10-Q 1 form10-q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission file number: 000-50912

 

 

 

AMERICAN INTERNATIONAL HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

 

Nevada   88-0225318
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

205S Bailey Street, Electra, Texas   76360
(Address of Principal Executive Offices)   (ZIP Code)

 

(940) 495-2155

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Indicate by check mark whether the registrant (1) has 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 ☒ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer Smaller reporting company
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of July 12, 2023, there were 195,000,000 shares of our common stock issued and outstanding, par value $0.0001.

 

 

 

  

 

 

TABLE OF CONTENTS

 

Item   Description   Page
    Cautionary Statement Regarding Forward-Looking Statements   1
         
    PART I — FINANCIAL INFORMATION    
Item 1.   Condensed Financial Statements  
    Condensed Consolidated Balance Sheets — as of March 31, 2023 (unaudited) and December 31, 2022 (unaudited)   2
    Condensed Consolidated Statements of Operations — Three Months Ended March 31, 2023 and 2022 (unaudited)   3
    Consolidated Statements of Changes in Stockholders’ Deficit — Three Months Ended March 31, 2023 and 2022 (unaudited)   4
    Condensed Consolidated Statements of Cash Flows —Three Months Ended March 31, 2023 and 2022 (unaudited)   5
    Notes to Condensed Consolidated Financial Statements (unaudited)   6
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   21
Item 3.   Quantitative and Qualitative Disclosures About Market Risk   26
Item 4.   Controls and Procedures   26
         
    PART II— OTHER INFORMATION    
Item 1.   Legal Proceedings   27
Item 1A.   Risk Factors   27
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds   32
Item 3.   Defaults Upon Senior Securities   32
Item 4.   Mine Safety Disclosures   32
Item 5.   Other Information   32
Item 6.   Exhibits   33

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains “forward-looking statements”. These forward-looking statements, including without limitation forward-looking statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” involve risks and uncertainties. Any statements contained in this Quarterly Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements as to our future operating results; plans for the marketing of our services; future economic conditions; the effect of our market and product development efforts; and expectations or plans relating to the implementation or realization of our strategic goals and future growth, including through potential future acquisitions. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, use of cash and other measures of financial performance, as well as statements relating to future dividend payments. Other forward-looking statements may be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “predicts,” “targets,” “forecasts,” “strategy,” and other words of similar meaning in connection with the discussion of future operating or financial performance. These statements are based on current expectations, estimates and projections about the industries in which we operate, and the beliefs and assumptions made by management. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Accordingly, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Readers should refer to the discussions under “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 concerning certain factors that could cause our actual results to differ materially from the results anticipated in such forward-looking statements. These Risk Factors are hereby incorporated by reference into this Quarterly Report.

 

1

 

PART I — FINANCIAL INFORMATION

 

American International Holdings Corp.

Condensed Consolidated Balance Sheets

 

   March 31, 2023   December 31, 2022 
   (Unaudited)   (Unaudited) 
ASSETS          
           
CURRENT ASSETS:          
Cash and cash equivalents  $167   $- 
Other receivables   1,061,348    - 
TOTAL CURRENT ASSETS   1,061,515    - 
           
Oil and gas properties, full cost method          
Proved developed producing oil and gas properties, net   

831,884

    - 
Total Oil and gas properties, net   

831,884

    - 
           
NON-CURRENT ASSETS          
Fixed asset, net   13,000    - 
Patent, net   1,111,506    - 
Goodwill   7,189,473    - 
Deposit   53,130    - 
TOTAL NON-CURRENT ASSETS   8,367,109    - 
           
TOTAL ASSETS  $10,260,508   $- 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable and accrued liabilities  $127,212   $- 
Accrued interest payable   351,659    - 
Accrued compensation   200,000    - 
Convertible notes payable, net of debt discount of $241,985 and $0   2,886,494    - 
Convertible notes payable - related parties   1,500,000    - 
Notes payable   758,800    - 
Notes payable - related parties   360,000    - 
Derivative liabilities   1,927,357    - 
TOTAL CURRENT LIABILITIES   8,111,522    - 
           
TOTAL LIABILITIES   8,111,522    - 
           
STOCKHOLDERS’ DEFICIT          
Preferred stock, (par value $0.0001, 5,000,000 shares authorized, of which 1,000,000 shares issued and outstanding)   100    100 
Common stock (par value $0.0001, 195,000,000 shares authorized, of which 195,000,000 and 75,601,875 shares issued and outstanding as of March 31, 2023 and December 31, 2022)   19,500    7,560 
Treasury stock, at cost   (3,894)   (3,894)
Additional paid in capital   2,563,835    - 
Accumulated deficit   (430,555)   (3,766)
TOTAL STOCKHOLDERS’ DEFICIT   2,148,986   -
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $10,260,508   $- 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2

 

American International Holdings Corp.

Condensed Consolidated Statements of Operations (Unaudited)

 

   For the three
Months Ended
   For the three
Months Ended
 
   March 31, 2023   March 31, 2022 
         
Revenues          
Revenues  $50,414   $      - 
Lease operating cost   64,950    - 
Gross profit (loss)   (14,536)   - 
           
Operating expenses          
General and administrative expenses   148,113    - 
Total operating expenses   148,113    - 
           
Loss from operations   (162,649)   -
           
Other income (expenses)          
Change in derivative liabilities   (147,466)   - 
Interest expense   (56,875)   - 
Amortization on debt discount   (59,799)   - 
Total other expense   (264,140)   - 
           
Loss before income taxes   (426,789)   -
           
Income taxes   -    - 
           
Net loss  $(426,789)  $-
Weighted average number of outstanding shares          
Basic   38,492,997    - 
Diluted   67,485,287    - 
           
Basic loss per share   (0.01)   - 
Diluted loss per share   (0.01)   - 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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American International Holdings Corp.

Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited)

 

   Shares   Amount   Shares   Amount   Shares   Amount   Capital   (Deficit)   Stock   (Deficit) 
   Preferred Stock A   Preferred Stock B   Common Stock  

Additional

Paid-in

  

Retained

Earnings

  

 

Treasury

  

Total

Stockholders’

 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   (Deficit)   Stock   (Deficit) 
                                         
Balance, December 31, 2021   1,000,000   $100    -   $-    1,407,418   $141   $-   $-   $(3,894)  $(3,653)
                                                   
Issuance of common shares for note conversion and settlement   -    -    -    -    84,878    9    -    -    -    9 
                                                   
Issuance of shares for services - related parties   -    -    -    -    23,717    2    -    -    -    2 
                                                   
Issuance of shares for services   -    -    -    -    88,768    9    -    -    -    9 
                                                   
Net Loss   -    -    -    -    -    -    -    -    -    - 
                                                   
Balance, March 31, 2022   1,000,000   $100    -   $-    1,604,781   $161   $-   $-   $(3,894)  $(3,633)
                                                   
Balance, December 31, 2022   1,000,000   $100    -   $-    75,601,875   $7,560   $-   $-   $(3,894)  $3,766 
                                                   
Acquisition of Cycle Energy Corp.   -    -    -    -    -    -    1,929,734    (3,766)   -    1,925,968 
                                                   
Issuance of common shares for note conversion and settlement   -    -    -    -    119,398,125    11,940    476,984    -    -    488,924 
                                                   
Reclassification of derivative liabilities due to note conversion   -    -    -    -    -    -    157,117    -    -    157,117 
                                                   
Net loss   -    -    -    -    -    -    -    (426,789)   -    (426,789)
                                                   
Balance, March 31, 2023   1,000,000   $100    -   $-    195,000,000   $19,500   $2,563,835   $(430,555)  $(3,894)  $2,148,986 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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American International Holdings Corp.

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

  

For the three

Months Ended

  

For the three

Months Ended

 
   March 31, 2023   March 31, 2022 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(426,789)  $-
Adjustments to reconcile net loss to net cash provided by operating activities:          
Derivative expense   70,765    - 
Changes in derivative liabilities   76,701    - 
Depreciation expense   32,014    - 
Amortization on debt discount   59,799    - 
Amortization of intangible asset   15,885    - 
(Decrease) increase in operating liabilities:          
Accounts payable and accrued liabilities   17,949    - 
Accrued interest payable   56,814    - 
Deposit   (3,130)   - 
NET CASH USED IN OPERATING ACTIVITIES   (99,992)   - 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Cash received in reverse acquisition   159      
           
NET CASH PROVIDED BY INVESTING ACTIVITIES   159    - 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from convertible notes payable   100,000     
           
NET CASH PROVIDED BY FINANCING ACTIVITIES   100,000   - 
           
NET INCREASE IN CASH AND CASH EQUIVALENTS   167    - 
           
CASH AND CASH EQUIVALENTS:          
Beginning of period   -    3,950 
End of period  $167   $3,950 
           
Supplemental disclosure of cash flow information:          
Cash paid for income taxes  $-   $- 
Cash paid for interest  $61   $- 
           

Non-cash investing and financing activities:

          
Debt discount on convertible debt  $100,000   $- 
Reverse merger  $

758,800

   $

-

 
Conversion of note payable, accrued interest and settlement of derivative  $

646,041

   $

-

 
Cashless acquisition of assets  $

3,115,637

   $

-

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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American International Holdings Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2023

(Unaudited)

 

Note 1 – Summary of Significant Accounting Policies

 

Organization, Ownership and Business

 

On April 28, 2020, American International Holdings Corp. (“AMIH” or the “Company”) incorporated a wholly-owned subsidiary, ZipDoctor, Inc. (“ZipDoctor”) in the State of Texas. ZipDoctor provides its customers with unlimited, 24/7 access to board certified physicians and licensed mental and behavioral health counselors and therapists via a newly developed, monthly subscription based online telemedicine platform. ZipDoctor was launched in August 2020.

 

On February 15, 2023, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Cycle Energy Corp., a Texas corporation (“Cycle Energy”), and Marble Trital Inc., the sole shareholder of Cycle Energy (the “Shareholder”). The Shareholder is beneficially owned and controlled by Mr. Michael McLaren, the Company’s newly appointed Chief Executive Officer. Pursuant to the Exchange Agreement, which closed on February 15, 2023 (the “Closing Date”), the Shareholder exchanged (the “Exchange”) 100% of the ownership of Cycle Energy in consideration for 1,000,000 shares of the Series A Preferred Stock of the Company (the “New Series A Shares”).

 

On March 9, 2023, and effective on February 15, 2023, the date of the Exchange Agreement, the Company, Cycle Energy and the Shareholder, entered into a First Amendment to Share Exchange Agreement (the “First Amendment”), which amended the Exchange Agreement to be effective February 15, 2023, instead of December 31, 2022.

 

The merger was accounted for as a reverse merger, whereby Cycle Energy was considered the accounting acquirer and became our wholly-owned subsidiary. In accordance with the accounting treatment for a “reverse merger”, the Company’s historical financial statements prior to the reverse merger has been replaced with the historical financial statements of Cycle Energy prior to the reverse merger. The consolidated financial statements after completion of the reverse merger include the assets, liabilities, and results of operations of the combined company from and after the closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’ equity remaining in the consolidated financial statements. See Note 3 for details.

 

Cycle Energy Corp. is a Texas-based company and an investor, developer and asset manager with diversified assets across the energy supply chain. The Company’s portfolio includes Cycle Energy that currently owns and operates two vertically integrated businesses – Cycle Oil and Cycle Services. Cycle Energy Corp. operates from a property in Electra, Texas which the Company owns. The property is 3.14 acres with a 1,500-square-foot shop. Cycle Energy Corp. targets US oil and gas export, oil and gas producers and suppliers and commercial clients requiring Energy Products.

 

Also on February 15, 2023, and as a required condition to the closing of the Exchange Agreement, the Company and Jacob D. Cohen, the then Chairman and Chief Executive Officer of the Company, entered into an Exchange Agreement (the “Cohen Exchange Agreement”). Pursuant to the Cohen Exchange Agreement, Mr. Cohen exchanged all 1,000,000 shares of the Series A Preferred Stock of the Company which he held (the “Cohen Series A Shares”), with the Company (which Cohen Series A Shares were then cancelled, prior to being reissued to the Seller as New Series A Shares, as discussed above), for (a) all of the issued and outstanding membership interests held by the Company in Epiq Scripts, LLC, a Texas limited liability company (“Epiq Scripts”)(representing 51% of Epiq Scripts)(the “Epiq Scripts Interests”); (b) all cash payments paid to the Company in the future as a Royalty Payment (as defined in the Royalty Agreement (defined below)) pursuant to that certain Royalty Agreement dated June 30, 2022, by and between Epiq MD, Inc. a Nevada corporation (“Epiq MD”) and the Company (the “Royalty Agreement” and the “Royalty Payments”); (c) all proceeds that the Company receives from any sale of the equity of ZipDoctor, Inc., a Texas corporation (the “ZipDoctor Consideration”); and (d) the rights to all debt owed to the Company from Epiq Scripts, in the amount of approximately $850,000 (the “Epiq Scripts Debt”).

