UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For
the quarterly period ended
Commission
file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(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 | ||
| OTC |
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.
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).
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 ☐ |
| Smaller
reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
Emerging growth company
The number of shares of Common Stock, $0.001 per share par value, outstanding on August 23, 2021 was .
Table of Contents
| Page | ||
| PART I - FINANCIAL INFORMATION | 3 | |
| Item 1 | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 16 |
| Item 4 | Controls and Procedures | 16 |
| PART II - OTHER INFORMATION | 16 | |
| Item 1 | Unregistered Sales of Equity Securities and Use of Proceeds | 16 |
| Item 2 | Exhibits | 17 |
| Signatures | 18 | |
| 2 |
PART I – FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
eWELLNESS HEALTHCARE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
| June 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | - | |||||||
| Total current assets | ||||||||
| Property & equipment, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued expenses - related party | ||||||||
| Accrued compensation | ||||||||
| Convertible debt, net of discount | ||||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock Series A, authorized shares, $ par value, and shares issued and outstanding, respectively | ||||||||
| Preferred stock Series C, authorized shares, $ par value, and shares issued and outstanding, respectively | - | |||||||
| Preferred stock Series D, authorized shares, $ par value, and shares issued and outstanding, respectively | - | |||||||
| Preferred stock Series E Convertible, authorized shares, $ par value, par value, and shares issued and outstanding, respectively | - | |||||||
| Common stock, authorized shares, $ par value, and issued and outstanding, respectively | ||||||||
| Shares to be issued | - | |||||||
| Subscription receivable | ( | ) | - | |||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
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 Six Months ended June 30, 2021 and 2020
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| REVENUE | $ | $ | $ | $ | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Executive compensation | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest income | - | - | - | |||||||||||||
| Gain (loss) on derivative liability | ( | ) | ( | ) | ||||||||||||
| Loss on disposal of asset | - | ( | ) | - | ( | ) | ||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Income (Loss) before Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Basic income (loss) per common share | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted average basic shares outstanding | ||||||||||||||||
| Diluted income (loss) per common share | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted average diluted shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these consolidated condensed financial statements
| 4 |
eWELLNESS HEALTHCARE CORPORATION
RECONCILIATION OF STOCKHOLDERS’ DEFICIT
(unaudited)
THREE MONTHS ENDED JUNE 30, 2021 AND 2020
| Preferred Shares - Series A | Preferred Shares - Series C | Preferred Shares - Series D | Preferred Shares - Series E | Common Shares | Subscription | Shares to be | Additional Paid in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Receivable | Issued | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | $ | $ | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued to officers, directors and consultants | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | - | - | - | - | - | - | - | ( |
) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for preferred share conversions | - | - | - | - | - | ( | ) | ( | ) | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | - | - | - | - | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2020 | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Contributed services | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued to officers, directors and consultants | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for debt conversion | - | - | - | - | - | - | - | - | - | - | ( | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | - | - | - | - | - | - | - | - | ( | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative liability | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2021 AND 2020
| Preferred Shares - Series A | Preferred Shares - Series C | Preferred Shares - Series D | Preferred Shares - Series E | Common Shares | Subscription | Shares to be | Additional Paid in |
| Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Receivable | Issued | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | $ | $ | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued to officers, directors and consultants | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | - | - | - | - | - | - | - | - | ( |
) | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for preferred share conversions | - | - | - | - | - | - | ( | ) | ( | ) | - | - | ( | ) | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||||||||||||||||
| Net profit | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | $ | $ | $ | $ | - | $ | $ | $ | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Contributed services | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued to officers, directors and consultants | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for debt conversion | - | - | - | - | - | - | - | - | - | - | ( | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | - | - | - | - | - | - | - | - | ( | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for rounding
- | - | - | - | - | - | - | - | - | ( | ) | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative liability | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | $ | $ | $ | $ | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
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 Six Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Contributed services | - | |||||||
| Shares issued to officers, directors and consultants | ||||||||
| Shares issued for consulting services | ||||||||
| Shares issued for financing costs | - | |||||||
| Amortization of debt discount and prepaids | - | |||||||
| (Gain) loss on derivative liability | ( | ) | ||||||
| Loss on disposal of asset | - | |||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expense | ( | ) | ||||||
| Accounts receivable | - | ( | ) | |||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable - related party | - | |||||||
| Accrued expenses - related party | ( | ) | ||||||
| Accrued compensation | - | |||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of equipment | - | - | ||||||
| Net cash used in investing activities | - | - | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of convertible debt | - | |||||||
| Original issue discount and debt issuance costs | - | ( | ) | |||||
| Proceeds from issuance of preferred series E | - | |||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental Information: | ||||||||
| Cash paid for: | ||||||||
| Taxes | $ | $ | ||||||
| Interest Expense | $ | $ | ||||||
| Non cash items: | ||||||||
| Shares issued for debt conversion | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated condensed financial statements
| 6 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
June 30, 2021
(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 minimal revenues to date.
