UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20192020
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-55203
eWELLNESS HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
Nevada | 90-1073143 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
(855) 470-1700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common shares | EWLL |
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
The number of shares of Common Stock, $0.001 per share par value, outstanding on November 12, 2019May 5, 2021 was 291,357,662 shares.16,864,183,627.
Table of Contents
2 |
eWELLNESS HEALTHCARE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
September 30, 2019 | December 31, 2018 | September 30, 2020 | December 31, 2019 | |||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS | ||||||||||||||||
Cash | $ | 781,060 | $ | 383,335 | $ | 5,694 | $ | 240,722 | ||||||||
Prepaid Expenses | 380,862 | 95,508 | ||||||||||||||
Accounts receivable | 196,130 | $ | 3,635 | |||||||||||||
Prepaid expenses | 9,791 | 157,139 | ||||||||||||||
Total current assets | 1,161,922 | 478,843 | 211,615 | 401,496 | ||||||||||||
Property & equipment, net | 24,172 | 14,092 | 15,172 | 22,810 | ||||||||||||
Intangible assets, net | 9,500 | 11,000 | 7,500 | 9,000 | ||||||||||||
TOTAL ASSETS | $ | 1,195,594 | $ | 503,935 | $ | 234,287 | $ | 433,306 | ||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Accounts payable and accrued expenses | $ | 305,825 | $ | 236,741 | $ | 816,608 | $ | 314,287 | ||||||||
Accounts payable - related party | 630,532 | 684,173 | 782,832 | 582,832 | ||||||||||||
Accrued expenses - related party | 198,241 | 214,076 | 121,107 | 138,868 | ||||||||||||
Accrued compensation | 776,464 | 1,113,470 | 290,861 | 532,974 | ||||||||||||
Contingent liability | 90,000 | 90,000 | ||||||||||||||
Convertible debt, net of discount | 2,423,293 | 562,362 | 1,590,661 | 2,240,408 | ||||||||||||
Derivative liability | 1,358,964 | 1,584,102 | 1,685,375 | 3,529,974 | ||||||||||||
Total current liabilities | 5,783,319 | 4,484,924 | 5,287,444 | 7,339,343 | ||||||||||||
Total Liabilities | 5,783,319 | 4,484,924 | 5,287,444 | 7,339,343 | ||||||||||||
COMMITMENTS AND CONTINGENCIES | - | - | - | - | ||||||||||||
STOCKHOLDERS’ DEFICIT | ||||||||||||||||
Preferred stock, authorized, 20,000,000 shares, $.001 par value, 125,000 and 0 shares issued and outstanding, respectively | 125 | - | ||||||||||||||
Common stock, authorized 1,900,000,000 shares, $.001 par value, 244,430,551 and 206,406,951 issued and outstanding, respectively outstanding, respectively | 244,431 | 206,407 | ||||||||||||||
Preferred stock, authorized, 20,000,000 shares, $.001 par value, 531,667 and 250,000 shares issued and outstanding, respectively | 532 | 250 | ||||||||||||||
Common stock, authorized 20,000,000,000 shares, $.001 par value, 13,775,349,662 and 12,752,084 issued and outstanding, respectively | 13,775,350 | 12,752 | ||||||||||||||
Shares to be issued | 19,150 | - | 178 | 150 | ||||||||||||
Additional paid in capital | 21,173,934 | 17,213,838 | 17,295,530 | 23,942,830 | ||||||||||||
Accumulated deficit | (26,025,365 | ) | (21,401,234 | ) | (36,124,747 | ) | (30,862,019 | ) | ||||||||
Total Stockholders’ Deficit | (4,587,725 | ) | (3,980,989 | ) | (5,053,157 | ) | (6,906,037 | ) | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 1,195,594 | $ | 503,935 | $ | 234,287 | $ | 433,306 |
The accompanying notes are an integral part of these consolidated condensed financial statements
3 |
eWELLNESS HEALTHCARE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine Months ended September 30, 20192020 and 2018
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Executive compensation | 102,000 | 102,000 | 306,000 | 306,000 | ||||||||||||
General and administrative | 709,205 | 322,266 | 1,284,556 | 809,704 | ||||||||||||
Professional fees | 669,261 | 407,355 | 1,918,402 | 1,360,206 | ||||||||||||
Total Operating Expenses | 1,480,466 | 831,621 | 3,508,958 | 2,475,910 | ||||||||||||
Loss from Operations | (1,480,466 | ) | (831,621 | ) | (3,508,958 | ) | (2,475,910 | ) | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Interest income | 13 | - | 29 | - | ||||||||||||
Foreign exchange rate | - | 4,507 | - | 12,598 | ||||||||||||
Gain (loss) on derivative liability | 1,331,213 | (89,579 | ) | 1,949,180 | 303,898 | |||||||||||
Gain (loss) on extinguishment of debt | - | - | - | (43,131 | ) | |||||||||||
Disposal of fixed asset | - | (2,134 | ) | - | (2,134 | ) | ||||||||||
Interest expense | (1,369,150 | ) | (173,306 | ) | (3,062,782 | ) | (493,106 | ) | ||||||||
Net Loss before Income Taxes | (1,518,750 | ) | (1,092,133 | ) | (4,622,531 | ) | (2,697,785 | ) | ||||||||
Income tax expense | (1,600 | ) | (29 | ) | (1,600 | ) | (1,656 | ) | ||||||||
Net Loss | $ | (1,520,350 | ) | $ | (1,092,162 | ) | $ | (4,624,131 | ) | $ | (2,699,441 | ) | ||||
Loss per common share | ||||||||||||||||
Basic | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
Diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 231,454,650 | 174,369,861 | 220,916,826 | 158,927,170 | ||||||||||||
Diluted | 231,454,650 | 174,369,861 | 220,916,826 | 158,927,170 |
The accompanying notes are an integral part of these consolidated condensed financial statements
eWELLNESS HEALTHCARE CORPORATION
RECONCILIATION OF STOCKHOLDERS’ DEFICIT
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(unaudited)
Preferred Shares | Common Shares | Shares to be | Additional Paid in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Deficit | |||||||||||||||||||||||||
Balance at January 1, 2019 | - | $ | - | 206,406,951 | $ | 206,407 | $ | - | $ | 17,213,838 | $ | (21,401,234 | ) | $ | (3,980,989 | ) | ||||||||||||||||
Contributed services | - | - | - | - | - | 54,000 | - | 54,000 | ||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 5,097,255 | 5,098 | - | 342,389 | - | 347,487 | ||||||||||||||||||||||||
Shars issued for financing costs | - | - | 1,000,000 | 1,000 | - | 114,000 | - | 115,000 | ||||||||||||||||||||||||
Shares issued for prepaid services | - | - | 3,510,870 | 3,511 | - | 402,239 | - | 405,750 | ||||||||||||||||||||||||
Shares issued for services | - | - | 1,324,560 | 1,325 | - | 180,224 | - | 181,549 | ||||||||||||||||||||||||
Derivative liability | - | - | - | - | - | 492,340 | - | 492,340 | ||||||||||||||||||||||||
Net loss | (1,338,471 | ) | (1,338,471 | ) | ||||||||||||||||||||||||||||
Balance at March 31, 2019 | - | $ | - | 217,339,636 | $ | 217,341 | $ | - | $ | 18,799,030 | $ | (22,739,705 | ) | $ | (3,723,334 | ) | ||||||||||||||||
Contributed services | - | - | - | - | - | 54,000 | - | 54,000 | ||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 1,181,433 | 1,181 | - | 52,574 | - | 53,755 | ||||||||||||||||||||||||
Shares issued for cash | - | - | 800,000 | 800 | - | 58,300 | - | 59,100 | ||||||||||||||||||||||||
Shares issued for prepaid services | - | - | 500,000 | 500 | - | 52,500 | - | 53,000 | ||||||||||||||||||||||||
Shares issued for services | - | - | 1,650,435 | 1,650 | - | 156,434 | - | 158,084 | ||||||||||||||||||||||||
Derivative liability | - | - | - | - | - | 70,987 | - | 70,987 | ||||||||||||||||||||||||
Net loss | (1,765,310 | ) | (1,765,310 | ) | ||||||||||||||||||||||||||||
Balance at June 30, 2019 | - | $ | - | 221,471,504 | $ | 221,472 | $ | - | $ | 19,243,825 | $ | (24,505,015 | ) | $ | (5,039,718 | ) | ||||||||||||||||
Contributed services | - | - | - | - | - | 54,000 | - | 54,000 | ||||||||||||||||||||||||
Shares issued to officers, directors and consultants | 125,000 | 125 | - | - | - | 374,875 | - | 375,000 | ||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 13,991,743 | 13,992 | - | 517,433 | - | 531,425 | ||||||||||||||||||||||||
Shares issued for prepaid services | - | - | 6,692,307 | 6,692 | - | 440,769 | - | 447,461 | ||||||||||||||||||||||||
Shares issued for services | - | - | 2,274,997 | 2,275 | - | 150,297 | - | 152,572 | ||||||||||||||||||||||||
Shares to be issued for services | - | - | - | - | 19,150 | - | - | 19,150 | ||||||||||||||||||||||||
Derivative liability | - | - | - | - | - | 392,735 | - | 392,735 | ||||||||||||||||||||||||
Net loss | (1,520,350 | ) | (1,520,350 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2019 | 125,000 | $ | 125 | 244,430,551 | $ | 244,431 | $ | 19,150 | $ | 21,173,934 | $ | (26,025,365 | ) | $ | (4,587,725 | ) |
Preferred Shares | Common Shares | Shares to be | Additional Paid in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Deficit | |||||||||||||||||||||||||
Balance at January 1, 2018 | - | $ | - | 142,352,406 | $ | 142,352 | $ | - | $ | 13,178,131 | $ | (16,949,772 | ) | $ | (3,629,289 | ) | ||||||||||||||||
Contributed services | - | - | - | - | - | 55,500 | - | 55,500 | ||||||||||||||||||||||||
Option expense | - | - | - | - | - | 108,594 | - | 108,594 | ||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 3,945,407 | 3,945 | - | 209,347 | - | 213,292 | ||||||||||||||||||||||||
Shares issued for prepaid services | - | - | 800,000 | 800 | - | 103,200 | - | 104,000 | ||||||||||||||||||||||||
Derivative liability | 219,525 | 219,525 | ||||||||||||||||||||||||||||||
Shares issued for services | - | - | 1,350,000 | 1,350 | - | 137,250 | - | 138,600 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (473,973 | ) | (473,973 | ) | ||||||||||||||||||||||
Balance at March 31, 2018 | - | $ | - | 148,447,813 | $ | 148,447 | $ | - | $ | 14,011,547 | $ | (17,423,745 | ) | $ | (3,263,751 | ) | ||||||||||||||||
Contributed services | - | - | - | - | 55,500 | - | 55,500 | |||||||||||||||||||||||||
Option expense | - | - | - | - | 108,594 | - | 108,594 | |||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 13,708,947 | 13,710 | 622,996 | - | 636,706 | |||||||||||||||||||||||||
Shares issued for prepaid services | - | - | 1,500,000 | 1,500 | 103,500 | - | 105,000 | |||||||||||||||||||||||||
Shares issued for contributions | - | - | 1,000,000 | 1,000 | 69,000 | 70,000 | ||||||||||||||||||||||||||
Derivative liability | 154,388 | 154,388 | ||||||||||||||||||||||||||||||
Shares issued for services | - | - | 1,200,000 | 1,200 | 14,800 | 96,100 | - | 112,100 | ||||||||||||||||||||||||
Net loss | (1,133,306 | ) | (1,133,306 | ) | ||||||||||||||||||||||||||||
Balance at June 30, 2018 | - | $ | - | 165,856,760 | $ | 165,857 | $ | 14,800 | $ | 15,221,625 | $ | (18,557,051 | ) | $ | (3,151,769 | ) | ||||||||||||||||
Contributed services | - | - | - | - | 55,500 | - | 55,500 | |||||||||||||||||||||||||
Option expense | - | - | - | - | 142,057 | - | 142,057 | |||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 12,943,900 | 12,944 | 607,546 | - | 620,490 | |||||||||||||||||||||||||
Shares issued for financing costs | - | - | 1,590,331 | 1,590 | 70,410 | - | 72,000 | |||||||||||||||||||||||||
Derivative liability | (49,741 | ) | (49,741 | ) | ||||||||||||||||||||||||||||
Shares issued for services | - | - | 1,325,000 | 1,325 | (14,800 | ) | 92,340 | - | 78,865 | |||||||||||||||||||||||
Net loss | (1,092,162 | ) | (1,092,162 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2018 | - | $ | - | 181,715,991 | $ | 181,716 | $ | - | $ | 16,139,737 | $ | (19,649,213 | ) | $ | (3,327,760 | ) |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
REVENUE | $ | 125,274 | $ | - | $ | 263,429 | $ | - | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Executive compensation | 102,000 | 102,000 | 476,000 | 306,000 | ||||||||||||
General and administrative | 54,465 | 709,205 | 489,708 | 1,284,556 | ||||||||||||
Professional fees | 94,867 | 669,261 | 945,448 | 1,918,402 | ||||||||||||
Total Operating Expenses | 251,332 | 1,480,466 | 1,911,156 | 3,508,958 | ||||||||||||
Loss from Operations | (126,058 | ) | (1,480,466 | ) | (1,647,727 | ) | (3,508,958 | ) | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Interest income | - | 13 | 1 | 29 | ||||||||||||
Gain (loss) on derivative liability | 1,465,693 | 1,331,213 | (2,734,266 | ) | 1,949,180 | |||||||||||
Loss on disposal of asset | - | - | (3,866 | ) | - | |||||||||||
Interest expense | (112,837 | ) | (1,369,510 | ) | (876,870 | ) | (3,062,782 | ) | ||||||||
Net Income (Loss) before Income Taxes | 1,226,798 | (1,518,750 | ) | (5,262,728 | ) | (4,622,531 | ) | |||||||||
Income tax expense | - | (1,600 | ) | - | (1,600 | ) | ||||||||||
Net income (Loss) | $ | 1,226,798 | $ | (1,520,350 | ) | $ | (5,262,728 | ) | $ | (4,624,131 | ) | |||||
Basic and diluted income (loss) per shares | $ | 0.00 | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.02 | ) | |||||
Weighted average shares outstanding | 9,749,989,477 | 231,454,650 | 5,049,047,707 | 220,916,826 |
The accompanying notes are an integral part of these consolidated condensed financial statements
4 |
eWELLNESS HEALTHCARE CORPORATION
CONSOLIDATED CONDENSED STATEMENTRECONCILIATION OF CASH FLOWS
For the Nine Months Ended September 30, 2019 and 2018STOCKHOLDERS’ DEFICIT
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
For Nine Months Ended | ||||||||
September 30, 2019 | September 30, 2018 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (4,624,131 | ) | $ | (2,699,441 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 4,794 | 2,863 | ||||||
Contributed services | 162,000 | 166,500 | ||||||
Shares issued for consulting services | 511,355 | 329,565 | ||||||
Shares issued for financing costs | 115,000 | 72,000 | ||||||
Shares issued to officers, directors and consultants | 86,250 | - | ||||||
Shares issued for contribution | - | 70,000 | ||||||
Options expense | - | 359,245 | ||||||