 

Pursuant to the Cohen Exchange Agreement, the Company also agreed to pay all Royalty Payments to Mr. Cohen within five days of its receipt thereof and that any amount of the Royalty Payments not paid when due will accrue interest at the rate of the lesser of (a) 18% per annum; and (b) the highest rate allowable pursuant to law, until paid in full (as applicable, (a) or (b), the “Default Rate”).

 

The Cohen Exchange Agreement has an effective date of February 15, 2023, and the transactions contemplated by the Cohen Exchange Agreement closed on February 15, 2023. As a result of the closing of the transactions contemplated by the Exchange Agreement and the Cohen Exchange Agreement, and effective on the Closing Date, February 15, 2023, the Shareholder, through ownership of all 1,000,000 of the outstanding Series A Preferred Stock shares, holds voting control over 60% of the Company’s outstanding voting shares, resulting in a change of control of the Company. Prior to the closing of the Cohen Exchange Agreement, Jacob D. Cohen held 1,000,000 shares of Series A Preferred Stock, which provided him voting control over 60% of the Company’s outstanding voting shares. The shares of Series A Preferred Stock held by the Shareholder are beneficially owned by Michael McLaren, its controlling shareholder owner and officer. As a result, Mr. McLaren, as a result of his control of the Shareholder, obtained control over the Company upon the closing of the transactions contemplated by the Exchange Agreement, as he obtained voting control over 60% of the Company’s outstanding voting stock due to his ownership of the New Series A Shares.

 

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As of March 31, 2023, our operations are limited, and consist mainly of Cycle Energy Corp. and ZipDoctor. On March 17, 2023, the Company decided to discontinue the operations of Zipdoctors, Inc. and entered into a Stock Purchase Agreement with Cosmos Health Inc. (“Cosmos” and the “SPA”). Pursuant to the SPA, the Company agreed to sell Cosmos 100% of the outstanding shares of common stock of ZipDoctor, Inc., for $150,000. The transactions contemplated by the SPA closed on April 3, 2023. The SPA contained representations and warranties of the parties customary for a transaction of the size and type of the SPA and includes various indemnification obligations of the parties. Pursuant to the Cohen Exchange Agreement, effective on February 15, 2023, the proceeds from the sale of Zipdoctor Inc. will be paid to Jacob D, Cohen. Zipdoctor Inc. has limited activities the three months ended March 31, 2023.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of Cycle Energy Corp., AMIH and its wholly-owned subsidiaries: ZipDoctor Inc. (February 15, 2023 forward, until sold April 3, 2023), Cycle energy Oil and Gas Inc. (February 23, 2023 forward) and Cycle Energy Services Inc. (February 23, 2023 forward). All material intercompany transactions and balances have been eliminated in consolidation.

 

Cash Equivalents

 

Highly liquid investments with original maturities of three months or less are considered cash equivalents. There are no cash equivalents at March 31, 2023 and December 31, 2022.

 

The Company maintains the majority of its cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per commercial bank. From time to time, cash in deposit accounts may exceed the FDIC limits, the excess would be at risk of loss for purposes of the consolidated statements of cash flows.

 

Net Income (Loss) Per Common Share

 

We compute net income (loss) per share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share “EPS” on the face of the consolidated statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. There were dilutive securities for the three months ended March 31, 2023.

 

Property and Equipment, Depreciation, Amortization and Long-Lived Assets

 

Long-lived assets include:

 

Property and Equipment – Assets acquired in the normal course of business are recorded at original cost and may be adjusted for any additional significant improvements after purchase. We depreciate the cost evenly over the assets’ estimated useful lives from the date on which they become fully operational and after taking into account their estimated residual values: 

 

 

   Depreciable life   Residual value 
Vehicles   5 years    0%

 `

7

 

Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss being recognized as a component of other income or expense.

 

Identifiable intangible assets – These assets are recorded at acquisition cost. Intangible assets with finite lives are amortized evenly over their estimated useful lives.

 

At least annually, we review all long-lived assets for impairment. When necessary, we record changes for impairments of long-lived assets for the amount by which the present value of future cash flows, or some other fair value measure, is less than the carrying value of these assets.

 

If the carrying amount of a reporting unit exceeds its fair value, we measure the possible goodwill impairment based upon an allocation of the estimate of fair value of the reporting unit to all of the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets (Step Two Analysis). The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities (“carrying amount”) is the implied fair value of goodwill.

 

Goodwill and indefinite-lived brands are not amortized, but are evaluated for impairment annually or when indicators of a potential impairment are present. Our impairment testing of goodwill is performed separately from our impairment testing of indefinite-lived intangibles. The annual evaluation for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. The Company believes such assumptions are also comparable to those that would be used by other marketplace participants.

 

Amortization of intangible assets with finite lives are computed using the straight-line method over the estimated useful lives as below (see Footnote 7, for further details):

 

 

    Estimated useful lives 
Patents   7 years 

 

Fair Value of Financial Instruments

 

The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with FASB ASC 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

8

 

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.

 

Our financial instruments include cash and cash equivalents, accounts payable and accrued liabilities, accrued interest payable, accrued compensation -related parties, convertible note payable, notes payable, notes payable – related parties and derivative liabilities.

 

The Company’s convertible notes payable are measured at amortized cost. The derivative liabilities are stated at their fair value as a level 3 measurement. The Company used the Monte Carlo model to determine the fair values of these derivative liabilities.

 

Oil and Gas Properties

 

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred.

 

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from operations before income taxes.

 

Limitation on Capitalized Costs

 

Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of:

 

(a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus

 

(b) the cost of properties not being amortized; plus

 

(c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of

 

(d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties.

 

9

 

Oil and Gas Reserves

 

Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices.

 

Goodwill

 

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests and any fair value of the Company’s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognized in profit or loss as a gain on bargain purchase.

 

The Company adopted Accounting Standards Update (“ASU”) 2017-04, Intangible – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. After adopting this guidance, the Company performs the quantitative impairment test by comparing the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, the amount by which the carrying amount exceeds the reporting unit’s fair value is recognized as impairment. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, allocation of assets, liabilities and goodwill to reporting units, and determination of the fair value of each reporting unit.