eWellness
Healthcare Corporation is the first physical therapy telehealth company to offer real-time distance monitored assessments and
treatments. On September 15, 2020, the Company and Bistromatics signed an agreement that transferred all worldwide marketing and
Intellectual Property Rights or claims to the Company’s Phzio, Phzio TeleRehab and MSK 360 platforms to Bistromatics in return
for a
During the last quarter of 2020 and the first quarter of 2021, the Company’s Board of Directors and management determined that while it would continue its efforts and resources involving physical therapy and telemedicine, it would also pursue other health-related business opportunities. With the Company’s announced plan to diversify its health-related business beyond its telemedicine operations, which telemedicine operations will continue, the Company has engaged in negotiations with a recently formed private Nevada company controlled by a third party, American Health Protection, Inc.(“AMHP”), for a potential business combination. In connection with such negotiations, the Company’s Board of Directors on March 8, 2021, approved the organization of EWLL Acquisition Corp. under the laws of Nevada as a new wholly owned subsidiary of the Company (“EWLL Acquisition”). The purpose of the formation of EWLL Acquisition was in contemplation of its merger with and into AMHP which would be the surviving entity and become a wholly owned subsidiary of the Company.
Pursuant to the Company’s intentions referenced above, the Company on May 18, 2021, entered into an Agreement and Plan of Merger by and between the Company, EWLL Acquisition and AMHP pursuant to which AMHP merged with EWLL Acquisition, with AMHP being the surviving entity and becoming a wholly owned subsidiary of the Company, subject to filing of Articles of Merger with the State of Nevada. On July 14, 2021, the Company filed the requisite Articles of Merger with the State of Nevada and, as a result, AMHP became a wholly owned subsidiary of the Company and EWLL Acquisition ceased to exist.
On
April 19, 2021, the Company filed 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:
| 7 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
June 30, 2021
(unaudited)
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, 2020. 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 six months ended June 30, 2021 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2021. 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, 2020.
The
information regarding common stock shares, options and warrants throughout this document have been adjusted to reflect the
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 six months ended June 30, 2021, the Company had no revenue. The Company has an accumulated loss of $
Fair Value of Financial Instruments
As of June 30, 2021, 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 | $ | $ | $ | $ | ||||||||||||
| Total Liabilities measured at fair value | $ | $ | - | $ | - | $ | ||||||||||
| 8 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
June 30, 2021
(unaudited)
As of December 31, 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 | $ | $ | - | $ | - | $ | ||||||||||
| Total Liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
Revenue Recognition
The Company recognizes revenue per ASC 606. Revenue is recognized when the services have been completed.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year’s presentation. These reclassifications have no impact on the previously reported results.