Amortization of debt discount to interest expense | 2,690,435 | 284,392 | ||||||
Amortization of prepaids | 678,805 | 301,140 | ||||||
Foreign currency exchange | - | 12,598 | ||||||
Loss on disposal of fixed asset | - | (2,134 | ) | |||||
Gain on derivative liability | (1,949,180 | ) | (303,898 | ) | ||||
Loss on settlement of debt | - | 43,131 | ||||||
Changes in operating assets and liabilities | ||||||||
Prepaid expense | (57,948 | ) | (18,055 | ) | ||||
Accounts payable and accrued expenses | 111,801 | 194,332 | ||||||
Accounts payable - related party | (19,891 | ) | 287,161 | |||||
Accrued expenses - related party | (15,835 | ) | 7,386 | |||||
Accrued compensation | (82,006 | ) | 72,901 | |||||
Net cash used in operating activities | (2,388,551 | ) | (820,315 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of equipment | (13,374 | ) | (2,037 | ) | ||||
Net cash used in investing activities | (13,374 | ) | (2,037 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of common stock | 59,100 | - | ||||||
Issuance of convertible debt | 4,400,500 | 969,300 | ||||||
Payment on debt | (1,102,450 | ) | (1,005 | ) | ||||
Debt issuance costs | (577,500 | ) | (125,150 | ) | ||||
Net cash provided by financing activities | 2,799,650 | 843,145 | ||||||
Net increase in cash | 397,725 | 20,793 | ||||||
Cash, beginning of period | 383,335 | 6,882 | ||||||
Cash, end of period | $ | 781,060 | $ | 27,675 | ||||
Supplemental Information: | ||||||||
Cash paid for: | ||||||||
Taxes | $ | 1,856 | $ | 1,267 | ||||
Interest Expense | $ | 475,519 | $ | - | ||||
Non cash items: | ||||||||
Derivative liability and debt discount issued with new notes | $ | 2,831,539 | $ | 359,732 | ||||
Shares issued for debt conversion | $ | 932,667 | $ | 1,190,489 | ||||
Shares issued for prepaids | $ | 906,211 | $ | 209,000 |
Additional | Total | |||||||||||||||||||||||||||||||
Preferred Shares | Common Shares | Shares to be | Paid in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Deficit | |||||||||||||||||||||||||
Balance at June 30, 2020 | 476,667 | $ | 477 | 7,851,724,496 | $ | 7,851,725 | $ | 76 | $ | 21,409,876 | $ | (37,351,545 | ) | $ | (8,089,391 | ) | ||||||||||||||||
Contributed services | - | - | - | - | - | 54,000 | - | 54,000 | ||||||||||||||||||||||||
Shares issued to officers, directors and consultants | 55,000 | 55 | - | - | - | 164,945 | - | 165,000 | ||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 5,923,625,166 | 5,923,625 | - | (5,479,659 | ) | - | 443,966 | |||||||||||||||||||||||
Shares issued for services | - | - | - | - | 102 | - | - | 102 | ||||||||||||||||||||||||
Derivative liability | - | - | - | - | - | 1,146,368 | - | 1,146,368 | ||||||||||||||||||||||||
Net Income | - | - | - | - | - | - | 1,226,798 | 1,226,798 | ||||||||||||||||||||||||
Balance at September 30, 2020 | 531,667 | $ | 532 | 13,775,349,662 | $ | 13,775,350 | $ | 178 | $ | 17,295,530 | $ | (36,124,747 | ) | $ | (5,053,157 | ) | ||||||||||||||||
Balance at June 30, 2019 | - | - | 4,429,430 | 4,429 | �� | - | 19,460,868 | (24,505,015 | ) | (5,039,718 | ) | |||||||||||||||||||||
Contributed services | - | - | - | - | - | 54,000 | - | 54,000 | ||||||||||||||||||||||||
Shares issued to officers, directors and consultants | 125,000 | 125 | - | - | - | 374,875 | 375,000 | |||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 279,835 | 280 | - | 531,145 | - | 531,425 | ||||||||||||||||||||||||
Shares issued for prepaid services | - | - | 133,846 | 134 | - | 447,327 | - | 447,461 | ||||||||||||||||||||||||
Shares issued for services | - | - | 45,500 | 46 | - | 152,526 | - | 152,572 | ||||||||||||||||||||||||
Shares to be issued for services | - | - | - | - | 19,150 | - | - | 19,150 | ||||||||||||||||||||||||
Derivative liability | - | - | - | - | - | 392,735 | - | 392,735 | ||||||||||||||||||||||||
Net loss | (1,520,350 | ) | (1,520,350 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2019 | 125,000 | $ | 125 | 4,888,611 | $ | 4,889 | $ | 19,150 | $ | 21,413,476 | (26,025,365 | ) | $ | (4,587,725 | ) |
NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
Additional | Total | |||||||||||||||||||||||||||||||
Preferred Shares | Common Shares | Shares to be | Paid in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Deficit | |||||||||||||||||||||||||
Balance at January 1, 2020 | 250,000 | $ | 250 | 12,752,084 | $ | 12,752 | $ | 150 | $ | 23,942,830 | $ | (30,862,019 | ) | $ | (6,906,037 | ) | ||||||||||||||||
Contributed services | - | - | - | - | - | 162,000 | - | 162,000 | ||||||||||||||||||||||||
Shares issued to officers, directors and consultants | 281,667 | 282 | - | - | - | 844,718 | - | 845,000 | ||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 13,761,881,370 | 13,761,882 | - | (12,161,555 | ) | - | 1,600,327 | |||||||||||||||||||||||
Shares issued for services | - | - | 668,332 | 668 | 28 | 957 | - | 1,653 | ||||||||||||||||||||||||
Shares issued for rounding - 50:1 split | 47,876 | 48 | - | (48 | ) | - | - | |||||||||||||||||||||||||
Derivative liability | - | - | - | - | - | 4,506,628 | - | 4,506,628 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (5,262,728 | ) | (5,262,728 | ) | ||||||||||||||||||||||
Balance at September 30, 2020 | 531,667 | $ | 532 | 13,775,349,662 | $ | 13,775,350 | $ | 178 | $ | 17,295,530 | $ | (36,124,747 | ) | $ | (5,053,156 | ) | ||||||||||||||||
Balance at January 1, 2019 | - | $ | - | 4,128,139 | $ | 4,128 | $ | - | $ | 17,416,117 | $ | (21,401,234 | ) | (3,980,989 | ) | |||||||||||||||||
Contributed services | - | - | - | - | - | 162,000 | - | 162,000 | ||||||||||||||||||||||||
Shares issued to officers, directors and consultants | 125,000 | 125 | - | - | - | 374,875 | - | 375,000 | ||||||||||||||||||||||||
Shares issued for debt conversion | - | - | 405,408 | 405 | - | 932,262 | - | 932,667 | ||||||||||||||||||||||||
Shares issued for cash | - | - | 16,000 | 16 | - | 59,084 | - | 59,100 | ||||||||||||||||||||||||
Shares issued for financing costs | - | - | 20,000 | 20 | - | 114,980 | - | 115,000 | ||||||||||||||||||||||||
Shares issued for prepaid services | - | - | 214,064 | 215 | - | 905,996 | - | 906,211 | ||||||||||||||||||||||||
Shares issued for services | - | - | 105,000 | 105 | - | 492,100 | - | 492,205 | ||||||||||||||||||||||||
Shares to be issued for services | - | - | - | - | 19,150 | - | - | 19,150 | ||||||||||||||||||||||||
Derivative liability | - | - | - | - | - | 956,062 | - | 956,062 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (4,624,131 | ) | (4,624,131 | ) | ||||||||||||||||||||||
Balance at September 30, 2019 | 125,000 | $ | 125 | 4,888,611 | $ | 4,889 | $ | 19,150 | $ | 21,413,476 | $ | (26,025,365 | ) | $ | (4,587,725 | ) |
The accompanying notes are an integral part of these consolidated condensed financial statements
5 |
eWELLNESS HEALTHCARE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
For Nine Months Ended | ||||||||
September 30, 2020 | September 30, 2019 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (5,262,728 | ) | $ | (4,624,131 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 5,272 | 4,794. | ||||||
Contributed services | 162,000 | 162,000 | ||||||
Shares issued to officers, directors and consultants | 376,750 | 86,250 | ||||||
Shares issued for consulting services | 1,653 | 511,355 | ||||||
Shares issued for financing costs | 95,933 | 115,000 | ||||||
Amortization of debt discount and prepaids | 771,793 | 3,369,240 | ||||||
Gain (loss) on derivative liability | 2,734,266 | (1,949,180 | ) | |||||
Loss on disposal of asset | 3,866 | - | ||||||
Changes in operating assets and liabilities | ||||||||
Prepaid expense | (19,708 | ) | (57,948 | ) | ||||
Accounts receivable | (192,496 | ) | - | |||||
Accounts payable and accrued expenses | 638,533 | 111,801 | ||||||
Accounts payable - related party | 196,460 | (19,891 | ) | |||||
Accrued expenses - related party | 25,489 | (15,835 | ) | |||||
Accrued compensation | 182,887 | (82,006 | ) | |||||
Net cash used in operating activities | (280,028 | ) | (2,388,551 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of equipment | - | (13,374 | ) | |||||
Net cash used in investing activities | - | (13,374 | ) | |||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of common stock | - | 59,100 | ||||||
Issuance of convertible debt | 52,800 | 4,400,500 | ||||||
Payment on debt | - | (1,102,450 | ) | |||||
Debt issuance costs | (7,800 | ) | (557,500 | ) | ||||
Net cash provided by financing activities | 45,000 | 2,799,650 | ||||||
Net increase (decrease) in cash | (235,028 | ) | 397,725 | |||||
Cash, beginning of period | 240,722 | 383,335 | ||||||
Cash, end of period | $ | 5,694 | $ | 781,060 | ||||
Supplemental Information: | ||||||||
Cash paid for: | ||||||||
Taxes | $ | - | $ | 1,856 | ||||
Interest Expense | $ | - | $ | 475,519 | ||||
Non cash items: | ||||||||
Derivative liability and debt discount issued with new notes | $ | - | $ | 2,831,539 | ||||
Shares issued for debt conversion | $ | 1,600,327 | $ | 932,667 | ||||
Shares issued for prepaids | $ | - | $ | 906,211 |
The accompanying notes are an integral part of these consolidated condensed financial statements
6 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 20192020
(unaudited)
Note 1. The Company
The Company and Nature of Business
eWellness Healthcare Corporation (the “eWellness”, “Company”, “we”, “us”, “our”) was incorporated in the State of Nevada on April 7, 2011. The Company has generated nominimal revenues to date.
eWellness Healthcare Corporation is the first physical therapy telehealth company to offer real-time distance monitored assessments and treatments. Our business model is to have large-scale employers use our PHZIO platform as a fully PT monitored corporate musculoskeletal treatment (“MSK”) wellness program. The Company’s PHZIO home physical therapy assessment and exercise platform has been designed to disrupt the $30 billion physical therapy market, the $4 billion MSK market and the $8 billion corporate wellness industry. PHZIO re-defines the way MSK physical therapy can be delivered. PHZIO is the first real-time remote monitored 1-to-many MSK physical therapy platforms for home use.
WeOn May 22, 2020, the Company received and accepted the resignations of Brandon Rowberry and Rochelle Pleskow as independent directors. Their letters of resignation state the reason for their resignations were to permit them to pursue other business opportunities and further stated that they have commenced treating patientshad no disagreements with the operations, policies or practices of the Company. Also, on various commercial contractsMay 22, 2020, the Company received a letter of resignation from Darwin Fogt resigning as CEO, President and anticipate generating initial revenuesdirector of the Company and a separate letter of resignation from Curtis Hollister, resigning as CTO and director of the Company. Messrs. Fogt and Hollister are executive officers and principals of Bistromatics Inc., organized under the laws of Canada (“Bistromatics”).
On November 12, 2016, the Company entered into a Services Agreement with Bistromatics (the “Bistromatics Agreement”) pursuant to which Bistromatics agreed to provide operational services to the Company for its PHZIO System including development, content editing and training, support and maintenance, billing, hosting and oversight, among other services. Reference is made to the Company’s Form 8-K filed on November 21, 2016, which Form 8-K was signed by Darwin Fogt as CEO on behalf of the Company, regarding the disclosure of the Bistromatics Agreement. The Services Agreement included a provision granting Bistromatics the right to appoint 40% of the Registrant’s Board of Directors, resulting in the appointment of Messrs. Fogt and Hollister as members of the Company’s Board. Although both Companies continue to abide by the Services Agreement the Company is in arrears in fees to Bistromatics for approximately $783,000 as of September 30, 2020. The Service Agreement expired during the 41thstquarter of 2019. Despite2020 and the lack of revenues, weparties continue to train physical therapist on how to use our PHZIO treatment platform, with manydiscuss the formation of these therapists treating various patients on our system on a complimentary basis. Our PHZIO system has delivered over 4,000 telerehab treatments to date.new Services Agreement.
Our latest challengesPursuant to communications between the Company and Darwin Fogt and Curtis Hollister regarding their resignations as executive officers and directors of the Company, which resignations were accepted by the Company’s Board on June 1, 2020, Messrs. Fogt and Hollister represented to the Company that Bistromatics and its management will continue to provide support services to the Company’s PHZIO System, In addition, both Darwin Fogt and Curtis Hollister confirmed that they have had no disagreements with the operations, policies or practices of the Company.
In connection with the resignation of Darwin Fogt as CEO, the Registrant’s Board of Directors has appointed Douglas MacLellan, who has served as the Company’s Chairman since May 2013, as Chief Executive Officer in addition to continuing to serve as the Workers Compensation space has been patient adoptionChairman of the Board of Directors.
As noted above, the Companies PHZIO relatedand MSK360 systems are currently operated on behalf of the Company by Bistromatics Inc. in Canada. These services are still operational and continues to a patients’ choicetreat EWLL’s corporate patients and customers.