 

Depreciation, depletion, and Amortization and Accretion

 

The estimates of proved reserves materially impact depreciation, depletion, amortization and accretion (“DD&A”) expense. If the estimates of proved reserves decline, the rate at which we record DD&A expense will increase, reducing future net income. Such a decline may result from lower market prices, which may make it uneconomic to drill for and produce from higher-cost fields.

 

Proved Reserves

 

Estimates of our proved reserves included in this report are prepared in accordance with U.S. SEC guidelines for reporting corporate reserves and future net revenue. The accuracy of a reserve estimate is a function of:

 

i. the quality and quantity of available data;

 

ii. the interpretation of that data;

 

iii. the accuracy of various mandated economic assumptions; and

 

iv. the judgment of the persons preparing the estimate.

 

Our proved reserve information included in this report was predominately based on estimates. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, reserve estimates will be different from the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of an estimate may justify material revisions to the estimate.

 

Asset Retirement Obligation

 

Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. We have not yet determined our ARO, but once we receive our proven reserves third party report, we will calculate the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. Periodic accretion of discount of the estimated liability is recorded as accretion expense in the accompanying consolidated statements of operations and comprehensive income.

 

ARO liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive lives of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated ARO.

 

Convertible Notes Payable

 

The Company accounts for convertible notes payable in accordance with the FASB ASC 815, Derivatives and Hedging, since the conversion feature is not indexed to the Company’s stock and it cannot be classified in equity. The Company allocates the proceeds received from convertible notes payable between the liability component and conversion feature component. The conversion feature that is considered embedded derivative liabilities has been recorded at fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company has also recorded the resulting discount on debt related to the conversion feature and is amortizing the discount using the straight line method over the life of the debt instruments.

 

Derivative Liabilities

 

The Company accounts for derivative liabilities in accordance with the FASB ASC 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires companies to recognize all derivative liabilities in the balance sheet at fair value, and marks it to market at each reporting date with the resulting gains or losses shown in the statement of operations of such period.

 

Management’s Estimates and Assumptions

 

The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

 

Concentration and Risks

 

The Company’s operations are subject to risks including financial, operational, regulatory and other risks including the potential risk of business failure.

 

For the three months ended March 31, 2023 and year ended December 31, 2022, the Company had revenue from continuing operations which was derived from a single customer or a few major customers, with one customer making up 100% of the total revenue.

 

Revenue Recognition

 

Zip Doctor, Inc: Zip Doctor generates its revenue from monthly membership subscriptions. Revenue is recognized at the time of delivery and includes a delivery fee for each delivery or a subscription fee on a monthly basis for memberships. Under Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) Revenue from Contracts with Customers, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account under Topic 606. The Company’s contracts with its customers do not include multiple performance obligations. Zip Doctor recognizes revenue when a performance obligation is satisfied by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration Zip Doctor expects to be entitled to in exchange for such products or services. Activity for ZipDoctor are reflected from February 15, 2023, until discontinued on April 3, 2023.

 

10

 

Cycle Oil and Gas: Sales of crude oil, natural gas, and natural gas liquids (NGLs) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (MMBtu) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant.

 

The following table of the Company’s revenue by source for the three months ended March 31, 2023 and the year- ended December 31, 2022:

 

   March 31, 2023   December 31, 2022 
           
Revenue from Oil and Gas  $50,414   $        - 

 

Income Taxes

 

The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized.

 

Related Parties

 

The Company follows subtopic 850-10 of FASB ASC 850, Related Party Disclosures for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Material related party transactions have been identified in Note 8, 10 and 12 in the condensed consolidated financial statements.

 

Recently Issued Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption.

 

11

 

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

 

Note 2 – Deposit

 

Deposits as of March 31, 2023 and December 31, 2022 were $53,130 and $0, respectively. $50,000 is related to a letter of credit issued in connection with the filling of a P-5 Organization Report with the Commission as required by Texas Natural Resources Code in order to perform operations within the jurisdiction of the Railroad Commission of Texas.

 

Note 3 – Reverse Merger

 

Acquisition of American International Holdings Corp.

 

On Feb 15, 2023, Cycle Energy Corp. entered into a Share Exchange Agreement with American International Holdings Corp., a Texas Corporation. American International Holdings Corp. is a holding company with Zipdoctor Inc.

 

Pursuant to the terms of the Agreement, the Company acquired 1,000,000 Series A Preferred Stock of American International Holdings Corp. in exchange for 100% of the issued and outstanding securities of the Company. The company had 195,000,000 shares of common stock outstanding with a closing price of $0.009/share. The total fair asset value of Series A preferred stock was $2,632,500=(195,000,000/0.4)*0.6*0.009. Considering that the net liabilities of American International Holdings Corp. was $4,556,973 as of February 15, 2023, goodwill of $7,189,473 was recorded related to the reverse merger. We will evaluate the goodwill for impairment on an ongoing basis and make adjustments as necessary.

 

The following table summarizes the consideration given for the Company and the fair values of the assets of liabilities assumed at the acquisition date.

 

Consideration given:     
      
Preferred stock shares given  $2,632,500 
Total consideration given  $

2,632,500

 
      
Fair value of identifiable assets acquired, and liabilities assumed:     
Cash  $159 
Accounts payable   (59,088)
Interest payable   (195,693)
Accrued compensation   (200,000)
Notes payable   (2,174,994)
Derivative liabilities   (1,927,357)
Deferred revenue   - 
Total identifiable net liabilities   (4,556,973)
Goodwill   7,189,473
Total consideration  $2,632,500 

 

Accounting Treatment of the Merger

 

For financial reporting purposes, the Share Exchange represented a “reverse merger” and Cycle Energy Corp was deemed to be the accounting acquirer in the transaction. The Share Exchange has been accounted for as a reverse merger.

 

Cycle Energy Corp. is deemed to be the acquirer for financial reporting purposes, and American International Holdings, Inc. is treated as the acquired company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the Share Exchange are those of Cycle Energy Corp and are recorded at the historical cost basis of Cycle Energy Corp, and the financial statements after completion of the Share Exchange will include the assets and liabilities of American International Holdings and Cycle Energy Corp, and the historical operations of American International Holdings and Cycle Energy Corp from the acquisition date forward.

 

Goodwill is not deductible for income tax purposes.