Note 3. Related Party Transactions
Throughout
the six months ended June 30, 2021, the officers and directors of the Company incurred business expenses on behalf of the Company. The
amounts payable to the officers as of June 30, 2021 and December 31, 2020 were $
Note 4. Convertible Notes Payable
During
the six months ended June 30, 2021, there were no new convertible notes executed. During the six months ended June 30, 2021, the Company
accrued interest payable of $
Year Ended December 31, 2020
In
March 2020, the Company executed a
During
the year ended December 31, 2020, the Company accrued interest of $
| 9 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
June 30, 2021
(unaudited)
Note 5. Equity Transactions
Preferred Stock
The
total number of shares of Series A Preferred Stock which the Company shall have authority to issue is shares with a par value
of $ per share. During the year ended December 31, 2019, the Company authorized the issuance of shares of preferred stock
to officers, directors and consultants as deferred compensation and/or expense.
In April 2021, the Board of Directors issued a Certificate of Designations, Preferences, Rights and Limitations of Series C Convertible Preferred Stock. The Board authorized that the Company shall have the authority to issue shares with a par value of $ per share to be issued to persons designated by the Board. The Series C 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 C Preferred Stock.
In April 2021, the Board of Directors issued a Certificate of Designations, Preferences and Rights Limitations of Series D Preferred Stock. The Board authorized that the Company shall have the authority issue shares with a par value of $per share 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.
In April 2021, the Board of Directors issued a Certificate of Designations, Preferences and Rights of Series E Convertible Preferred Stock. The Board authorized that the Company shall have authority to issue shares with a par value of $ per share. The Board of Directors may determine to : (i) issue a number of Series Preferred in a private placement at an offering price of $ per share; (ii) issue the Series E Preferred in consideration for the cancellation of shares of the Company’s Series A Preferred held by the Corporation’s officers, directors and key personnel based on terms and conditions that the Board of Directors may determine; and (iii) issue the shares of Series E Preferred for such other purposes as the Board of Directors may determine.
The Series C, Series D
and Series E 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 ; and (ii) 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) existing subsidiaries of the Corporation.
On
May 4, 2021, the Board of Directors issued shares of Series E Convertible Preferred Stock
for the subscription agreements dated March 1, 2021 at the value of $per share. Since the full payment of $
On
May 12, 2021, the Board of Directors authorized the issuance of shares of Series D Voting Preferred Stock with a value of $
On
May 20, 2021, the Board of Directors authorized the issuance of shares of Series C Convertible Preferred Stock with a value of
$
| 10 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
June 30, 2021
(unaudited)
Common Stock
On
February 12, 2020, FINRA approved a
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 one billion nine hundred million () shares of Common Stock to twenty billion () shares of Common Stock.
Six Months Ended June 30, 2021
During
the six months ended June 30, 2021, the Company issued shares of common stock for consultant services
valued at $
During the six months ended June 30, 2021, the Company issued shares of common stock for conversion of shares of preferred series E shares.
Six Months Ended June 30, 2020
In
January 2020, the Company executed a 12-month advisory services agreement. The Company is to issue shares of common stock monthly.
The Company issued shares of common stock with a value of $
During
the six months ended June 30, 2020, the Company issued a total of shares of common stock per debt conversion of various
convertible notes. The total of the debt conversion was for $
During
the six months ended June 30, 2020, the Company issued shares of common stock for consultant services valued at $
Stock Options
| Weighted | ||||||||||||||||
| Number of Stock | Average Exercise | Remaining | Intrinsic | |||||||||||||
| Options | Price | Life (yrs) | Value | |||||||||||||
| Outstanding on December 31, 2020 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Cancelled | ( | ) | ||||||||||||||
| Outstanding on June 30, 2021 | $ | |||||||||||||||
| Options exercisable on June 30, 2021 | $ | $ | ||||||||||||||
| 11 |
eWellness Healthcare Corporation
Notes to Consolidated Condensed Financial Statements
June 30, 2021
(unaudited)
Warrants
The following is a summary of the status of the Company’s warrants as of June 30, 2021 and changes during the six months ended on that date:
| Weighted | |||||||||||||||||
| Number of | Average Exercise | Remaining | Intrinsic | ||||||||||||||
| Warrants | Price | Life (yrs.) | Value | ||||||||||||||
| Outstanding on December 31, 2020 | $ | $ | |||||||||||||||
| Granted | |||||||||||||||||
| Exercised | |||||||||||||||||
| Cancelled | ( | ) | |||||||||||||||
| Outstanding on June 30, 2021 | $ | $ | |||||||||||||||
| Warrants exercisable on June 30, 2021 | $ | $ | |||||||||||||||
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 Company believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
Note 7. 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. The Company records the notes under ASU paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. The Company records 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 six months ended June 30, 2021 and 2020,
the Company amortized the debt discount of $
During the six months ended June 30, 2021, the Company had the following activity in the derivative liability account:
| Notes | ||||
| Derivative liability at December 31, 2020 | $ | |||
| Change in fair value | ( | ) | ||
| Derivative liability at June 30, 2021 | $ | |||
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 | $ | |||
| Risk free interest rate | % | |||
| Stock volatility factor | % | |||
| Years to Maturity | ||||
| Expected dividend yield |
Note 8. Subsequent Events
From July 1 until the filing of this report, the Company issued shares of Series E Convertible Preferred shares.