On September 15, 2020, the Company and Bistromatics signed an agreement that would transfer all worldwide marketing and Intellectual Property Rights or claims to choose if they are treated in-clinic or digitally. They are nearly all choosing in-clinic care. Our pivot to address this issue was to developthe Company’s Phzio, Phzio TeleRehab and sell MSK 360 platforms to Bistromatics in return for a pre-injury fitness exam and custom exercise platform that is just rolling out now. Next, we finally are getting traction for our Per-Hab product with several large TPA’s. Lastly, multiple clients are requesting an Rheumatoid Arthritis Exercise product (RA 360) that is currently being developed with a launch date15% ownership in Bistromatics. This agreement would eliminate all past due professional fees of mid-January. With the successapproximately $783,000. The transfer of MSK 360 we expect that more Workers Comp patients will choose digital care over in-clinic care.rights would not be completed until December 31, 2020.
7 |
We have now developed four key products with large scale users that need to turn on utilization in 2020. We have a large list of corporate self-insured, TPA and insurance company sales book that we are actively focused on selling to them our MSK-360 and Pre-Hab platforms. We expect good traction from many of these firms in 2020. These products are:
+ PHZIO: Realtime PT monitored Digital PT Treatments (post-injury)eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
+ MSK 360: Digital “PHZIOFIT" fitness exam and customer exercise plans for employees, (pre-injury)September 30, 2020
(unaudited)
+ Pre-Hab: Digital pre-surgery (non-monitored) for Total Knee, Hip and Shoulder surgery (post injury and pre-surgery)
+ RA 360: (Available January 2020) Rheumatoid Arthritis Exercise Plan
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense notes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2018.2019. In the opinion of management, all adjustments necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the ninesix months ended September 30, 20192020 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2019.2020. The unaudited consolidated condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.
The information regarding common stock shares, options and warrants throughout this document have been adjusted to reflect the 1:50 reverse split authorized by the Board of Directors on December 16, 2019 and further approved by FINRA on February 12, 2020.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these good faith estimates and judgments.
Going Concern
For the nine months ended September 30, 2019,2020, the Company had no revenues.revenues of $263,429. The Company has an accumulated loss of $26,025,365. In view$36,124,747 and a working capital deficit of these matters, there is substantial doubt about the Company’s ability to continue as a going concern.$5,075,829 The Company’s ability to continue operations is dependent upon the Company’s ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations, of which there can be no guarantee. The Company intends to finance its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Fair Value of Financial Instruments
As of September 30, 2020, the Company had the following assets and liabilities measured at fair value on a recurring basis.
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Derivative Liability | $ | 1,685,375 | $ | - | $ | - | $ | 1,685,375 | ||||||||
Total Liabilities measured at fair value | $ | 1,685,375 | $ | - | $ | - | $ | 1,685,375 |
8 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 20192020
(unaudited)
Fair Value of Financial Instruments
As of September 30,December 31, 2019, the Company had the following assets and liabilities measured at fair value on a recurring basis.
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Derivative Liability | $ | 1,358,964 | $ | - | $ | - | $ | 1,358,964 | $ | 3,529,974 | $ | - | $ | - | $ | 3,529,974 | ||||||||||||||||
Total Liabilities measured at fair value | $ | 1,358,964 | $ | - | $ | - | $ | 1,358,964 | $ | 3,529,974 | $ | - | $ | - | $ | 3,529,974 |
As of December 31, 2018, the Company had the following assets and liabilities measured at fair value on a recurring basis.
Revenue Recognition
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Derivative Liability | $ | 1,584,102 | $ | - | $ | - | $ | 1,584,102 | ||||||||
Total Liabilities measured at fair value | $ | 1,584,102 | $ | - | $ | - | $ | 1,584,102 |
The Company recognizes revenue per ASC 606. Revenue is recognized when the claims for physical therapy sessions have been submitted to the various insurance carriers.
Note 3. Related Party Transactions
In November 2016, the Company signed an agreement with a programming company (“PC”) within which one of the Company’s former directors and Chief Technical Officer (“CTO”) is the Chief Marketing Officer. The agreement is for additional features to be programmed for the launch of the PHZIO platform. The Company is to pay a monthly base fee of $100,000 for the development and compensation for the Company’s CEO and CTO. Following payment of the initial $100,000, the Company is obligated to only pay $50,000 monthly until the PC has successfully signed and collected the first monthly service fee for 100 physical therapy clinics to use the PHZIO platform. The agreement establishes that the Company is indebted to the PC for $225,000 for past programming services. For this amount, the Company issued 25,280,899 common shares at a value of $0.0089 per share on April 1, 2017. The PC will also have the right to appoint 40% of the directors. At the end ofperiods ended September 30, 2020 and December 31, 2019, the Company had a payable of $627,832 due$782,832 and $582,832, respectively. The CTO resigned his officer and director position on June 1, 2020.
The Company signed an agreement with the former CEO for administrative physical therapy consulting. The agreement provides that the former CEO will provide non-clinical administrative services in the various states where the Phzio companies are located. The Company is to this company.pay the former CEO the sum of $3,500 per month. Since the former CEO resigned his officer and director position on June 1, 2020, any amounts owed to him are included in accounts payable.
Throughout the nine months ended September 30, 2019,2020, the officers and directors of the Company incurred business expenses on behalf of the Company. The amounts payable to the officers as of September 30, 20192020 and December 31, 20182019 were $44,991$0 and $3,076,$1,368, respectively. There were no expenses due to the board members, but the Company has accrued directors’ fees of $153,250$121,107 and $211,000 at$137,500 as of September 30, 20192020 and December 31, 2018,2019, respectively. Because the Company is not yet profitable the officers have agreed to defer compensation. The Company had accrued executive compensation of $776,464$290,861 and $1,113,470 at$532,974 as of September 30, 20192020 and December 31, 20182019, respectively.
Note 4. Convertible Notes Payable
Nine Months Ended September 30, 20192020
On January 29, 2019, the Company received the third tranche of $60,000 relating to a note executed on July 13, 2018. During the nine months ending September 30, 2019, the Company accrued interest expense of $1,350. On July 12, 2019, the Company prepaid this note of $60,000 plus accrued interest and a prepayment penalty of $30,000. At September 30, 2019, this note is fully paid.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
On January 8, 2019,In March 2020, the Company executed an 8%a 12% Convertible Promissory NotesNote payable to an institutional investor in the principal amount of $308,000.$52,800. The note, which is due on January 8, 2020,15, 2021, has an original issue discount of $28,000$4,800 and transaction costs of $10,000. The$3,000. After 180 days, the convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $17,547. During the nine months ended September 30, 2019, the investor converted $30,000 of principal and $1,687 of accrued interest for 905,333 shares of common stock at a price of $.035. At September 30, 2019, there is $278,000 principal outstanding.
On January 8, 2019, the Company executed an 8% Convertible Promissory Notes payable to an institutional investor in the principal amount of $308,000 each. The note, which is due on January 8, 2020, has an original issue discount of $28,000 and transaction costs of $10,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $17,029. During the nine months ended September 30, 2019, the investor converted $162,000 of principal for 4,424,400 shares of common stock for prices ranging from $.035 to $.042. At September 30, 2019, there is $146,000 principal outstanding.
On January 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $114,000. The note, which is due on October 30, 2019, has an original issue discount of $11,000 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the nine months ended September 30, 2019,2020, the Company accrued interest expense of $6,028. On July 12, 2019, the Company prepaid this note of $114,000 plus accrued interest and a prepayment penalty of $42,010. At September 30, 2019, this note is fully paid.
On January 29, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is due on November 15, 2019, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $2,753. On July 12, 2019, the Company prepaid this note of $58,300 plus accrued interest and a prepayment penalty of $21,369. At September 30, 2019, this note is fully paid.
On February 22, 2019, the Company received the fourth tranche of $30,000 relating to a note executed on July 13, 2018. During the nine months ending September 30, 2019, the Company accrued interest of $534. On September 17, 2019, the convertible debt holder converted $9,700 of principal for 340,000 shares of common stock at a price of $.03. At September 30, 2019, there is $20,300 principal outstanding.
On March 18, 2019, the Company executed a Securities Purchase Agreement for Convertible Debentures to an institutional investor in the principal amount of $365,000 to be funded in six tranches: $65,000 at signing, $100,000 forty-five (45) days after the signing date and $200,000 forty-five (45) days after the second closing date. The debentures, which are payable on March 18, 2022, have a 10% original issue discount and a commitment fee of $5,000 payable with the signing debenture. The debentures convert into common stock of the Company at a conversion price equal to the lesser of (i) $.12 or (ii) seventy percent (70%) of the lowest traded price (as reported by Bloomberg LP) of the common stock for the ten (10) trading days prior to the conversion date. The first tranche of $65,000 was received on March 21, 2019. On September 12, 2019, the Company prepaid this note of $65,000 and a prepayment penalty of $19,500. At September 30, 2019, this note is fully paid.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
On March 18, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $47,300. The note, which is payable on January 30, 2020, has an original issue discount of $4,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,226. On September 12, 2019, the Company prepaid this note of $47,300 plus accrued interest and a prepayment penalty of $16,555. At September 30, 2019, this note is fully paid.
On March 21, 2019, the Company executed a 3% Convertible Promissory Note payable to an institutional investor in the principal amount of $360,000. The note, which is payable twelve (12) months after each tranche is funded, has an original issue discount of $60,000. The original issue discount will be prorated with each tranche paid. The first tranche of $60,000 is due at signing date. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the lesser of (i) lowest trading price or (ii) the lowest closing bid price on the OTCQB during the twenty-five (25) trading day period ending on the last complete trading day prior to the conversion date. The first tranche was received on March 29, 2019. The second tranche of $37,500 was received on July 19, 2019. During the nine months ended September 30, 2019, the Company accrued interest expense of $2,925. On September 30, 2019, the Company prepaid the first tranche of $60,000 plus accrued interest and a prepayment penalty of $30,000. At September 30, 2019, only the second tranche of $37,500 is outstanding.
On March 21, 2019, the Company executed a 12% Convertible Promissory Note to an institutional investor in the principal amount of $1,500,000 to be funded over separate tranches; the first tranche to be funded on signing. The note, which is due and payable six (6) months after the funding date of each tranche, has an original issue discount of 10%. The Company issued 3,260,870 shares of restricted common stock on the closing date. These are deemed returnable shares which the investor must return if the Company repays the note prior to the maturity date. In addition, the Company issued 1,000,000 shares of restricted common stock as a commitment fee. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the lowest trading price during the thirty (30) day trading period ending on the last complete trading day prior to the conversion date. The first tranche of $750,000 was received on March 25, 2019. The second tranche of $350,000 was received on July 12, 2019 and the Company issued 2,692,307 shares of restricted common stock. These shares are redeemable if the Company pays the note prior to the maturity date of January 20, 2020. The third and final tranche was received on September 9, 2019 and the Company issued 4,000,000 shares of restricted common stock. These shares are redeemable if the Company pays the note prior to the maturity date of March 12, 2020. During the nine months ended September 30, 2019, the Company accrued interest expense of $57,337.
On April 1, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is payable on February 15, 2020, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $3,811. On September 12, 2019, the Company prepaid this note of $58,300 plus accrued interest and a prepayment penalty of $20,405. At September 30, 2019, this note is fully paid.
On May 6, 2019, the Company executed a convertible note conversion period extension agreement on a note dated October 28, 2018, within which the period of conversion by note holder was extended to May 27, 2019. The Company paid $16,031 to note holder for this extension agreement. On May 28, 2019, the Company executed a second extension agreement on this note within which the period of conversion by note holder was extended to June 11, 2019. The Company paid $16,105 to note holder for this extension agreement. During the nine months ended September 30, 2019, the note holder converted the $308,000 note and accrued interest of $16,337 into 8,987,253 shares of common shares at prices ranging from $.035 $.04508. At September 30, 2019, this note has been fully converted.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
On May 13, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. The note, which is due on February 13, 2020, has an original issue discount of $10,000 and transactions costs of $3,000. The convertible note converts into common stock of the Company at conversion price that shall be equal to the 65% of the lowest closing price for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $5,063.
On July 2, 2019, two Back-End notes executed in October 2018 with an institutional investor was funded for $154,000 each. Each note, which is due on October 29, 2019, has an original issue discount of $16,500. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the prior twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,038 for each note.
On July 5, 2019, the Company signed an amendment to a convertible note issued on March 21, 2019 revising the conversion price from 75% to 65% of the lowest trading price during the thirty (30) trading days prior to the conversion date.
On July 8, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $140,800. The note, which is payable on April 30, 2020, has an original issue discount of $12,800 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $3.379.
On July 8, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within which the period of conversion by note holder was extended to August 9, 2019. The Company paid $21,560 to note holder for this extension agreement.
On July 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $113,000. The note, which is due on July 9, 2020, has an original issue discount of $10,000 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of the lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $2,712.
On July 9, 2019, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $235,000. The note, which is due on July 11, 2020, has an original issue discount of $25,200 and transaction costs of $10,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of the lowest per share trading prices for the prior twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,605.
On July 10, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within which the period of conversion by note holder was extended to August 9, 2019. The Company paid $22,410 to note holder for this extension agreement.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
On July 11, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $250,000. The note, which is due on April 19, 2020, has an original issue discount of $37,500 and transaction costs of $5,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the average of the lowest per share trading prices for the twenty-five (25) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $5,425.
On July 30, 2019, the Company executed two 12% Convertible Promissory Notes payable to two institutional investors in the principal amount of $38,500 each. Each note, which is due on April 30, 2020, has an original issue discount of $3,500 and transaction costs of $1,500. The convertible notes convert into common stock of the Company at a conversion price that shall be equal to the 65% of the lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $1,380 for the two notes.
On September 4, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is payable on July 15, 2020, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $364.
On September 9, 2019, a Back-End note executed in January 2019 with an institutional investor was funded for $154,000. The note, which is due on January 9, 2020, has an original issue discount of $14,000 and transaction costs of $5,000. The convertible note converts into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $641.
On September 19, 2019, two Back-End notes executed in January 2019 with an institutional investor was funded for $154,000 each. Each note, which is due on January 8, 2020, has an original issue discount of $14,000 and transactions costs of $5,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the prior twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $371 for each note.
Year Ended December 31, 2018
In January 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. During the year ended December 31, 2018, the note, which was due on October 12, 2018, and accrued interest totaling $4,489 was fully converted into 2,412,827 shares of common stock at a price of $.04745 per share.
In January 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $91,300. During the year ended December 31, 2018, the note, which was due on October 30, 2018, and accrued interest totaling $4,980 was fully converted into 1,630,799 shares of common stock at prices ranging from $.0583 to $.0603.