 

Note 4 – Other Receivables

 

On February 23, 2023, the Company (the “purchaser”) entered into an asset purchase agreement with Marble Trital Inc (the “seller”), a related party. Pursuant to the agreement, the purchaser acquired One Million Five Hundred Thousand $1,061,348 receivable from sale of Cycle Oil and Gas Canada by assuming notes payables from a related party, please see note 10 and 17 for further discussion. Short term investment from continuing operations as of March 31, 2023 and December 31, 2022 were $1,061,348 and $0, respectively.

 

Note 5 – Oil and Gas Properties

 

On February 23, 2023, the Company (the “purchaser”) entered into an asset purchase agreement with Marble Trital Inc. to acquire proved developed producing oil and gas properties with a net balance of $471,120 and 100% ownership of Cycle Oil and Gas Inc. (Texas). Please see Note 17 and 18 for further discussion.

 

On May 1, 2022, Cycle Oil and Gas, Inc. (Texas) purchased the oil and gas properties from Triple S Gas Inc. for $320,000 which consists of 1) total cash consideration Three Hundred and Twenty Thousand ($320,000) Dollars. 2) A ($10,000)   non-refundable deposit due on signing. And the Company also needs to pay a 2.5% gross overriding royalty interest capped at Two Hundred and Fifty Thousand Dollars ($250,000) based on the specific quantities sold in oil and gas. As of March 31, 2023, no royalty payments had been paid. If there is no production, there is no royalty due.

 

On June 1,2022, Cycle Oil and Gas purchased the oil and gas properties from Ray Loveless Enterprises LLC. for $250,000 total cash consideration Two Hundred and Fifty Thousand ($250,000) Dollars. And the Company also needs to pay a 2.5% gross overriding royalty interest capped at Three Hundred and Twenty-Five Thousand Dollars ($325,000) based on the specific quantities sold in oil and gas. As of March 31, 2023, no royalty payments had been paid. If there is no production, there is no royalty due.

 

Oil and Gas Properties were as follows as of March 31, 2023 and December 31, 2022:

 

Schedule of Oil and Gas Properties

   March 31,   December 31, 
   2023   2022 
   (Unaudited)   (Unaudited) 
Proved developed producing oil and gas properties  $1,041,120   $- 
Total   1,041,120    - 
Less: Accumulated Depreciation   (209,236)   - 
Proved developed producing oil and gas properties - net  $831,884   $       - 

 

Depreciation expense for the three months ended March 31, 2023, and 2022 was $68,765 and $0, respectively. Accumulated depreciation as of March 31, 2023 and December 31, 2022 were $68,765 and $0, respectively.

 

Note 6 – Fixed Assets

 

Equipment and vehicles were as follows as of March 31, 2023 and December 31, 2022:

 

 

   March 31,   December 31, 
   2023   2022 
   (Unaudited)   (unaudited) 
Vehicle  $15,000   $        - 
Total   15,000    - 
Less: Accumulated Depreciation   (2,000)   - 
Proved developed producing oil and gas properties - net  $

13,000

   $- 

 

Depreciation expense for the three months ended March 31, 2023, and 2022 was $2,000 and $0, respectively. Accumulated depreciation as of March 31, 2023 and December 31, 2022 were $2,000, and $0, respectively

 

Note 7 – Patent

 

Intangible assets, including only patents related to the oil and gas industry and equipment, were acquired through an asset purchase agreement effective on February 23, 2023, please see note 17 for further discussion. These intangible assets are amortized over seven years. The balance of patents were as follows at March 31, 2023 and December 31, 2022:

 

 

  

March 31, 2023

   December 31, 2022 
Patents  $1,127,391   $       - 
Less: accumulated amortization   (15,885)   - 
Net property and equipment   1,111,506    - 

 

Amortization expense for the three months ended March 31, 2023 and 2022 was $15,885 and $0, respectively.

 

Schedule of expected amortization of patent in the next seven years.

 

 

      
   Expected Amortization 
2023  $120,792 
2024   161,056 
2025   161,056 
2026   161,056 
2027 and thereafter   507,547 
Total   1,111,506 

 

Note 8 – Accrued Compensation - Related Parties

 

At March 31, 2023 and December 31, 2022 accrued compensation was $200,000 and $110,000, respectively, representing cash compensation due to the Company’s former executive officers and directors, for services rendered.

 

12

 

Note 9– Convertible Notes Payable

 

Convertible notes payable represents the following at March 31, 2023 and December 31, 2022:

 

 

   March 31, 2023   December 31, 2022 
Note payable to an individual dated July 8, 2019 for $40,000, with interest at 8% per annum and due on July 8, 2020. The Note is currently past due.  $40,000   $- 
Note payable to an individual dated July 8, 2019 for $40,000, with interest at 8% per annum and due on July 8, 2020. The Note is currently in default  $40,000   $- 
           
Note payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. The note is in default.   300,000    - 
           
Note payable of $300,000 dated March 30, 2021 for cash of $282,000, with interest at 6% per annum and due on March 30, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A partial conversion of the Note and accrued interest totaling $51,116 was converted into 14,689 common shares of the Company within the terms of the note during the year ended December 31, 2021. The note and accrued interest totaling $174,280 was converted into 5,522,961 common shares of the Company within the terms of the note during the year ended December31, 2022. The Note is currently in default.   111,000    - 
           
Less: Conversion   -    -
    111,000    - 
           
Note payable of $265,958 dated June 24, 2021 for cash of $250,000, with interest at 6% per annum and due on June 24, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A partial conversion of the Note totaling $84,602 was converted into 1,689,983 common shares of the Company within the terms of the note during the year ended December 31, 2022. A partial conversion of the Note totaling $11,365 was converted into 5,000,000 common shares of the Company within the terms of the note during the three months ended March 31, 2023. The Note is currently in default.  $62,688    - 
           
Less: Conversion   (11,365)   -
    51,323    - 
           
Note payable of $271,958 dated June 24, 2021 for cash of $256,000, with interest at 6% per annum and due on June 24, 2022. The annual interest rate will increase to 15% if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.2437 or 75% of the lowest daily volume weighted average price (VWAP) for the common stock during the seven (7) trading day period prior to the conversion date, representing a discount rate of 25%. A partial conversion of the Note and accrued interest totaling $140,000 was converted into 45,707 common shares of the Company within the terms of the note during the year ended December 31, 2021. The note and accrued interest totaling $143,865 was converted into 7,733,643 common shares of the Company within the terms of the note during the year ended December31, 2022.   -    - 
           