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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 six months ended June 30, 2021 and 2020 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, 2020.
THE COMPANY
Overview
The Company believes that it was the first physical therapy telehealth company to offer real-time distance monitored assessments and treatments. Our business model was 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 was designed to achieve a market presence in the $30 billion physical therapy market, the $4 billion MSK market and the $8 billion corporate wellness industry. PHZIO is the first real-time remote monitored 1-to-many MSK physical therapy platforms for home use.
On May 22, 2020, the Company received and accepted the resignations of Brandon Rowberry and Rochelle Pleskow as independent directors. Their letters of resignation dated May 22, 2020, state that the reason for their resignations were to permit them to pursue other business opportunities and further stated that they have had no disagreements with the operations, policies or practices of the Company. Also, on May 22, 2020, the Company received a letter of resignation from Darwin Fogt, resigning as CEO, President and director of the Registrant 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 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 . The Service Agreement expired during the first quarter of 2020 and the parties signed a new agreement on September 15, 2020 which is discussed below.
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Pursuant to communications between the Company and Darwin Fogt and Curtis Hollister regarding their resignations 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 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 Chairman of the Board of Directors.
Plan of Operations
On September 15, 2020, the Company and Bistromatics signed an agreement that transferred all worldwide marketing and Intellectual Property Rights or claims to the Company’s Phzio, Phzio TeleRehab and MSK 360 platforms to Bistromatics in return for a 15% ownership in Bistromatics. This agreement eliminated all past due professional fees of $748,832. The transfer of rights was completed on December 31, 2020.
During the last quarter of 2020 and the first quarter of 2021, the Company’s Board of Directors and Management determined that while it would continue its efforts and resources involving physical therapy and telemedicine, it would also pursue other health-related business opportunities. With the Company’s announced plan to diversify its health-related business beyond its telemedicine operations, which telemedicine operations will continue, the Company has engaged in negotiations with a recently formed private Nevada company controlled by a third party, American Health Protection, Inc.(“AMHP”), for a potential business combination. In connection with such negotiations, the Company’s Board of Directors on March 8, 2021, approved the organization of EWLL Acquisition Corp. under the laws of Nevada as a new wholly owned subsidiary of the Company (“EWLL Acquisition”). The purpose of the formation of EWLL Acquisition was in contemplation of its merger with and into AMHP which would be the surviving entity and become a wholly owned subsidiary of the Company.
On April 19, 2021, the Company filed 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. (“Name Change”); (ii) change the par value of the Company’s common stock and preferred stock from $0.001 per share to $0.0001 per share (“Par Value Change”); and (iii) implement the 1:2,000 reverse split of our Common Stock and the shares underlying conversion of the 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 (“Reverse Split”).
The Name Change, Par Value Change and Reverse Split are sometimes referred to as the “Corporate Actions”, which Corporate Actions must be approved by FINRA. Following the filing of this Form 10Q, the Company will file the FINRA application for approval of these actions.