In February 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $63,800. During year ended December 31, 2018, the note, which was due on November 30, 2018, and accrued interest totaling $3,480 was fully converted into 1,309,799 shares of common stock at prices ranging from $.0487 to $.0532.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
In March 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. During the year ended December 31, 2018, the note, which was due on December 5, 2018, and accrued interest totaling $5,928 was fully converted into 2,402,436 shares of common stock at a price of $.036.
In March 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $72,450. During the year ended December 31, 2018, the note, which was due on December 30, 2018, and accrued interest totaling $3,780 was fully converted into 1,877,796 shares of common stock at prices ranging from $.0393 to $.0437.
In May 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $125,000. During the year ended December 31, 2018, the note, which is due on May 10, 2019, and accrued interest totaling $415 was fully converted into 1,626,268 shares of common stock at prices ranging from $.0628 to $.1032. At the year ended December 31, 2018, the Company is still liable for $5,288 of accrued interest that has not yet been converted.
In May 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $51,750. During the year ended December 31, 2018, the note, which is due on March 1, 2019, and accrued interest of $2,700 was fully converted into 658,722 shares of common stock at prices ranging from $.081 and $.085.
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $56,500. The note, which is due on April 17, 2019, has an original issue discount of $6,500. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 100,000 shares of common stock valued at $8,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized interest expense of $2,991.
In July 2018, the Company executed an 3% Convertible Promissory Note payable to an institutional investor in the principal amount of $180,000 for funding in six tranches. The note, which is due twelve months from the date of each individual tranche, has an original issue discount of $10,000 per tranche. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 75% of the market price which is lowest trading price during the twenty (20) trading day period ending on the last complete trading day prior to the conversion date. The trading price is the lesser of: (i) lowest traded price or (ii) the lowest closing bid price on the OTCQB. The first tranche of $60,000 was received in the month of July and second tranche of $30,000 was received in the month of August. During the year ended December 31, 2018, the Company recognized interest expense of $1,102.
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $28,250. The note, which is due on April 17, 2019, has an original issue discount of $3,250. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 50,000 shares of common stock valued at $4,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized interest expense of $1,495.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. The note, which is due on April 5, 2019, has an original issue discount of $7,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.06 or (ii) 75% of the lowest per share trading price for the ten (10) trading days before the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,870.
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $60,950. The note, which is due on April 30, 2019, has an original issue discount of $7,950. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price which is 75% of the average of the lowest (2) VWAP for the ten (10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $3,647.
In August 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is due on June 15, 2019, has an original issue discount of $5,300. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price which is 75% of the average of the two (2) lowest VWAP for the ten (10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $2,338.
In October 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $47,300. The note, which is due on July 15, 2019, has an original issue discount of $7,300. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the variable conversion price which is 70% of the average of the two (2) lowest VWAP for the ten(10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $1,291.
In October 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $165,000. The note, which is due on October 12, 2019, has an original issue discount of $15,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 65% of the lowest per share closing price during the fifteen (15) trading days immediately preceding the date of the notice of conversion. The first tranche of $110,000 was received in the month of October and the second tranche of $55,000 was received in the month of November. During the year ended December 31, 2018, the Company recognized interest expense of $2,594.
In October 2018, the Company executed two 8% Convertible Promissory Notes payable to two institutional investors, each in the principal amount of $308,000. Each note, which is due on October 29, 2019, has an original issue discount of $33,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,118 for each note.
In November 2018, a Back-End note executed in May 2018 with an institutional investor was funded. The Back-End note is an 8% Convertible Promissory Note payable in the principal amount of $125,000. The note, which is due on May 10, 2019, has an original issue discount of $10,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 72% of the lowest VWAP for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common stock can commence following the 180thcalendar day after the Original Issue Date. During the year ended December 31, 2018, the Company recognized interest expense of $1,123.$3,276.
9 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 20192020
(unaudited)
Note 5. Equity Transactions
Preferred Stock
The total number of shares of preferred stock which the Company shall have authority to issue is 20,000,000 shares with a par value of $0.001 per share. During the nine monthsyear ended September 30,December 31, 2019, the Company authorized the issuance of 1,000,000 shares of preferred stock to officers, directors and consultants as deferred compensation and/or expense. The shares are eligible for conversion after 24 months into 40 shares of common stock per each preferred share. The value of the issued shares was calculated on the basis of 40 shares per preferred share at the common share value on the date of issuance. The deferred compensation value of the shares will vest monthly at 1/24th24th of the calculated value of $3,000,000 and requisite expense or reduction of accrued compensation and/or accrued directors fees will be recorded. At the recording of the requisite vested share value, the corresponding number of preferred shares will be recorded as being issued. AtOn May 22, 2020, two independent directors resigned and three officers/directors/consultant resigned. Therefore, the endvesting of their preferred shares ceased on those dates per the authorization documents. During the nine months ended September 30, 2019,2020, there were 125,000 vested281,667 preferred shares that vested and $255,000$425,000 was recorded to reduce accrued compensation; $33,750$43,250 was recorded to reduce accrued directors’ fees, and $86,250$376,750 was recorded as expense for a total of $375,000.$845,000. As of September 30, 2020, there were 531,667 vested preferred shares for a total value of $1,595,000.
In April 2020, the Board of Directors issued a Certificate of Designations, Preferences and Rights of Series D Preferred Stock in which the Board authorized a new series of Preferred Stock to be designated as Series D. The Board authorized two hundred thousand (200,000) shares to be issued to persons designated by the Board. The Series D Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Holder decides to convert the shares of Series D Preferred Stock.
The Series D Preferred Stock will rank, with respect to rights to the payment of dividends and the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, (i) senior to all classes or series of the Corporation’s Common Stock, par value $0.001 per share (“Common Stock”), and to all other equity securities issued by the Corporation other than the Corporation’s newly authorized 13% Series B Cumulative Redeemable Perpetual Preferred Stock (the “Series B Preferred”); (ii) on parity with all equity securities issued by the Corporation with terms specifically providing that the Series B Preferred ranks on parity, except with respect to voting rights on which the Series B Preferred ranks junior to the Series D Preferred and except with respect to rights to the payment of dividends and the distribution of assets upon any liquidation, dissolution or winding up of the Corporation, which the Series B Preferred ranks senior to the Series D Preferred; and (iii) effectively junior to all existing and future indebtedness (including indebtedness convertible into our Common Stock or Preferred Stock) of the Corporation and to any indebtedness and other liabilities of (as well as any preferred equity interest held by others in) existing subsidiaries of the Corporation. The term “equity securities” shall not include convertible debt securities The Holders of the Series D Preferred Stock have the right, on all matters subject to the vote of the capital stock of the Corporation, to have the collective vote equal to 70% of the total of all voting capital stock of the Corporation, notwithstanding the number of shares of voting capital stock, including shares of common stock, that may be outstanding from time to time.
10 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2020
(unaudited)
Common Stock
On July 9, 2019,February 12, 2020, FINRA approved a 1:50 reverse split of the Company’s common stock. As noted throughout this document, all common shares are stated as if the 1:50 reverse split had been completed as of the beginning of the year ended December 31, 2019. Following the approval, the Company’s stock began trading under the symbol “EWLLD”. Due to rounding issues for the reverse split, the Company issued 47,876 additional shares of common stock.
On February 14, 2020, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of authorizing the increase in the number of authorized shares of Common Stock from fourone billion nine hundred million (400,000,000)(1,900,000,000) shares of Common Stock to nine hundred million (900,000,000)twenty billion (20,000,000,000) shares of Common Stock (the “Authorized Common Stock Share Increase”).Stock. On July 9,February 19, 2019, the Company filed Articles of Amendment to the Company’s Articles of Incorporation to implement the Authorized Common Stock Share Increase with the State of Nevada.
Nine Months Ended September 30, 2020
On October 10, 2019,
In January 2020, the Company filedexecuted a Definitive Information Statement on Schedule 14C for the purpose of authorizing the increase in the number of authorized12-month advisory services agreement. The Company is to issue 20,000 shares of Common Stock from nine hundred million (900,000,000)common stock monthly. The Company issued 80,000 shares of Common Stockcommon stock with a value of $126. The Company needs to one billion nine hundred million (1,900,000,000)issue an additional 100,000 shares of Common Stock (the “Authorized Common Stock Share Increase”). On October 15, 2019,common stock with a value of $20. In addition, the Company filed Articlesis to also pay the advisor a monthly fee of Amendment to$2,500.
During the Company’s Articlesnine months ended September 30, 2020, the Company issued a total of Incorporation to implement13,761,881,370 shares of common stock per debt conversion of various convertible notes. The total of the Authorized Common Stock Share Increase withdebt conversion was for $1,371,723 of principal, $132,671 of accrued interest and $95,933 of financing costs.
During the Statenine months ended September 30, 2020, the Company issued 668,332 shares of Nevada.
common stock for consultant services valued at $1,653 which includes the advisory services agreement discussed above.
Nine Months Ended September 30, 2019
On February 7, 2019, the Company executed an amendment to a contract executed on April 8, 2018 for twelve months for consulting services. The Company issued 250,0005,000 shares of common stock at the signing of the contract valued at $30,500 that is being amortized over the life of the contract.
On March 22, 2019, the Company issued 3,260,87065,217 shares of common stock to an institutional investor as part of a promissory note for the first tranche payment.note. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $375,000 which was recorded as prepaid until the six-month maturity has passed. The Company also issued 1,000,00020,000 shares of common stock to the institutional investor as a commitment fee. The value of these shares is $115,000.
On April 2, 2019, the Company issued 800,00016,000 shares of common stock pursuant to a capital call notice in relation to an Equity Purchase Agreement dated June 18, 2018. The capital call totaled $59,100.
On May 17, 2019, the Company executed a contract for three months for consulting services. The Company issued 500,00010,000 shares of common stock at the signing of the contract valued at $53,000 that is being amortized over the life of the contract. The contract further indicated that another 500,000 shares were to be issued atAt the end of the three months. Themonths, the Company issued the second 500,000is to issue another 10,000 shares of common stock on August 20, 2019. The value of the shares is $31,200 and was expensed.stock.
On July 10, 2019, the Company issued 2,692,30753,846 shares of common stock to an institutional investor as part of a promissory note for the second tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $167,462 which was recorded as prepaid until the six-month maturity has passed.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
On September 30, 2019, the Company issued 4,000,00080,000 shares of common stock to an institutional investor as part of a promissory note for the third and final tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $280,000 which was recorded as prepaid until the six-month maturity has passed.
On September 25, 2019, the Company executed a contract for six months for consulting services. The contract included the issuance of 250,0005,000 shares of common stock. The value of these shares is $13,750. The shares had not yet been issued at the nine months ended September 30,2019, so the value was recorded as Shares to be Issued.
During the nine months ended September 30, 2019, the Company issued 4,749,99295,000 shares of common stock to consultants for services rendered in accordance to consulting agreements. The value of these shares is $466,403
During the nine months ended September 30, 2019, the Company issued 20,270,431405,409 shares of common stock for debt conversion totaling $932,667 which includes $889,950 principal, $40,217 accrued interest and $2,500 due diligence fee.
Nine Months Ended September 30, 2018
In January 2018, the Board of Directors approved the extension of an Advisory Agreement dated February 15, 2015 for one year. The Company issued 800,000 shares of common stock as compensation with a value of $104,000. This value is being amortized over the life of the contract.
During the nine months ended September 30, 2018, the Company issued a total of 26,598,252 shares of common stock per debt conversion of convertible notes. The total of the debt conversion was $1,190,189 which includes $163,157 of accrued interest.
During the nine months ended September 30, 2018, the Company issued 3,875,000 shares of common stock for marketing and consulting services valued at $329,565.
During the nine months ended September 30, 2018, the Company issued 4,000,000 shares of common stock for settlement of a complaint filed in the United States Federal District Count (see Footnote 4). The debt settled totaled $236,868 which includes $56,817 of accrued interest.
During the nine months ended September 30, 2018, the Company issued 1,590,331 shares of common stock for financing fees for convertible debt issued. These shares were valued at $72,000.
In June 2018, the Company entered into a consulting agreement within which the Company agreed to issue 125,000 shares of common stock per month beginning in July 2018 and 1,500,000 shares of common stock upon signing of the agreement. The 1,500,000 shares of common stock were issued with a value of $105,000 which is being amortized over the life of the contract.
In June 2018, the Company executed an Equity Purchase Agreement with an institutional investor within which the investor agrees to purchase up to $1,500,000 of the Company’s common stock, par value $0.001. As an inducement to the investor to enter into the agreement, the Company issued 1,000,000 restricted shares of common stock to the investor valued at $70,000.
11 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 20192020
(unaudited)
In January 2018, the Board of Directors agreed to form a new eWellness Healthcare Corporation 2018 Equity Incentive Plan (“Plan”). The Plan shall be for 20,000,000 shares of common stock that will be placed in a 10b5-1 Sales Plan that will be registered under an S-8 Registration Statement. Under the sales plan, each recipient will open an account with Garden State Securities (“GSS”) for management of all sales of shares issued under the Plan. Quarterly limitations are placed on the number of shares that can be sold. The Company initially allocated 17,400,000 shares to officers, directors and consultants. As of September 30, 2018, no shares were issued.
Stock Options
The following is a summary of the status of all Company’s stock options as of September 30, 20192020 and changes during the nine months ended on that date:
Weighted | ||||||||||||||||
Number of Stock | Average Exercise | Remaining | Intrinsic | |||||||||||||
Options | Price | Life (yrs) | Value | |||||||||||||
Outstanding at December 31, 2018 | 2,850,000 | $ | 0.80 | 2.2 | $ | - | ||||||||||
Granted | - | - | ||||||||||||||
Exercised | - | - | ||||||||||||||
Cancelled | - | - | ||||||||||||||
Outstanding at September 30, 2019 | 2,850,000 | 0.80 | 1.4 | $ | - | |||||||||||
Options exercisable at September 30, 2019 | 2,850,000 | $ | 0.80 | 1.4 | $ | - |
The Company recognized stock option expense of $0 and $217,188 for the nine months ended September 30, 2019 and 2018, respectively.
Weighted | ||||||||||||||||
Number of Stock | Average Exercise | Remaining | Intrinsic | |||||||||||||
Options | Price | Life (yrs) | Value | |||||||||||||
Outstanding on December 31, 2019 | 57,000 | $ | 40.00 | 1.1 | $ | - | ||||||||||
Granted | - | - | ||||||||||||||
Exercised | - | - | ||||||||||||||
Cancelled | (30,000 | ) | - | |||||||||||||
Outstanding on September 30, 2020 | 27,000 | 40.00 | .4 | $ | - | |||||||||||
Options exercisable on September 30, 2020 | 27,000 | $ | 40.00 | .4 | $ | - |
Warrants
In March 2018, the Board of Directors, at the request and with the approval of the investors, determined that it was in the best interests of the Company and the Investors, based upon market price and relatively limited liquidity of the shares of common stock that the Company revised the expiration date and exercise price for 417,429 unexercised warrants granted on April 9, 2015. The original expiration date of April 9, 2018 was extended to April 9, 2019. During the nine months ended September 30, 2019, these warrants expired.