Less: Conversion   -    -
    -    - 
           
Note payable of $750,000 dated November 22, 2021 for cash of $750,000, with interest at 10% per annum and due on June 24, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.075 or 80% of the offering price per share of Common Stock at which the Uplist Offering is made. The note and accrued interest totaling $240,710 was converted into 12,855,362 common shares of the Company within the terms of the note during the year ended December 31, 2022. The note and accrued interest totaling $93,335 was converted into 21,166,158 common shares of the Company within the terms of the note during the three months ended March 31, 2023.The Note is currently in default.   592,527    - 
           
Less: Conversion   (77,307)   -
    515,220    - 
           
Note payable of $500,000 dated November 30, 2021 for cash of $5000,000, with interest at 10% per annum and due on November 30, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.075 or 80% of the offering price per share of Common Stock at which the Uplist Offering is made. The note and accrued interest totaling $342,801 was converted into 17,595,000 common shares of the Company within the terms of the note during the year ended December 31, 2022. The note and accrued interest totaling $169,135 was converted into 26,450,000 common shares of the Company within the terms of the note during the three months ended March 31, 2023.The Note is currently in default.   230,756    - 
           
Less: Conversion   (164,135)   -
    66,621    - 
           
Note payable of $250,000 dated December 1, 2021 for cash of $250,000, with interest at 10% per annum and due on December 1, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.075 or 80% of the offering price per share of Common Stock at which the Uplist Offering is made. The note and accrued interest totaling $40,800 was converted into 3,400,000 common shares of the Company within the terms of the note during the year ended December 31, 2022. The note and accrued interest totaling $31,500 was converted into 5,000,000 common shares of the Company within the terms of the note during the three months ended March 31, 2023.The Note is currently in default.   209,200    - 
           
Less: Conversion   (31,500)   -
    177,700    - 
           
Note payable of $500,000 dated December 2, 2021 for cash of $500,000, with interest at 10% per annum and due on December 2, 2022. The annual interest rate will increase to 16% or the maximum amount permitted by law if in default. The Note is a convertible promissory note. The conversion price equals the lessor of $0.075 or 80% of the offering price per share of Common Stock at which the Uplist Offering is made. The note and accrued interest totaling $99,775 was converted into 5,456,194 common shares of the Company within the terms of the note during the year ended December 31, 2022. The note and accrued interest totaling $86,975 was converted into 25,251,000 common shares of the Company within the terms of the note during the three months ended March 31, 2023.The Note is currently in default.   450,485    - 
           
Less: Conversion   (76,320)   -
    374,165    - 
           
Note payable of $137,500 dated May 13, 2022 for cash of $128,450, with interest at 6% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded an original issue discount (OID) of $9,050 which is to be amortized over the term of the note and derivative liabilities of $55,323. The annual interest rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals 75% of the lowest daily VWAP of the Common Stock during the seven (7) consecutive trading day period prior to conversion. The note and accrued interest totaling $128,950 was converted into 12,785,822 common shares of the Company within the terms of the note during the year ended. The note and accrued interest totaling $8,550 was converted into 3,000,000 common shares of the Company within the terms of the note during the three months ended March 31, 2023.   8,550    - 
           
Less: Conversion   (8,550)   -
    -    - 
           
Note payable of $88,775 dated June 16, 2022 for cash of $85,775, with interest at 6% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $3,000 which is to be amortized over the term of the note and derivative liabilities of $38,713. The annual interest rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals 75% of the lowest daily VWAP of the Common Stock during the seven (7) consecutive trading day period prior to conversion. All the note converted to 33,530,967 common shares during the three months ended March 31,2023.   88,775    - 
           
Less: Conversion   (88,775)   - 
    -    - 
           
Note payable of $62,250 dated August 29, 2022 for cash of $56,025, with interest at 12% per annum and due on May 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $6,225 which is to be amortized over the term of the note and derivative liabilities of $23,543. The annual interest rate will increase to 16% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals $0.04, subject to adjustment.   62,250    - 
           
Note payable of $62,250 dated September 13, 2022 for cash of $56,025, with interest at 12% per annum and due on September 13, 2023. In connection with the original issue discount promissory note the Company recorded OID of $6,250 which is to be amortized over the term of the note and derivative liabilities of $10,748. The annual interest rate will increase to 16% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals $0.04, subject to adjustment.   62,250    - 
           
Note payable of $59,400 dated October 3, 2022 for cash of $55,000, with interest at 6% per annum and due on October 3, 2023. In connection with the original issue discount promissory note the Company recorded OID of $4,400 which is to be amortized over the term of the note. The annual interest rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals 75% of the lowest daily VWAP of the common stock during the 7 consecutive trading day, subject to adjustment.   59,400    - 
           
Note payable of $58,050 dated November 29, 2022 for cash of $53,750, with interest at 6% per annum and due on November 29, 2023. In connection with the original issue discount promissory note the Company recorded OID of $4,300 which is to be amortized over the term of the note. The annual interest rate will increase to 22% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals 75% of the lowest daily VWAP of the common stock during the 7 consecutive trading day, subject to adjustment.   58,050    - 
           
Note payable of $100,000 dated March 1, 2023 for service, with interest at 12% per annum and due on March 1, 2024. No OID related. The annual interest rate will increase to 20% upon the occurrence of an event of default. The Note is a convertible promissory note. The conversion price equals equal to $0.01 per share or 50% of the lowest trading prices on the primary trading market on which the Company’s Common Stock is quoted for the last twenty (20) trading days immediately prior to but not including the Conversion Date, whichever is lower (the “Conversion Price”).   100,000    - 
           
Note payable of $75,000 dated Feb 6, 2022 with interest at 7% per annum and due on Aug 6, 2022. The Note is currently past due. The Note is a convertible promissory note. The conversion price equals to 50% of the 5 day average closing price for the common stock from the trading day immediately preceding the conversion   75,000    - 
           
A series of convertible notes total of $1,025,500 dated from March 16, 2021 to Feb 1, 2023 transferred from other company for purchasing of intangible assets happened on Feb 23, 2023, with default interest at 18% per annum and latest due on March 10, 2023. The Notes was convertible promissory notes. The conversion price equals the 50% of the average of three low trade(s) of the common stock for the pricing prior (the period beginning 30 trading days preceding the day upon which a notice of conversion is received by the company and ending on the date the conversion shares are delivered).   1,025,500    - 
           