Pursuant to the Company’s intentions referenced above, the Company on May 18, 2021, entered into an Agreement and Plan of Merger by and between the Company, EWLL Acquisition and AMHP pursuant to which AMHP merged with EWLL Acquisition, with AMHP being the surviving entity and becoming a wholly owned subsidiary of the Company, subject to filing of Articles of Merger with the State of Nevada. On July 14, 2021, the Company filed the requisite Articles of Merger with the State of Nevada and, as a result, AMHP became a wholly owned subsidiary of the Company and EWLL Acquisition ceased to exist.
Results of Operations of eWellness for the three and six months ended June 30, 2021 vs. 2020
REVENUES: Total revenues for the six months ended June 30, 2021 and 2020 were $0 and $138,155. respectively.
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OPERATING EXPENSES: Total operating expenses decreased to $1,251,658 for the six months ended June 30, 2021 from $1,659,824 for the six months ended June 20, 2020 reflecting a decrease of $408,166. The decrease resulted from a reduction in number of shares of common stock issued to consultants, reduction in accrued executive compensation, reduction in financing fees and reduction of professional fees. Total operating expenses increased to $1,214,671 for the three months ended June 30, 2021 from $658,716 for the three months ended June 30, 2020 reflecting an increase of $555,955. The increase is a result of an increase in the number of shares of preferred shares issued to officers, directors and consultants offset by a reduction in financing fees.
NET INCOME (LOSS): The Company had a net income of $1,111,226 for the six months ended June 30, 2021 compared with a net loss of $6,489,526 for the six months ended June 30, 2020 which reflects an increase of $7,600,752. The increase from loss to income is from an increase from loss to gain from derivative liability on convertible debt of $6,691,282, a decrease in interest expense of $558,960 and decrease in operating expenses of $408,166 (as outlined above). The Company had a loss of $635,594 for the three months ended June 30, 2021, compared with a net loss of $2,960,927 for the three months ended June 30, 2020, which reflects a decrease of net loss of $2,395,541. The decrease is from an increase from loss to gain from derivative liability on convertible debt of $2,930,967, a decrease in interest expense of $140,443 offset by an increase in operating expenses of $555,955 (as outlined above).
Liquidity and Capital Resources
As of June 30, 2021, we had negative working capital of $4,172,832 compared to negative working capital of $6,660,570 as of December 31, 2020. The negative working capital decrease is because of a decrease in derivative liability offset by an increase in accounts payable and accrued expenses. Cash used in operations was $253,844 and $281,647 for the six months ended June 30, 2021 and 2020, respectively. The decrease in cash used in operations is a result of income versus loss. Cash flows provided by financing activities were $255,025 and $45,000 for the six months ended June 30, 2021 and 2020, respectively. The increase resulted from the issuance of Preferred Series E stock for cash. The cash balance as of June 30, 2021 was $2,290.
We do not have sufficient cash on hand to 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.
Off-Balance Sheet Arrangements
As of June 30, 2021 and December 31, 2020, 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
From time to time the Company may become a party to litigation matters involving claims against the Company. 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.
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, 2020, 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.
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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 June 30, 2021, 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.
PART II - OTHER INFORMATION
ITEM 1. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the six months ended June 30, 2021, the Company issued 2,001,666 shares of common stock for consultant and advisory services valued at $752.
During the six months ended June 30, 2021, the Company issued 843,200,000 shares of common stock for conversion of 84,320 shares of preferred series E shares.
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ITEM 2 EXHIBITS
| (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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SIGNATURES
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)
| By: | /s/ Douglas MacLellan | Date August 23, 2021 | |
| Douglas MacLellan | |||
| Chief Executive Officer |
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.
| Signature | Title | Date | ||
| /s/ Douglas MacLellan | Chief Executive Officer and Chairman of the Board | August 23, 2021 | ||
| Douglas MacLellan | (Principal Executive Officer) | |||
| /s/ David Markowski | Chief Financial Officer and Director | August 23, 2021 | ||
| David Markowski | (Principal Financial and Accounting Officer) | |||
| /s/ Douglas Cole | Director | August 23, 2021 | ||
| Douglas Cole |
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