The following is a summary of the status of the Company’s warrants as of September 30, 20192020 and changes during the nine months ended on that date:
Weighted | ||||||||||||||||
Number of | Average Exercise | Remaining | Intrinsic | |||||||||||||
Warrants | Price | Life (yrs.) | Value | |||||||||||||
Outstanding at December 31, 2018 | 3,778,179 | $ | 0.48 | 1.4 | $ | - | ||||||||||
Granted | - | - | - | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Cancelled | 477,429 | - | - | - | ||||||||||||
Outstanding at September 30, 2019 | 3,300,750 | $ | 0.52 | 1.1 | $ | 22.240 | ||||||||||
Warrants exercisable at September 30, 2019 | 3,300,750 | $ | 0.52 | 1.1 | $ | 22,240 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
Weighted | ||||||||||||||||
Number of | Average Exercise | Remaining | Intrinsic | |||||||||||||
Warrants | Price | Life (yrs.) | Value | |||||||||||||
Outstanding on December 31, 2019 | 42,015 | $ | 11.94 | 1.9 | $ | - | ||||||||||
Granted | - | - | - | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Cancelled | (16,000 | ) | 11.04 | - | - | |||||||||||
Outstanding on September 30, 2020 | 26,015 | $ | 12.50 | 1.5 | $ | - | ||||||||||
Warrants exercisable on September 30, 2020 | 26,015 | $ | 12.50 | 1.5 | $ | - |
Note 6. Commitments, Contingencies
The Company may be subject to lawsuits, administrative proceedings, regulatory reviews or investigations associated with its business and other matters arising in the normal conduct of its business. The following is a description of an uncertainty that is considered other than ordinary, routine and incidental to the business.
The closing of the Initial Exchange Agreement with Private Co. was conditioned upon certain, limited customary representations and warranties, as well as, among other things, our compliance with Rule 419 (“Rule 419”) of Regulation C under the Securities Act of 1933, as amended (the “Securities Act”) and the consent of our shareholders as required under Rule 419. Accordingly, we conducted a “Blank Check” offering subject to Rule 419 (the “Rule 419 Offering”) and filed a Registration Statement on Form S-1 to register the shares of such offering; the Registration Statement was declared effective on September 14, 2012. We used 10% of the subscription proceeds as permitted under Rule 419 and the amount remaining in the escrow trust as of the date of the closing of the Share Exchange was $90,000 (the “Trust Account Balance”).
Rule 419 required that the Share Exchange occur on or before March 18, 2014, but due to normal negotiations regarding the transactions and the parties’ efforts to satisfy all the closing conditions, the Share Exchange did not close on such date. Accordingly, after numerous discussions with management of both parties, they entered into an Amended and Restated Share Exchange Agreement (the “Share Exchange Agreement”) to reflect a revised business combination structure, pursuant to which we would: (i) file a registration statement on Form 8-A (“Form 8A”) to register our common stock pursuant to Section 12(g) of the Exchange Act, which we did on May 1, 2014 and (ii) seek to convert the participants of the Rule 419 Offering into participants of a similarly termed private offering (the “Converted Offering”), to be conducted pursuant to Regulation D, as promulgated under the Securities Act.
Fifty-two persons participated in the Rule 419 Offering and each of them gave the Company his/her/its consent to use his/her/its escrowed funds to purchase shares of the Company’s restricted common stock in the Converted Offering (the “Consent”) rather than have their funds returned. To avoid further administrative work for the investors, we believe that we took reasonable steps to inform investors of the situation and provided them with an appropriate opportunity to maintain their investment in the Company, if they so choose, or have their funds physically returned. Management believed the steps it took constituted a constructive return of the funds and therefore met the requirements of Rule 419.
However, pursuant to Rule 419(e)(2)(iv), “funds held in the escrow or trust account shall be returned by first class mail or equally prompt means to the purchaser within five business days [if the related acquisition transaction does not occur by a date that is 18 months after the effective date of the related registration statement].” As set forth above, rather than physically return the funds, we sought consent from the investors of the Rule 419 Offering to direct their escrowed funds to the Company to instead purchase shares in the Converted Offering. The consent document (which was essentially a form of rescission) was given to the investors along with a private placement memorandum describing the Converted Offering and stated that any investor who elected not to participate in the Converted Offering would get 90% of their funds physically returned. Pursuant to Rule 419(b)(2)(vi), a blank check company is entitled to use 10% of the proceed/escrowed funds; therefore, if a return of funds is required, only 90% of the proceed/escrowed funds need be returned. The Company received $100,000 proceeds and used $10,000 as per Rule 419(b)(2)(vi); therefore, only $90,000 was subject to possible return.
As disclosed therein, we filed the amendments to the initial Form 8-K in response to comments from the SEC regarding the Form 8-K and many of those comments pertain to an alleged violation of Rule 419. The Company continued to provide the SEC with information and analysis as to why it believes it did not violate Rule 419 but was unable to satisfy the SEC’s concerns. Comments and communications indicate that Rule 419 requires a physical return of funds if a 419 offering cannot be completed because a business combination was not consummated within the required time frame; constructive return is not permitted.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
Because of these communications and past comments, we are disclosing that we did not comply with the requirements of Rule 419, which required us to physically return the funds previously submitted to escrow pursuant to the Rule 419 Offering. Because of our failure to comply with Rule 419, the SEC may bring an enforcement action or commence litigation against us for failure to strictly comply with Rule 419. If any claims or actions were to be brought against us relating to our lack of compliance with Rule 419, we could be subject to penalties (including criminal penalties), required to pay fines, make damages payments or settlement payments. In addition, any claims or actions could force us to expend significant financial resources to defend ourselves, could divert the attention of our management from our core business and could harm our reputation.
Ultimately, the SEC determined to terminate its review of the Initial Form 8-K and related amendments, rather than provide us with additional opportunities to address their concerns and therefore, we did not clear their comments. It is not possible at this time to predict whether or when the SEC may initiate any proceedings, when this issue may be resolved or what, if any, penalties or other remedies may be imposed, and whether any such penalties or remedies would have a material adverse effect on our consolidated financial position, results of operations, or cash flows. Litigation and enforcement actions are inherently unpredictable, the outcome of any potential lawsuit or action is subject to significant uncertainties and, therefore, determining currently the likelihood of a loss, any SEC enforcement action and/or the measurement of the amount of any loss is complex. Consequently, we are unable to estimate the range of reasonably possible loss. Our assessment is based on an estimate and assumption that has been deemed reasonable by management, but the assessment process relies heavily on an estimate and assumption that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change that estimate and assumption. Considering the uncertainty of this issue and while Management evaluates the best and most appropriate way to resolve same, management determined to create a reserve on the Company’s Balance Sheet for the $90,000 that was subject to the Consent.
From time to time the Company may become a party to litigation matters involving claims against the Company. Except as may be outlined above, the Company believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
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eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2020
(unaudited)
Note 7. Revenue Recognition
Under ASC Topic 606, the Company recognizes revenue when the claims for physical therapy sessions have been submitted to the various insurance carriers.
Note 7.8. Derivative Valuation
The Company evaluated the convertible debentures and associated warrants in accordance with ASC Topic 815, “Derivatives and Hedging,” and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to their variable conversion rates. The notes have no explicit limit on the number of shares issuable, so they did not meet the conditions set forth in current accounting standards for equity classification. Therefore, these have been characterized as derivative instruments. We elected to recognize the notes under ASU paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. We elected to initially and subsequently measure the notes and warrants in their entirety at fair value, with changes in fair value recognized in earnings.
The debt discount is amortized over the life of the note and recognized as interest expense. For the nine months ended September 30, 20192020 and 2018,2019, the Company amortized the debt discount of $604,738 and $2,690,435, and $284,390, respectively.
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
September 30, 2019
(unaudited)
During the nine months ended September 30, 2019,2020, the Company had the following activity in the derivative liability account:
Notes | Warrants | Total | Notes | |||||||||||||
Derivative liability at December 31, 2018 | $ | 1,402,721 | $ | 181,381 | $ | 1,584,102 | ||||||||||
Derivative liability at December 31, 2019 | $ | 3,529,974 | ||||||||||||||
Addition of new conversion option derivatives | 3,631,177 | - | 3,631,177 | - | ||||||||||||
Conversion of note derivatives | (1,107,498 | ) | - | (1,107,498 | ) | (4,578,864 | ) | |||||||||
Change in fair value | (2,582,681 | ) | (166,137 | ) | (2,748,818 | ) | 2,734,265 | |||||||||
Derivative liability at September 30, 2019 | $ | 1,343,719 | $ | 15,244 | $ | 1,358,963 | ||||||||||
Derivative liability at September 30, 2020 | $ | 1,685,375 |
For purposes of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
Stock price at valuation date | $ | .0001 | ||
Exercise price of warrants | $ | 12.50 | ||
Conversion rate of convertible debt | $ | .00007-.00013 | ||
Risk free interest rate | .07%-.11 | % | ||
Stock volatility factor | 229.41-1100.34 | % | ||
Years to Maturity | .01 – .30 | |||
Expected dividend yield | None |
Note 8.9. Subsequent Events
On October 2, 2019, the Company executed a 10% Convertible Promissory Note payable to an institutional investor in the principal amount of $57,750. The note, which is payable on October 2, 2020, has an original issue discount of $5,250 and transaction costs of $2,500. The convertible note converts into common stock of the Company at a conversion price equal to 65% of the lowest trading prices during the twenty (20) trading day period ending on the last complete trading day prior to the conversion date.
On October 10, 2019, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of authorizing the increase in the number of authorized shares of Common Stock from nine hundred million (900,000,000) shares of Common Stock to one billion nine hundred million (1,900,000,000) shares of Common Stock (the “Authorized Common Stock Share Increase”). On October 15, 2019, the Company filed Articles of Amendment to the Company’s Articles of Incorporation to implement the Authorized Common Stock Share Increase with the State of Nevada.
From October 1 until the filing of this report, the Company issued 374,9993,087,132,299 shares of common stock per consulting agreements valued at $12,150.for convertible debt conversion totaling $248,091 which includes $235,595 principal and $12,496 accrued interest.
From October 1 until the filing of this report, the Company issued 45,502,1121,701,666 shares of common stock to consultants for convertible debt conversion totaling $508,655 which includes $436,906 principal, $69,199 accrued interest and $2,550 financing costs
a value of $405.
From October 1 until the filing of this report,On April 19, 2021, the Company issued 1,050,000 sharesfiled a DEF 14C to disclose to the stockholders the ratification and approval by Joint Written Consent, based upon the unanimous approval by our Board of Directors and the consent of the Majority Consenting Stockholders, of the corporate actions to file an amendment to its Amended and Restated Articles of Incorporation to: (i) change the name of the Company from eWellness Healthcare Corporation to American Health Protection Corp.; (ii) change the par value of the Company’s common stock for prepaid services valued at $39,750 which is being amortized overand preferred stock from $0.001 per share to $0.0001 per share; and (iii) implement the life1:2,000 reverse split of our Common Stock and the shares underlying conversion of the contracts.Company’s securities convertible into Common Stock together with the shares reserved for such conversions, on a one for two thousand (1:2,000) basis. The change in par value and the implementation of the reverse split must be approved by FINRA.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements. These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including but not limited to: variability of our future revenues and financial performance; risks associated with product development and technological changes; the acceptance of our products in the marketplace by potential future customers; general economic conditions. You should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.
The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the financial statements of eWellness Healthcare Corporation for the ninesix months ended September 30, 20192020 and 20182019 and should be read in conjunction with such financial statements and related notes included in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.
THE COMPANY
Overview
eWellness Healthcare Corporation is a provider of the firststate of the art PHZIO platform for the physical therapy (“PT”) and telehealth markets and believes it is the first digital telehealth physical therapy company (“dtPT Company”) to offer real-time distance monitored physical therapy assessments and treatments. Our business model istreatments to have large-scale employers use our PHZIO and or MSK 360 platforms as a fully PT monitored corporate musculoskeletal treatment (“MSK”) and wellness program.employers. The Company’s PHZIO and MSK360 home physical therapydigital telehealth assessment and exercisetreatment platform (the “dtPT Platform” or “Platform”) has been designed to disruptserve the $30 billion physical therapy market, the $4 billion MSKmusculoskeletal (“MSK”) market and the $8 billion corporate wellness industry. PHZIO re-definesmarket. Our dtPT Platform redefines the way MSK physical therapy (“PT”) can be delivered. PHZIOWe believe that our Platform is able to transform the first real-time remote monitored 1-to-many MSK physical therapy platform for home use.access, cost and quality dynamics of PT assessments and treatments. We have signed 7 partnership and healthcare provider agreements to date, that are anticipated to beginbegan generating revenue during the fourth quarter of 2019.
The Company has developed a new operating structure so that we can operate in 48 states. The below noted chart illustrates the Company’s new operational structure that provides for three individual professional operating companies in California, New Jersey and most importantly Florida. With our Florida Professional Association (PA), we are able to provision our telehealth services in 46 states, (excluding: California, Delaware, Kansas and New Jersey). Thus, we formed two additional professional companies in California and New Jersey. Eventually, we will form entities in Delaware and Kansas when the need arises. Each professional company has executed a revocable operating agreement with the Company. These agreements are required by each individual state and states that Darwin Fogt, MPT, the Company’s CEO, is the sole shareholder, officer and director of each of the operating companies. All accounting services are supplied to these operating companies by the Company’s accounting team.
Our PHZIOWe designed our Platform to enable its usage for all PT assessments and MSK 360 platforms have been developed to significantly support us in becoming the leader in the new industrytreatments by means of computer, smart phone and/or similar digital telehealth physical therapy (“dPT”media devices (the “Access Devices”) and MSK services. Our focus is to highlight that many of all future PT and MSK treatments can be accomplished with a smart phone.. This new digital adoptionapproach will lower patient treatment costs, expand patient treatment access and improve patient compliance. Our PHZIO and MSK platformsdtPT Platform allows patients and PT’s to cutavoid the cord from the old-school, wait in line, brick and mortartime-consuming clinical experience to an immediate response digital, in-home PT experience. We believe that approximately 80% of all PT and MSK assessments and treatments can now be done on a patient’s smart phoneperformed using our Platform accessible via the Access Devices in the privacy of their ownonce home. Digital
We believe that our innovative approach to solving the pervasive access, cost and quality challenges facing the current access to PT is clearlyclinics, will lead to highly scalable and substantial growth in our revenues. The Company has signed 7 partnership and healthcare provider agreements to date. We believe that we are well positioned to participate in the next upgrade the industry needs to make.rapidly evolving PT treatment market by introducing our innovative dtPT Platform enabling remote patient monitoring, post-discharge treatment plan adherence and in-home care. Our Platform incorporates research-based methods and focuses on, not only rehabilitation but also wellness, functional fitness, performance, and prevention.