Note payable of $50,000 dated October 4, 2022 with interest at 7% per annum and due on February 4, 2023. The Note is currently past due. The Note is a convertible promissory note. The conversion price equals to 50% of the 5 day average closing price for the common stock from the trading day immediately preceding the conversion   50,000    - 
           
Total   3,128,479    - 
Less: unamortized discount   (241,985)   -
Total   2,886,494    - 
Short term convertible notes, net of discount of $241,985 and $0  $2,886,494    - 

 

13

 

Note 10– Convertible Notes Payable – Related Parties

 

The Company assumed the convertible notes payable, of which the note holder was the Chief executive officer, on an asset purchase agreement effective on February 23, 2023, please see note 17 for further discussion. On February 23, 2023, the Convertible note had an outstanding balance of $1,500,000. The convertible note balance as of March 31, 2023 and December 31, 2022 is as follows:

 

   March 31, 2023   December 31 2022 
Note payable of $1,500,000 dated Feb 23, 2023 with interest at 7% per annum and due on Aug 23, 2023. The Note is a convertible promissory note. The conversion price equals to 50% of the 5 day average closing price for the common stock from the trading day immediately preceding the conversion  $1,500,000        - 
Total  $1,500,000    - 

 

Note 11 – Notes Payable

 

Notes payable represents the following at March 31, 2023 and December 31, 2022:

   March 31, 2023   December 31, 2022 
Note Payable  $50,000    - 
Note payable dated July 7, 2020 for $50,000, with interest at 5% per annum and due on July 7, 2021. The Note is unsecured. The Note is currently in default.  $50,000    - 
           
Note payable dated September 16, 2020 for $5,000, with interest at 0% per annum and due on demand.  $5,000    - 
           
Note payable to an unrelated party dated September 11, 2020 for $4,000, with no interest and due on demand.  $4,000    - 
           
Note payable dated December 1, 2021 for $20,000, with interest at 0% per annum and due on demand.  $20,000    - 
           
Note payable dated September 21,2022 for $310,000. The interest rate is 9.5% and the note is mature in 60 days. The first payment of $100,000 was made on September 30,2022. The note is in default.  $210,000    - 
            
Note payable dated June 23, 2022 for $250,000. The interest rate is 9.5% and the note matures in 90 days. The note is in default.  $  250,000    - 
           
Note payable dated September 30, 2022 for $100,000. The interest rate is 9.5% and the note matures in 1 year.  $  100,000    - 
           
Short-term advance, due on demand and bears no interest.  $119,800   - 
           
Total  $758,800   $- 

 

14

 

Note 12 – Notes Payable - Related Parties

 

Notes payable represents the following at March 31, 2023 and December 31, 2022:

 

   March 31, 2023   December 31, 2022 
On April 12, 2019, the Company entered into individual share exchange agreements and promissory notes with each of Daniel Dror, Winfred Fields and former Directors Everett Bassie and Charles Zeller (the “AMIH Shareholders”), whereby the AMIH Shareholders agreed to cancel and exchange a total of 98,333 shares of their AMIH common stock. The Company issued individual promissory notes with an aggregate principal amount of $350,000 (the “Promissory Notes”) for cancellation of the 98,333 common shares. The Promissory Notes have a term of two years and accrue interest at the rate of 10% per annum until paid in full by the Company. The Note and accrued interest totaling $280,108 was settled by the issuance of 57,942 common shares of the Company. The shares were valued at $16.20 and $18.60 per share based on the market price at the settlement date. Accordingly, the Company recorded a loss on loan settlement of $758,601 during the year ended December 31, 2020. These notes are currently in default.  $110,000   $- 
           
Short-term note payable in the amount of $13,473 to Kemah Development Texas, LP, a company owned by Dror Family Trust, a related party. The Company settled this note payable of $13,473 and accrued interest of $2,633 with a payment of $2,000 in cash on May 23, 2022.   -       - 
           
Less payments / settlements   -    -
Note payable, gross     -      - 
On December 28, 2022, the Company received an advance in the amount of $250,000 from a former Director, due on demand for 0% interest.    250,000     - 
           
Total  $360,000   $- 

 

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Note 13 – Derivative Liabilities

 

Notes that are convertible at a discount to market are considered embedded derivatives.

 

Under FASB, U.S. GAAP, ASC 815, Derivatives and Hedging, requires that all derivative financial instruments be recorded on the balance sheet at fair value. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market-based pricing models incorporating readily observable market data and requiring judgment and estimates.

 

The Company’s convertible note has been evaluated with respect to the terms and conditions of the conversion features contained in the note to determine whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company determined that the conversion features contained in the notes totaled $633,920 and represent an embedded derivative instrument that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s condensed consolidated balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using the Monte Carlo model at the inception date of the note and will do so again on each subsequent consolidated balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense at each consolidated balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion.

 

The Convertible Note derivatives were valued as of March 31, 2023 and December 31, 2022, at issuance, at conversion as set forth in the table below. 

 

Derivative liabilities as of December 31, 2022  $- 
Initial derivative liabilities at February 15, 2023   1,837,008 
Conversion   (157,117)
Mark to market changes   76,701 
   $170,765 
Derivative liabilities as of March 31, 2023  $1,927,357 

 

As of March 31, 2023 and February 15, 2023, the Company had derivative liabilities of $1,927,357 and $1,837,008, respectively, and recorded changes in derivative liabilities in the amount of $(70,765) and $0 during the three months ended March 31, 2023 and the year ended December 31, 2022.

 

The following assumptions were used for the valuation of the derivative liability related to the Notes:

 

  - The stock price would fluctuate with the Company’s projected volatility;
  - The projected volatility curve from an annualized analysis for each valuation period was based on the historical volatility of the Company and the term remaining for each note ranged from 62.08% through 389.85% at issuance, conversion, and quarters ends;
  - The Company would not redeem the notes;

 

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  - An event of default adjusting the interest rate would occur initially 0% of the time for all notes with increases 1% per month to a maximum of 100% with the corresponding penalty;
  - The Company would raise capital quarterly at market, which could trigger a reset event; and
  - The Holder would convert the note monthly if the Company was not in default.

 

Note 14 – Capital Stock

 

Preferred Stock

 

The Company is authorized to issue up to 5,000,000 shares of preferred stock, $0.0001 par value, of which 1,000,000 shares were designated as Series A Convertible Preferred Stock and 2,000,000 were designated as Series B Preferred stock, the balance of 2,000,000 shares of preferred stock were undesignated as of March 31, 2023 and December 31, 2022.

