A Designation (except in connection with certain non-material technical
amendments).
Redemption
Rights. The Series A Preferred Stock have no redemption rights.
Protective
Provisions. Subject to the rights of series of preferred stock which may from time to time come into existence, so long as any
shares of Series A Preferred Stock are outstanding, the Company cannot without first obtaining the approval (by written consent, as provided
by law) of the holders of a majority of the then outstanding shares of Series A Preferred Stock, voting together as a class:
(a)
Issue any additional shares of Series A Preferred Stock after the original issuance of shares of Series A Preferred Stock;
(b)
Increase or decrease the total number of authorized or designated shares of Series A Preferred Stock;
(c)
Effect an exchange, reclassification, or cancellation of all or a part of the Series A Preferred Stock;
(d)
Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Preferred
Stock; or
(e)
Alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares
of such series, including the rights set forth in the Second Amended and Restated Designation.
Transfer
Restrictions. Each holder of Series A Preferred Stock is prohibited from Transferring any shares of Series A Preferred Stock.
“Transfer” means directly or indirectly (a) offering for sale, selling, pledging, hypothecating, transferring, assigning
or otherwise disposing of (or enter into any transaction or device that is designed to, or could be expected to, result in the sale,
pledge, hypothecation, transfer, assignment or other disposition at any time) (including, without limitation, by operation of law); or
(b) entering into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the benefits or risks
of ownership of the applicable securities, whether any such transaction is to be settled by delivery of securities or other securities,
in cash or otherwise.
On
May 13, 2022, effective May 16, 2022, the Company entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC,
an accredited investor (“1800 Diagonal”), pursuant to which the Company sold 1800 Diagonal a convertible promissory
note in the principal amount of $137,500 (the “1800 Diagonal Note”). The 1800 Diagonal Note accrues interest at a
rate of 6% per annum (22% upon the occurrence of an event of default) and has a maturity date of May 13, 2023. The 1800 Diagonal Note
included an original issue discount of $9,050, and was purchased for an aggregate of $128,450.
The
Company has the right to prepay the 1800 Diagonal Note at any time during the first six months the note is outstanding at the rate of
120% of the unpaid principal amount of the note plus interest. The 1800 Diagonal Note may not be prepaid after the 180th day
following the issuance date, unless 1800 Diagonal agrees to such repayment and such terms.
1800
Diagonal may in its option, at any time beginning 180 days after the date of the note, convert the outstanding principal and interest
on the 1800 Diagonal Note into shares of our common stock at a conversion price per share equal to 75% of the lowest daily volume weighted
average price (“VWAP”) of our common stock during the 7 days trading days prior to the date of conversion; provided
that such conversion price cannot be lower than 75% of the VWAP on May 13, 2022, provided that if the daily VWAP on any 7 consecutive
trading days is ever less than the then applicable floor price, the applicable floor price is reduced to 75% of the VWAP on such seventh
trading day. We agreed to reserve three and one half times the number of shares of our common stock which may be issuable upon conversion
of the 1800 Diagonal Note at all times (initially 1,527,777 shares of common stock).
The
1800 Diagonal Note provides for standard and customary events of default such as failing to timely make payments under the 1800 Diagonal
Note when due, the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements
and the failure to maintain a listing on the OTC Markets. The 1800 Diagonal Note also contains customary positive and negative covenants.
The 1800 Diagonal Note includes penalties and damages payable to 1800 Diagonal in the event we do not comply with the terms of such note,
including in the event we do not issue shares of common stock to 1800 Diagonal upon conversion of the note within the time periods set
forth therein. Additionally, upon the occurrence of certain defaults, as described in the 1800 Diagonal Note, we are required to pay
1800 Diagonal liquidated damages in addition to the amount owed under the 1800 Diagonal Note (including in some cases up to 300% of the
amount of the note and in other cases the value of the shares which 1800 Diagonal could have been issued upon the full conversion of
the note after including default fees equal to 150% of the amount of such note).
The
1800 Diagonal Note also includes a right of first refusal which prevents the Company from undertaking a financing in an amount less than
$150,000 in the nine months following the date of the 1800 Diagonal Note, without first providing 1800 Diagonal a right of first refusal
to provide such funding on proposed terms.
At
no time may the 1800 Diagonal Note be converted into shares of our common stock if such conversion would result in 1800 Diagonal and
its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.
We
hope to repay the 1800 Diagonal Note prior to any conversion. In the event that the 1800 Diagonal Note is not repaid in cash in its entirety,
Company shareholders may suffer significant dilution if, and to the extent that, the balance of the 1800 Diagonal Note is converted into
common stock.
On
and effective on May 19, 2022, Dr. Craig A. Hewitt resigned as Chief Financial Officer and Principal Financial/Accounting Officer of
the Company. Dr. Hewitt’s resignation was not the result of any dispute related to accounting policies or internal controls or
any other disagreement with the Company. Dr. Hewitt had served as Chief Financial Officer and Principal Financial/Accounting Officer
since March 30, 2022. As a result of Dr. Hewitt’s resignation as discussed above, Mr. Jacob D. Cohen, the Chief Executive Officer
of the Company became the acting Principal Financial/Accounting Officer of the Company effective May 19, 2022. Further, the February
11, 2022 Confidential Employment Offer Letter and Summary of Terms and Conditions entered into between the Company and Dr. Hewitt was
terminated on May 19, 2022.