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Our PHZIO and MSK 360 platforms completely disrupts the current in-clinic business model of the $30 billion PT industry, the 4 billion MSK market and the $8 billion corporate wellness industries. Innovators in other industries have solved access, cost and quality inefficiencies through the implementation of technology platforms and business models that deliver products and services on-demand and create new economies by connecting and empowering both consumers and businesses. We have taken the same approach to solving the pervasive access, cost and quality challenges facing the current access to PT and MSK clinics. eWellness’ underlying technology platform is complex, deeply integrated and purpose-built over the past five years for the evolving PT and MSK treatment marketplaces. eWellness’ PHZIO and MSK 360 platforms are highly scalable and can support substantial growth of third-party licensees. eWellness’ PHZIO and MSK 360 platforms provides for broad interconnectivity between PT practitioners and their patients, uniquely positioning the Company as a focal point in the rapidly evolving PT industry to introduce innovative, technology- based solutions, such as remote patient monitoring, post-discharge treatment plan adherence and in-home care.
PHZIOOn May 22, 2020, the Company received and MSK 360 re-definesaccepted the way PT can be delivered. PHZIOresignations of Brandon Rowberry and MSK 360 areRochelle Pleskow as independent directors. Their letters of resignation dated May 22, 2020, state that the first real-time remote monitored one-to-many PTreason for their resignations were to permit them to pursue other business opportunities and MSK platform for home use. Due tofurther stated that they have had no disagreements with the real-time patient monitoring feature,operations, policies or practices of the PHZIO and MSK 360 platforms are insurance reimbursable by payers such as Anthem Blue Cross and Blue Shield.
Los Angeles Sales & Marketing Office: TheCompany. Also, on May 22, 2020, the Company opened its first sales and marketing office in Playa Vista, California in May 2017 to accelerate the adoptionreceived a letter of PHZIO and the other new digital telehealth tools to patients, physicians and PT’s in California. The company has also hired sales and marketing professional consultants to manage the new silos of business development.
The Company’s corporate operating structure allows EWLL to operate in 48 states. It provides for three individual professional operating companies in California, New Jersey and most importantly Florida. With our Florida Professional Association (PA), EWLL is able to provision its telehealth services in 46 states, (excluding: California, Delaware, Kansas and New Jersey). Thus, we formed two other professional companies in California and New Jersey. Eventually, we will form entities in Delaware and Kansas when the need arises.
Each professional company has executed a revocable operating agreement with EWLL, that are required by each individual state, whereinresignation from Darwin Fogt, MPT, EWLL’sresigning as CEO, is the sole shareholder, officerPresident and director of eachthe Registrant and a separate letter of resignation from Curtis Hollister, resigning as CTO and director of the operating companies. All accounting servicesCompany. Messrs. Fogt and Hollister are supplied to these operating companies by EWLL’s accounting team.
eWellness will initially rollout these new telehealth solutions within California, New Jersey, Georgia, Tennessee, Arizonaexecutive officers and principals of Bistromatics Inc., organized under the laws of Canada with plans to expand nationally over the next twelve months. With these new telehealth tools, eWellness will engage with the “At-Home” Physical Therapy and MSK treatment market. This market involves physical therapy practitioners treating patients in their home instead of a clinic. The “At-Home” market model when combined with the PHZIO and or MSK 360 offers patients and practitioners a means to receive and deliver PT and MSK services without having to leave work during normal business hours. Patients can receive physical therapy and MSK services at almost any hour of the day. A model that is not currently employed within traditional clinical settings.
Additionally, during October 2019, the Company introduced MSK 360 treatment platform as a new silo of business that focuses on the $4 Billion North American Musculoskeletal Treatment Market to address the global musculoskeletal diseases treatment market, that is expected to reach US$ 5.7 billion in 2025 from US $3.8 billion in 2017, according to a report by The Insight Partners. The musculoskeletal diseases treatment market is estimated to grow with a CAGR of 5.3% from 2018-2025. MSK disease affects the joints, bones and muscles and also back pain. More years are lived with musculoskeletal disability than any other long-term human condition.
EWLL’s PHZIO and MSK 360 platforms have been developed to significantly support us in becoming the leader in the new industry of digital telehealth in the MSK and PT markets. Our focus is to highlight that a majority of all future MSK PT treatments can be accomplished with a smart phone. This new digital adoption will lower employee treatment costs, expand employee treatment access and improve employee compliance. Our PHZIO and MSK 360 platform allows employees and PT’s to cut the cord from the old-school, wait in line, brick and mortar clinical experience to an immediate response digital, in-home PT experience. Nearly, 100% of all PT assessments and treatments can now be done on an employee’s smart phone in the privacy of their own home. Digital MSK treatments are clearly the next upgrade the industry needs to make.
The Company has created a strong path to initial revenue generation and substantial sales growth through executing on our Workers Compensation and MSK Sales Funnel. Our Workman’s Compensation and MSK Sales Funnel currently includes over 101 companies. Starting in the Summer of 2018 we pivoted our sales process to focus on the workman’s compensation PT industry. Additionally, we added the MSK market during the summer of 2019. Multiple agreements are anticipated to be executed from our workman’s compensation and MSK sales funnel through 2019 and beyond.
During June 2019 the Company signed a Provider Service Agreement with CareIQ, a division of CorVel Healthcare Corporation, one of the largest Third-Party Insurance Administrators (“TPA”Bistromatics”) in the U.S. with patients in all 50 states.https://www.corvel.com/about-us. Initially, PHZIO will be used to treat patients in five (5) states including: California, New Jersey, Georgia, Tennessee and Arizona. These initial states will be used to assess the effectiveness of the PHZIO digital physical therapy platform.
On October 11, 2019November 12, 2016, the Company entered into a Services Agreement with Bistromatics (the “Bistromatics Agreement”) pursuant to which Bistromatics agreed to provide operational services to the Company for its PHZIO System including development, content editing and training, support and maintenance, billing, hosting and oversight, among other services. Reference is made to the Registrant’s Form 8-K filed on November 21, 2016, which Form 8-K was signed by Darwin Fogt as CEO on behalf of the Registrant, regarding the disclosure of the Bistromatics Agreement. The Services Agreement included a provision granting Bistromatics the right to appoint 40% of the Registrant’s Board of Directors, resulting in the appointment of Messrs. Fogt and Hollister as members of the Company’s Board. Although both Companies continue to abide by the Services Agreement the Company is in arrears in fees to Bistromatics for approximately $783,000 as of September 30, 2020. The Service Agreement expired during the first quarter of 2020 and the partiessigned a Directnew agreement on September 15, 2020 which is discussed below.
Pursuant to Consumer Marketing Agreement with Wosler Holdings, Inc., a Delaware Corporation d/b/a/ Slingshot Health (“Slingshot”)(https://www.slingshothealth.com), Through this agreement, Slingshot seeks to involve EWLL affiliated PT Providers,communications between the Company and EWLL seeks to gainDarwin Fogt and Curtis Hollister regarding their affiliated PT Providers accessresignations as executive officers and directors of the Registrant, which resignations were accepted by the Company’s Board on June 1, 2020, Messrs. Fogt and Hollister represented to the Slingshot consumer healthcare patients throughCompany that Bistromatics and its management will continue to provide support services to the Slingshot platform. The Parties anticipate commencing these new direct to consumer salesCompany’s PHZIO System,. In addition, both Darwin Fogt and marketing efforts duringCurtis Hollister confirmed that they have had no disagreements with the fourth quarter ended December 31, 2019. The Company believes that Slingshot Healthcare is oneoperations, policies or practices of the leading on-line platforms for digital healthcareCompany.
In connection with the resignation of Darwin Fogt as CEO, the Registrant’s Board of Directors has appointed Douglas MacLellan, who has served as the Company’s Chairman since May 2013, as Chief Executive Officer in addition to consumers. Slingshot Health is a healthcare marketplace connecting peoplecontinuing to healthserve as the Chairman of the Board of Directors.
As noted above, the Companies PHZIO and wellness providers, placing control directlyMSK360 systems are currently operated on behalf of the Company by Bistromatics Inc. in the hands of those seekingCanada. These services are still operational and delivering care. By removing layers of bureaucracy surrounding our healthcare system, Slingshot is achieving its mission of creating better access, more affordabilitycontinues to treat EWLL’s corporate patients and greater transparency in healthcare. Through Slingshot’s proprietary platform, consumers enter the services they want, their location, availability and the price they are willing to pay. Slingshot then matches them to a local provider who can deliver the service. Healthcare consumers receive high-quality, affordable services and providers earn more overall.
On October 22, 2019, EWLL’s PHZIO Canada (“PHZIO Canada”) signed a one-year Pilot Program Agreement with C&C Insurance Consultants d/b/a/ StudentVIP.ca (“StudentVIP.ca”) (https://studentvip.ca/about-us/), Through this agreement, StudentVIP.ca seeks to market PHZIO.com services to its student health insurance clients. StudentVIP.ca is one of Canada’s largest student health insurance provider servicing over 100,000 college students. The Parties anticipate commencing these new direct to consumer sales and marketing efforts during the fourth quarter of 2019.customers.
Plan of Operations
Based upon a businessOn September 15, 2020, the Company and Bistromatics signed an agreement that would transfer all worldwide marketing pivot duringand Intellectual Property Rights or claims to the summer of 2018 and 2019, our current business model is to provision our PHZIO platform to any customer of third-party administrators (TPA’s). and or have large-scale employers use our digital MSK 360 platforms as an employee wellness program.
PreHabPT.Any individuals, who are seeking non-emergency orthopedic surgery, shall first receive a concierge online consultation, in-home or in-office PT therapy evaluation and will be prescribed a four to eight-week prehabpt.com exercise program prior to any surgery. Another in-home or in-office PT evaluation will be made following surgery and a treatment plan will be initiated. PreHabPT is up to an eight-week physician to patient pre-surgical (Prehab) digital therapeutic exercise treatment system for patients that anticipate having total join replacement (knee, hip and or shoulder) or back surgeries.
MSK 360 Comprehensive Wellness Program Following an employee receiving a PHZIOFIT fitness assessment, the employee may enroll in a 6-month comprehensive wellness program. The top line wellness goals of our MSK 360 wellness exercise program is to graduate at least 60% of inducted patients through our 6-month program. Patients should expect to experience an average of a 20% reduction in BMI, a two-inch reduction in waist size, weight loss of at least 10 pounds, significant overall improvement in balance, coordination, flexibility, strength and lumbopelvic stability. Patients also should score better on Functional Outcomes Scales (Oswestry and LEFS) which indicates improved functional activity levels due to reduced low back, knee and hip pain.
The PHZIO Solution: A New PT Delivery System
Our initial PHZIOCompany’s Phzio, Phzio TeleRehab and MSK 360 platforms enables employees or patients to engage with live or on-demand video based physical therapy telemedicine treatments from their home or office. FollowingBistromatics in return for a physician’s exam and prescription for physical therapy to treat back, knee or hip pain, a patient can15% ownership in Bistromatics. This agreement would eliminate all past due professional fees of approximately $783,000. The transfer of rights would not be examined by a physical therapist and if found appropriate inducted in the Company’s PHZIO and MSK 360 programs that includes a progressive 6-month telemedicine exercise program (including monthly in-clinic checkups). All PHZIO treatments are monitored by a licensed therapist that sees everything the patient is doing while providing their professional guidance and feedback in real-time. This ensures treatment compliance by the patient, maintains the safety and integrity of the prescribed exercises, tracks patient metrics and captures pre-and post-treatment evaluation data. PHZIO and MSK 360 unlocks a host of potential for revolutionizing patient treatment models.completed until December 31, 2020.
Our PHZIO and MSK 360 platforms, which includes design, testing, exercise intervention, follow-up, and exercise demonstration, have been developed by accomplished Los Angeles based physical therapist Darwin Fogt. Mr. Fogt has extensive experience and education working with diverse populations from professional athletes to morbidly obese. He understands the most beneficial exercise prescription to achieve optimal results and has had enormous success in motivating all patient types to stay consistent in working toward their goals. Additionally, his methods have proven effective and safe as he demonstrates exercises with attention to proper form to avoid injury. Mr. Fogt has established himself as a national leader in his field and has successfully implemented progressive solutions to delivering physical therapy: he has consulted with and been published by numerous national publications including Runner’s World, Men’s Health, Men’s Journal, and various Physical Therapy specific magazines; his 13 plus years of experience include rehabilitating the general population, as well as professional athletes, Olympic gold medalists, and celebrities. He has bridged the gap between physical therapy and fitness by opening Evolution Fitness, which uses licensed physical therapists to teach high intensity circuit training fitness classes. He also founded one of the first exclusive prenatal and postnatal physical therapy clinic in the country. Mr. Fogt is a leader in advancing the profession to incorporate research-based methods and focus on, not only rehabilitation but also wellness, functional fitness, performance, and prevention. He can recognize that the national healthcare structure (federal and private insurance) is moving toward a model of prevention and that the physical therapy profession will take a larger role in providing wellness services to patients.
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Innovators in other industries have solved access, cost and quality inefficiencies through the implementation of technology platforms and business models that deliver products and services on-demand and create new economies by connecting and empowering both consumers and businesses. We have taken the same approach to solving the pervasive access, cost and quality challenges facing the current access to physical therapy clinics.
Our underlying technology platform is complex, deeply integrated and purpose-built over the six years for the evolving physical therapy marketplace. Our PHZIO and MSK 360 platforms are highly scalable and can support substantial growth. Our PHZIO and MSK 360 platforms provides for broad interconnectivity between PT practitioners and their patients and, we believe, uniquely positions us as a focal point in the rapidly evolving PT industry to introduce innovative, technology-based solutions, such as remote patient monitoring, post-discharge treatment plan adherence and in-home care.
We plan to generate revenue from third-party PT customers and corporate wellness partnerships on a contractually recurring per PHZIO and or MSK 360 session fee basis. Our PHZIO and MSK 360 platforms are anticipated to transform the access, cost and quality dynamics of physical therapy and MSK delivery for all the market participants. We further believe any patient, employer, health plan or healthcare professional interested in a better approach to physical therapy is a potential PHZIO platform user.
Before even launching, we have received a high indication of interest in our service. We think the demand is warranted but recognize, that in the preliminary stages of our services, we may experience bottlenecks in our ability to meet the demand for the service. Under this type of environment, it is critical to maintain awareness of the Company’s operational budget goals and how they are being met in our attempts to address demand. Regardless of our growth pace, it is critical to shareholder value that we are mindful of our operational spending.
Our underlying technology platform is complex, deeply integrated and purpose-built for the evolving PT marketplace. Our PHZIO platform is highly scalable and can support substantial growth of third-party licensees. Our PHZIO platform provides for broad interconnectivity between PT practitioners and their patients and, we believe, uniquely positions us as a focal point in the rapidly evolving PT industry to introduce innovative, technology-based solutions, such as remote patient monitoring, post-discharge treatment plan adherence and in-home care.
Background on our PHZIO Technology
The Company’s Chief Technology Officer (“CTO”), Curtis Hollister, oversees the operational aspects of the PHZIO platform via a team located in Ottawa, Canada. The below noted chart contains information on our PHZIO System.
IP and Licensing
We have licensed our telemedicine platform from Bistromatics Inc., a company owned by our former CTO, for perpetuity for any telemedicine application in any market worldwide. The below noted chart highlights what we have built to date.
Results of Operations of eWellness for the three and nine months ended September 30, 20192020 vs. 20182019
REVENUES: eWellness has reported $0Total revenues from operations for the three or nine months ended September 30, 2020 and 2019 were $263,429 and 2018. We anticipate$0. respectively. Total revenues for the beginning of revenue generation by the fourth quarter of 2019.three months ended September 30, 2020 and 2019 were $125,274 and $0, respectively.
OPERATING EXPENSES: Total operating expenses increaseddecreased to $1,911,156 for the nine months ended September 30, 2020 from $3,508,958 for the nine months ended September 30, 2019 reflecting a decrease of $1,597,802. The decrease resulted from $2,475,910a reduction in number of shares of common stock issued to consultants offset by an increase in financing fees for conversion of convertible debt. Total operating expenses decreased to $251,332 for the ninethree months ended September 30, 2018.2020 from $1,480,466 for the three months ended September 30, 2019 reflecting a decrease of $1,229,134. The increasedecrease is a result of an increaseda decrease in the number of shares of common stock issued to consultants and foroffset by an increase in financing fees offset by a decrease in stock option expenses. Total operating expenses increased to $1,480,466 for the three months ended September 30, 2019 from $831,621 for the three months ended September 30, 2018. The increase is a resultconversion of an increased number of shares of common stock issued to consultants and for financing fees offset by a decrease in stock option expenses.convertible debt.
NET LOSS: The Company incurred a net loss $5,262,728 for the nine months ended September 30, 2020 compared with a net loss of $4,624,131 for the nine months ended September 30, 2019 which reflects an increase of $638,597. The increase is from an increase in loss on derivative liability on convertible debt of $4,683,446 offset by a decrease in interest expense of $2,185,912 and decrease in operating expenses of $1,597,802 (as outlined above). The Company recognized a net income of $1,226,798 for the three months ended September 30, 2020, compared with a net loss of $2,699,441$1,520,350 for the ninethree months ended September 30, 2018,2019, which reflects an increasea decrease in loss of $1,924,690.$2,747,148. The increasedecrease is from increased operating expenses (outlined above) of $1,033,048, increasea decrease in interest expense of $2,569,676 offset by$1,256,673, decrease in operating expenses of $1,229,134 (as outlined above) and an increase inof gain on derivative liability on convertible debt and warrants of $1,645,282. For the three months ended September 30, 2019, the Company incurred a loss of $1,520,350 compared with the loss of $1,092,162 for the three months ended September 30, 2018. The increase is from increased operating expenses (outlined above) of $648,845, increase in interest expense of $1,195,844 offset by a gain on derivative liability on convertible debt and warrants of $1,420,792.$134,480.
Liquidity and Capital Resources
As of September 30, 2019,2020, we had negative working capital of $4,621,397$5,075,829 compared to negative working capital of $4,006,081$6,937,847 as of December 31, 2018.2019. The negative working capital increasedecrease is because of an increasedecrease in convertible debt (net of discount)derivative liability offset by an increaseincreases in prepaid expense.accounts payable and accrued expenses. Cash used in operations was $2,388,551$280,028 and $820,315$2,388,551 for the nine months ended September 30, 20192020 and 2018,2019, respectively. The increasedecrease in cash used in operations is a result of the increased net loss,an increase in derivative liability and changes in operating assets and liabilities.liabilities offset by an increase in net loss. Cash used in investingflows provided by financing activities was $13,374were $45,000 and $2,037$2,799,650 for the nine months ended September 30, 20192020 and 2018, respectively. Cash flows provided by financing activities were $2,799,650 and $843,145 for the nine months ended September 30, 2019, and 2018, respectively. The increasedecrease resulted from a decrease in the issuance of convertible debt (net of debt issuance costs) of $2,978,850$3,798,000 and issuancereduction of shares of common stock for cash totaling $59,100 reduced by $1,101,445 payment of debt.debt of $1,102,450. The cash balance as of September 30, 20192020 was $781,060.$5,694.
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We do not have sufficient cash on hand to operate until March 2020. We anticipate that we will be able to raise additional capital on the same or better terms by early 2020 or before in the form of equity capital to provide the necessary working capital.operate. Our ability to meet our obligations and continue to operate as a going concern is highly dependent on our ability to obtain additional financing. We cannot predict whether this additional financing will be in the form of equity or debt or be in another form. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, we may be unable to implement our current plans which circumstances would have a material adverse effect on our business, prospects, financial conditions and results of operations.
Contingencies
The Company may be subject to lawsuits, administrative proceedings, regulatory reviews or investigations associated with its business and other matters arising in the normal conduct of its business. The following is a description of an uncertainty that is considered other than ordinary, routine and incidental to the business.
The closing of the Initial Exchange Agreement with Private Co. was conditioned upon certain, limited customary representations and warranties, as well as, among other things, our compliance with Rule 419 (“Rule 419”) of Regulation C under the Securities Act of 1933, as amended (the “Securities Act”) and the consent of our shareholders as required under Rule 419. Accordingly, we conducted a “Blank Check” offering subject to Rule 419 (the “Rule 419 Offering”) and filed a Registration Statement on Form S-1 to register the shares of such offering; the Registration Statement was declared effective on September 14, 2012. We used 10% of the subscription proceeds as permitted under Rule 419 and the amount remaining in the escrow trust as of the date of the closing of the Share Exchange was $90,000 (the “Trust Account Balance”).
Rule 419 required that the Share Exchange occur on or before March 18, 2014, but due to normal negotiations regarding the transactions and the parties’ efforts to satisfy all the closing conditions, the Share Exchange did not close on such date. Accordingly, after numerous discussions with management of both parties, they entered into an Amended and Restated Share Exchange Agreement (the “Share Exchange Agreement”) to reflect a revised business combination structure, pursuant to which we would: (i) file a registration statement on Form 8-A (“Form 8A”) to register our common stock pursuant to Section 12(g) of the Exchange Act, which we did on May 1, 2014 and (ii) seek to convert the participants of the Rule 419 Offering into participants of a similarly termed private offering (the “Converted Offering”), to be conducted pursuant to Regulation D, as promulgated under the Securities Act.
Fifty-two persons participated in the Rule 419 Offering and each of them gave the Company his/her/its consent to use his/her/its escrowed funds to purchase shares of the Company’s restricted common stock in the Converted Offering (the “Consent”) rather than have their funds returned. To avoid further administrative work for the investors, we believe that we took reasonable steps to inform investors of the situation and provided them with an appropriate opportunity to maintain their investment in the Company, if they so choose, or have their funds physically returned. Management believed the steps it took constituted a constructive return of the funds and therefore met the requirements of Rule 419.
However, pursuant to Rule 419(e)(2)(iv), “funds held in the escrow or trust account shall be returned by first class mail or equally prompt means to the purchaser within five business days [if the related acquisition transaction does not occur by a date that is 18 months after the effective date of the related registration statement].” As set forth above, rather than physically return the funds, we sought consent from the investors of the Rule 419 Offering to direct their escrowed funds to the Company to instead purchase shares in the Converted Offering. The consent document was given to the investors along with a private placement memorandum describing the Converted Offering and stated that any investor who elected not to participate in the Converted Offering would get 90% of their funds physically returned. Pursuant to Rule 419(b)(2)(vi), a blank check company is entitled to use 10% of the proceed/escrowed funds; therefore, if a return of funds is required, only 90% of the proceed/escrowed funds need be returned. The Company received $100,000 proceeds and used $10,000 as per Rule 419(b)(2)(vi); therefore, only $90,000 was subject to possible return.
As disclosed in the prior amendments to the Initial Form 8-K, we have filed the prior amendments in response to comments from the SEC regarding the Form 8-K and many of those comments pertain to the Company’s potential violation of Rule 419. Although the Company has continued to provide the SEC with information and analysis as to why it believes it did not violate Rule 419, based upon latest communications with the persons reviewing the Form 8-K, they do not agree with the assessments the Company presented to them. Comments and communications indicate that Rule 419 requires a physical return of funds if a 419 offering cannot be completed because a business combination was not consummated within the required time frame; constructive return is not permitted.
Because of these communications and past comments, we are disclosing that we did not comply with the requirements of Rule 419, which required us to physically return the funds previously submitted to escrow pursuant to the Rule 419 Offering. Because of our failure to comply with Rule 419, the SEC may bring an enforcement action or commence litigation against us for failure to strictly comply with Rule 419. If any claims or actions were to be brought against us relating to our lack of compliance with Rule 419, we could be subject to penalties (including criminal penalties), required to pay fines, make damages payments or settlement payments. In addition, any claims or actions could force us to expend significant financial resources to defend ourselves, could divert the attention of our management from our core business and could harm our reputation.
Ultimately, the SEC determined to terminate its review of the Initial Form 8-K and related amendments, rather than provide us with additional opportunities to address their concerns and therefore, we did not clear their comments. It is not possible now to predict whether or when the SEC may initiate any proceedings, when this issue may be resolved or what, if any, penalties or other remedies may be imposed, and whether any such penalties or remedies would have a material adverse effect on our consolidated financial position, results of operations, or cash flows. Litigation and enforcement actions are inherently unpredictable, the outcome of any potential lawsuit or action is subject to significant uncertainties and, therefore, determining now the likelihood of a loss, any SEC enforcement action and/or the measurement of the amount of any loss is complex. Consequently, we are unable to estimate the range of reasonably possible loss. Our assessment is based on an estimate and assumption that has been deemed reasonable by management, but the assessment process relies heavily on an estimate and assumption that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change that estimate and assumption. Considering the uncertainty of this issue and while Management evaluates the best and most appropriate way to resolve same, management determined to create a reserve on the Company’s Balance Sheet for the $90,000 that was subject to the Consent.
Capital Expenditure Plan
During the nine months ended September 30, 2019,2020, we raised $4,400,500,$52,800, less $576,333$7,800 for debt issuance costs in equity and debt capital and $59,100 for issuance of shares of common stock for cash.capital. We maywill require up to an additional $1.6 million in capital during the next 12 months to fully implement our business plan and fund our operations. Our plan is to utilize the equity capital that we raise, together with anticipated cash flow from operations, to fund a very significant investment in sales and marketing, concentration principally on advertising and incentivizing existing customers for the introduction of new customers, among other strategies. However, there can be no assurance that: (i) we will continue to be successful in raising equity capital in sufficient amounts and/or at terms and conditions satisfactory to the Company; or (ii) we will generate sufficient revenues from operations, to fulfill our plan of operations. Our revenues are expected to come from our PHZIO platform services. As a result, we will continue to incur operating losses unless and until we are able to generate sufficient cash flow to meet our operating expenses and fund our planned sales and market efforts. There can be no assurance that the market will adopt our portal or that we will generate sufficient cash flow to fund our enhanced sales and marketing plan. In the event that we are not able to successfully: (i) raise equity capital and/or debt financing; or (ii) market and significantly increase the number of portal users and revenues from such users, our financial condition and results of operations will be materially and adversely affected and we will either have to delay or curtail our plan for funding our sales and marketing efforts.”
Off-Balance Sheet Arrangements
As of September 30, 20192020 and December 31, 2018,2019, respectively, 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.
Contractual Obligations and Commitments
Nine Months Ended September 30, 20192020
On January 29, 2019, the Company received the third tranche of $60,000 relating to a note executed on July 13, 2018. During the nine months ending September 30, 2019, the Company accrued interest expense of $1,350. On July 12, 2019, the Company prepaid this note of $60,000 plus accrued interest and a prepayment penalty of $30,000. At September 30, 2019, this note is fully paid.
On January 8, 2019,In March 2020, the Company executed an 8%a 12% Convertible Promissory NotesNote payable to an institutional investor in the principal amount of $308,000.$52,800. The note, which is due on January 8, 2020,15, 2021, has an original issue discount of $28,000$4,800 and transaction costs of $10,000.$3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $17,547. During the nine months ended September 30, 2019, the investor converted $30,000 of principal and $1,687 of accrued interest for 905,333 shares of common stock at a price of $.035. At September 30, 2019, there is $278,000 principal outstanding.
On January 8, 2019, the Company executed an 8% Convertible Promissory Notes payable to an institutional investor in the principal amount of $308,000 each. The note, which is due on January 8, 2020, has an original issue discount of $28,000 and transaction costs of $10,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $17,029. During the nine months ended September 30, 2019, the investor converted $162,000 of principal for 4,424,400 shares of common stock for prices ranging from $.035 to $.042. At September 30, 2019, there is $146,000 principal outstanding.
On January 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $114,000. The note, which is due on October 30, 2019, has an original issue discount of $11,000 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the nine months ended September 30, 2019,2020, the Company accrued interest expense of $6,028. On July 12, 2019, the Company prepaid this note of $114,000 plus accrued interest and a prepayment penalty of $42,010. At September 30, 2019, this note is fully paid.$3,276.
On January 29, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is due on November 15, 2019, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $2,753. On July 12, 2019, the Company prepaid this note of $58,300 plus accrued interest and a prepayment penalty of $21,369. At September 30, 2019, this note is fully paid.
On February 22, 2019, the Company received the fourth tranche of $30,000 relating to a note executed on July 13, 2018. During the nine months ending September 30, 2019, the Company accrued interest of $534. On September 17, 2019, the convertible debt holder converted $9,700 of principal for 340,000 shares of common stock at a price of $.03. At September 30, 2019, there is $20,300 principal outstanding.
On March 18, 2019, the Company executed a Securities Purchase Agreement for Convertible Debentures to an institutional investor in the principal amount of $365,000 to be funded in six tranches: $65,000 at signing, $100,000 forty-five (45) days after the signing date and $200,000 forty-five (45) days after the second closing date. The debentures, which are payable on March 18, 2022, have a 10% original issue discount and a commitment fee of $5,000 payable with the signing debenture. The debentures convert into common stock of the Company at a conversion price equal to the lesser of (i) $.12 or (ii) seventy percent (70%) of the lowest traded price (as reported by Bloomberg LP) of the common stock for the ten (10) trading days prior to the conversion date. The first tranche of $65,000 was received on March 21, 2019. On September 12, 2019, the Company prepaid this note of $65,000 and a prepayment penalty of $19,500. At September 30, 2019, this note is fully paid.
On March 18, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $47,300. The note, which is payable on January 30, 2020, has an original issue discount of $4,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,226. On September 12, 2019, the Company prepaid this note of $47,300 plus accrued interest and a prepayment penalty of $16,555. At September 30, 2019, this note is fully paid.
On March 21, 2019, the Company executed a 3% Convertible Promissory Note payable to an institutional investor in the principal amount of $360,000. The note, which is payable twelve (12) months after each tranche is funded, has an original issue discount of $60,000. The original issue discount will be prorated with each tranche paid. The first tranche of $60,000 is due at signing date. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the lesser of (i) lowest trading price or (ii) the lowest closing bid price on the OTCQB during the twenty-five (25) trading day period ending on the last complete trading day prior to the conversion date. The first tranche was received on March 29, 2019. The second tranche of $37,500 was received on July 19, 2019. During the nine months ended September 30, 2019, the Company accrued interest expense of $2,925. On September 30, 2019, the Company prepaid the first tranche of $60,000 plus accrued interest and a prepayment penalty of $30,000. At September 30, 2019, only the second tranche of $37,500 is outstanding.
On March 21, 2019, the Company executed a 12% Convertible Promissory Note to an institutional investor in the principal amount of $1,500,000 to be funded over separate tranches of $750,000 each; the first tranche to be funded on signing. The note, which is due and payable six (6) months after the funding date of each tranche, has an original issue discount of 10%. The Company issued 3,260,870 shares of restricted common stock on the closing date. These are deemed returnable shares which the investor must return if the Company repays the note prior to the maturity date. In addition, the Company issued 1,000,000 shares of restricted common stock as a commitment fee. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 75% of the lowest trading price during the thirty (30) day trading period ending on the last complete trading day prior to the conversion date. The first tranche of $750,000 was received on March 25, 2019. The second tranche of $350,000 was received on July 12, 2019 and the Company issued 2,692,307 shares of restricted common stock. These shares are redeemable if the Company pays the note prior to the maturity date of January 20, 2020. The third and final tranche was received on September 9, 2019 and the Company issued 4,000,000 shares of restricted common stock. These shares are redeemable if the Company pays the note prior to the maturity date of March 12, 2020. During the nine months ended September 30, 2019, the Company accrued interest expense of $57,337.
On April 1, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is payable on February 15, 2020, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $3,811. On September 12, 2019, the Company prepaid this note of $58,300 plus accrued interest and a prepayment penalty of $20,405. At September 30, 2019, this note is fully paid.
On May 6, 2019, the Company executed a convertible note conversion period extension agreement on a note dated October 28, 2018, within which the period of conversion by note holder was extended to May 27, 2019. The Company paid $16,031 to note holder for this extension agreement. On May 28, 2019, the Company executed a second extension agreement on this note within which the period of conversion by note holder was extended to June 11, 2019. The Company paid $16,105 to note holder for this extension agreement. During the nine months ended September 30, 2019, the note holder converted the $308,000 note and accrued interest of $19,5397 into 8,322,010 shares of common shares at prices ranging from $.035 $.04508. At September 30, 2019, this note has been fully converted.
On May 13, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. The note, which is due on February 13, 2020, has an original issue discount of $10,000 and transactions costs of $3,000. The convertible note converts into common stock of the Company at conversion price that shall be equal to the 65% of the lowest closing price for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $5,063.
On July 2, 2019, two Back-End notes executed in October 2018 with an institutional investor was funded for $154,000 each. Each note, which is due on October 29, 2019, has an original issue discount of $16,500. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the prior twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,038 for each note.
On July 5, 2019, the Company signed an amendment to a convertible note issued on March 21, 2019 revising the conversion price from 75% to 65% of the lowest trading price during the thirty (30) trading days prior to the conversion date.
On July 8, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $140,800. The note, which is payable on April 30, 2020, has an original issue discount of $12,800 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $3.379.
On July 8, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within which the period of conversion by note holder was extended to August 9, 2019. The Company paid $21,560 to note holder for this extension agreement.
On July 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $113,000. The note, which is due on July 9, 2020, has an original issue discount of $10,000 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of the lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $2,712.
On July 9, 2019, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $235,000. The note, which is due on July 11, 2020, has an original issue discount of $25,200 and transaction costs of $10,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% of the lowest per share trading prices for prior the twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,605.
On July 10, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within which the period of conversion by note holder was extended to August 9, 2019. The Company paid $22,410 to note holder for this extension agreement.
On July 11, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $250,000. The note, which is due on April 19, 2020, has an original issue discount of $37,500 and transaction costs of $5,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% of the lowest per share trading price for the twenty-five (25) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $5,425.
On July 30, 2019, the Company executed two 12% Convertible Promissory Notes payable to two institutional investors in the principal amount of $38,500 each. Each note, which is due on April 30, 2020, has an original issue discount of $3,500 and transaction costs of $1,500. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of the lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $1,380 for the two notes.
On September 4, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is payable on July 15, 2020, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $364.
On September 9, 2019, a Back-End note executed in January 2019 with an institutional investor was funded for $154,000. The note, which is due on January 9, 2020, has an original issue discount of $14,000 and transaction costs of $5,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $641.
On September 19, 2019, two Back-End notes executed in January 2019 with an institutional investor was funded for $154,000 each. Each note, which is due on January 8, 2019, has an original issue discount of $14,000 and transactions costs of $5,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $371 for each note.
Year Ended December 31, 2018
In January 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. During the year ended December 31, 2018, the note, which was due on October 12, 2018, and accrued interest totaling $4,489 was fully converted into 2,412,827 shares of common stock at a price of $.04745 per share.
In January 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $91,300. During the year ended December 31, 2018, the note, which was due on October 30, 2018, and accrued interest totaling $4,980 was fully converted into 1,630,799 shares of common stock at prices ranging from $.0583 to $.0603.
In February 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $63,800. During year ended December 31, 2018, the note, which was due on November 30, 2018, and accrued interest totaling $3,480 was fully converted into 1,309,799 shares of common stock at prices ranging from $.0487 to $.0532.
In March 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. During the year ended December 31, 2018, the note, which was due on December 5, 2018, and accrued interest totaling $5,928 was fully converted into 2,402,436 shares of common stock at a price of $.036.
In March 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $72,450. During the year ended December 31, 2018, the note, which was due on December 30, 2018, and accrued interest totaling $3,780 was fully converted into 1,877,796 shares of common stock at prices ranging from $.0393 to $.0437.
In May 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $125,000. During the year ended December 31, 2018, the note, which is due on May 10, 2019, and accrued interest totaling $415 was fully converted into 1,626,268 shares of common stock at prices ranging from $.0628 to $.1032. At the year ended December 31, 2018, the Company is still liable for $5,288 of accrued interest that has not yet been converted.
In May 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $51,750. During the year ended December 31, 2018, the note, which is due on March 1, 2019, and accrued interest of $2,700 was fully converted into 658,722 shares of common stock at prices ranging from $.081 and $.085.
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $56,500. The note, which is due on April 17, 2019 has an original issue discount of $6,500. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 100,000 shares of common stock valued at $8,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized interest expense of $2,991.
In July 2018, the Company executed an 3% Convertible Promissory Note payable to an institutional investor in the principal amount of $180,000 for funding in six tranches. The note, which is due twelve months from the date of each individual tranche, has an original issue discount of $10,000 per tranche. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 75% of the market price which is lowest trading price during the twenty (20) trading day period ending on the last complete trading day prior to the conversion date. The trading price is the lesser of: (i) lowest traded price or (ii) the lowest closing bid price on the OTCQB. The first tranche of $60,000 was received in the month of July and second tranche of $30,000 was received in the month of August. During the year ended December 31, 2018, the Company recognized interest expense of $1,102.
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $28,250. The note, which is due on April 17, 2019 has an original issue discount of $3,250. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 50,000 shares of common stock valued at $4,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized interest expense of $1,495.
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. The note, which is due on April 5, 2019, has an original issue discount of $7,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.06 or (ii) 75% of the lowest per share trading price for the ten (10) trading days before the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,870.
In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $60,950. The note, which is due on April 30, 2019 has an original issue discount of $7,950. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price which is 75% of the average of the lowest (2) VWAP for the ten (10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $3,647.
In August 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is due on June 15, 2019 has an original issue discount of $5,300. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price which is 75% of the average of the two (2) lowest VWAP for the ten (10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $2,338.
In October 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $47,300. The note, which is due on July 15, 2019 has an original issue discount of $7,300. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the variable conversion price which is 70% of the average of the two (2) lowest VWAP for the ten(10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $1,291.
In October 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $165,000. The note, which is due on October 12, 2019 has an original issue discount of $15,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 65% of the lowest per share closing price during the fifteen (15) trading days immediately preceding the date of the notice of conversion. The first tranche of $110,000 was received in the month of October and the second tranche of $55,000 was received in the month of November. During the year ended December 31, 2018, the Company recognized interest expense of $2,594.
In October 2018, the Company executed two 8% Convertible Promissory Notes payable to two institutional investors each in the principal amount of $308,000. Each note, which is due on October 29, 2019, has an original issue discount of $33,000. The convertible notes convert into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,118 for each note.
In November 2018, a Back-End note executed in May 2018 with an institutional investor was funded. The Back-End note is an 8% Convertible Promissory Note payable in the principal amount of $125,000. The note, which is due on May 10, 2019, has an original issue discount of $10,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 72% of the lowest VWAP for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common stock can commence following the 180thcalendar day after the Original Issue Date. During the year ended December 31, 2018, the Company recognized interest expense of $1,123.
From time to time the Company may become a party to litigation matters involving claims against the Company. Except as may be outlined above, the Company believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
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Critical Accounting Policies
Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, for disclosures regarding the Company’s critical accounting policies and estimates, as well as any updates further disclosed in our interim financial statements as described in this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Smaller reporting companies are not required to provide this disclosure.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2019,2020, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules, regulations and forms, and (ii) that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 1. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Nine Months Ended September 30, 20192020
On February 7, 2019, the Company executed an amendment to a contract executed on April 8, 2018 for twelve months for consulting services. The Company issued 250,000 shares of common stock at the signing of the contract valued at $30,500 that is being amortized over the life of the contract.
On March 22, 2019, the Company issued 3,260,870 shares of common stock to an institutional investor as part of a promissory note for the first tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $375,000 which was recorded as prepaid until the six-month maturity has passed. The Company also issued 1,000,000 shares of common stock to the institutional investor as a commitment fee. The value of these shares is $115,000.
On April 2, 2019, the Company issued 800,000 shares of common stock pursuant to a capital call notice in relation to an Equity Purchase Agreement dated June 18, 2018. The capital call totaled $59,100.
On May 17, 2019, the Company executed a contract for three months for consulting services. The Company issued 500,000 shares of common stock at the signing of the contract valued at $53,000 that is being amortized over the life of the contract. The contract further indicated that another 500,000 shares were to be issued at the end of three months. The Company issued the second 500,000 shares of common stock on August 20, 2019. The value of the shares is $31,200 and was expensed.
On July 10, 2019, the Company issued 2,692,307 shares of common stock to an institutional investor as part of a promissory note for the second tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $167,462 which was recorded as prepaid until the six-month maturity has passed.
On September 30, 2019, the Company issued 4,000,000 shares of common stock to an institutional investor as part of a promissory note for the third and final tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $280,000 which was recorded as prepaid until the six-month maturity has passed.
On September 25, 2019, the Company executed a contract for six months for consulting services. The contract included the issuance of 250,000 shares of common stock. The value of these shares is $13,750. The shares had not yet been issued at the nine months ended September 30,2019, so the value was recorded as Shares to be Issued.
During the nine months ended September 30, 2019,2020, the Company issued 4,749,992a total of 13,761,881,370 shares of common stock to consultantsper debt conversion of various convertible notes. The total of the debt conversion was for services rendered in accordance to consulting agreements. The value$1,371,723 of these shares is $466,403principal, $132,671 of accrued interest and $95,933 of financing costs.
During the nine months ended September 30, 2019,2020, the Company issued 20,270,430668,332 shares of common stock for debt conversion totaling $932,667 which includes $889,950 principal, $40,217 accrued interest and $2,500 due diligence fee.
Nine Months Ended September 30, 2018
In January 2018, the Board of Directors approved the extension of an Advisory Agreement dated February 15, 2015 for one year. The Company issued 800,000 shares of common stock as compensation with a value of $104,000. This value is being amortized over the life of the contract.
In June 2018, the Company entered into a consulting agreement within which the Company agreed to issue 125,000 shares of common stock per month beginning in July 2018 and 1,500,000 shares of common stock upon signing of the agreement. The 1,500,000 shares of common stock were issued with a value of $105,000 which is being amortized over the life of the contract.
In June 2018, the Company executed an Equity Purchase Agreement with an institutional investor within which the investor agrees to purchase up to $1,500,000 of the Company’s common stock, par value $0.001. As an inducement to the investor to enter into the agreement, the Company issued 1,000,000 restricted shares of common stock to the investor valued at $70,000.
During the nine months ended September 30, 2018, the Company issued a total of 26,598,252 shares of common stock per debt conversion of convertible notes. The total of the debt conversion was $1,190,189 which includes $163,157 of accrued interest.
During the nine months ended September 30, 2018, the Company issued 3,875,000 shares of common stock for marketing and consultingconsultant services valued at $329,565.$1,653.
During the nine months ended September 30, 2018, the Company issued 4,000,000 shares of common stock for settlement of a complaint filed in the United States Federal District Count (see Footnote 4). The debt settled totaled $236,868 which includes $56,817 of accrued interest.
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During the nine months ended September 30, 2018, the Company issued 1,590,331 shares of common stock for financing fees for convertible debt issued. These shares were valued at $72,000.
(a) | The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document. |
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
eWellness Healthcare Corporation (Registrant)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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