 

The holders of Series B Preferred Stock have the same dividend rights as common stockholders on a fully converted basis, are entitled to receive pari passu with any distribution of any of the assets of the Company to the holders of the Company’s common stock, but not prior to any holders of senior securities. Each share of Series B Preferred Stock may be converted, at the option of the holder thereof, into that number of shares of common stock of the Company as equals $1.00 divided by 90% of the average of the volume weighted average prices (“VWAP”) of the Company’s common stock, for the five trading days immediately preceding the date the notice of conversion is received, subject to the limit of 4.999% of the Company’s outstanding shares of common stock. The holders of Series B Preferred Stock have no voting rights. As of March 31, 2023 and December 31, 2022, there were no Series B Preferred Stock outstanding.

 

Series A Preferred Stock

 

The holders of Series A Preferred Stock have no dividend rights or liquidation preference. Each holder of Series A Preferred Stock may, at its option, convert its shares of Series A Preferred Stock into that number of shares of common stock equal to the holder’s pro rata share of all Series A Preferred Stock then issued and outstanding, multiplied by (i) 60%, minus the aggregate percentage of the Company’s outstanding common stock previously converted by holders of the Series A Preferred Stock, through such applicable date (the “Remaining Percentage”), multiplied by (ii) the outstanding shares of common stock as of the applicable date of determination, divided by 0.40, divided by (iii) the total number of shares of Series A Preferred Stock then outstanding. No individual conversion by any individual holder shall be in an amount greater than 9.99% of the outstanding common stock of the Company on the date on which the holder delivers notice of such conversion to the Company (the “Individual Conversion Limitation”). The result of the above, is that such Series A Preferred Stock is convertible into 60% of the Company’s outstanding common stock (on a post-conversion basis, i.e., 150% of the Company’s outstanding common stock on a pre-conversion basis) currently.

 

For so long as any shares of the Series A Preferred Stock remain issued and outstanding, the holders thereof, voting separately as a class, shall have the right to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to the Remaining Percentage of the total vote. All Series A Shares vote together with the common stock on all shareholder matters as its own voting class.

 

Additionally, so long as Series A Preferred Stock is outstanding, the Company shall not, without the affirmative vote of the holders of at least 66-2/3% of all outstanding shares of Series A Preferred Stock, voting separately as a class (i) amend, alter or repeal any provision of the Articles of Incorporation or the Bylaws of the Company so as to adversely affect the designations, preferences, limitations and relative rights of the Series A Preferred Stock, (ii) effect any reclassification of the Series A Preferred Stock, (iii) designate any additional series of preferred stock, the designation of which adversely effects the rights, privileges, preferences or limitations of the Series A Preferred Stock; or (iv) amend, alter or repeal any provision of the Series A Designation (except in connection with certain non-material technical amendments).

 

On February 15, 2023, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Cycle Energy Corp., a Texas corporation (“Cycle Energy”), and Marble Trital Inc., the sole shareholder of Cycle Energy (the “Shareholder”). The Shareholder is beneficially owned and controlled by Mr. Michael McLaren, the Company’s newly appointed Chief Executive Officer. Pursuant to the Exchange Agreement, which closed on February 15, 2023 (the “Closing Date”), the Shareholder exchanged (the “Exchange”) 100% of the ownership of Cycle Energy in consideration for 1,000,000 shares of the Series A Preferred Stock of the Company (the “New Series A Shares”).

 

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On March 9, 2023, and effective on February 15, 2023, the date of the Exchange Agreement, the Company, Cycle Energy and the Shareholder, entered into a First Amendment to Share Exchange Agreement (the “First Amendment”), which amended the Exchange Agreement to be effective February 15, 2023, instead of December 31, 2022.

 

Also on February 15, 2023, and as a required condition to the closing of the Exchange Agreement, the Company and Jacob D. Cohen, the then Chairman and Chief Executive Officer of the Company, entered into an Exchange Agreement (the “Cohen Exchange Agreement”). Pursuant to the Cohen Exchange Agreement, Mr. Cohen exchanged all 1,000,000 shares of the Series A Preferred Stock of the Company which he held (the “Cohen Series A Shares”), with the Company (which Cohen Series A Shares were then cancelled, prior to being reissued to the Seller as New Series A Shares, as discussed above), for (a) all of the issued and outstanding membership interests held by the Company in Epiq Scripts, LLC, a Texas limited liability company (“Epiq Scripts”)(representing 51% of Epiq Scripts)(the “Epiq Scripts Interests”); (b) all cash payments paid to the Company in the future as a Royalty Payment (as defined in the Royalty Agreement (defined below)) pursuant to that certain Royalty Agreement dated June 30, 2022, by and between Epiq MD, Inc. a Nevada corporation (“Epiq MD”) and the Company (the “Royalty Agreement” and the “Royalty Payments”); (c) all proceeds that the Company receives from any sale of the equity of ZipDoctor, Inc., a Texas corporation (the “ZipDoctor Consideration”); and (d) the rights to all debt owed to the Company from Epiq Scripts, in the amount of approximately $850,000 (the “Epiq Scripts Debt”).

 

Pursuant to the Cohen Exchange Agreement, the Company also agreed to pay all Royalty Payments to Mr. Cohen within five days of its receipt thereof and that any amount of the Royalty Payments not paid when due will accrue interest at the rate of the lesser of (a) 18% per annum; and (b) the highest rate allowable pursuant to law, until paid in full (as applicable, (a) or (b), the “Default Rate”).

 

The Cohen Exchange Agreement has an effective date of February 15, 2023, and the transactions contemplated by the Cohen Exchange Agreement closed on February 15, 2023. As a result of the closing of the transactions contemplated by the Exchange Agreement and the Cohen Exchange Agreement, and effective on the Closing Date, February 15, 2023, the Shareholder, through ownership of all 1,000,000 of the outstanding Series A Preferred Stock shares, holds voting control over 60% of the Company’s outstanding voting shares, resulting in a change of control of the Company. Prior to the closing of the Cohen Exchange Agreement, Jacob D. Cohen held 1,000,000 shares of Series A Preferred Stock, which provided him voting control over 60% of the Company’s outstanding voting shares. The shares of Series A Preferred Stock held by the Shareholder are beneficially owned by Michael McLaren, its controlling shareholder owner and officer. As a result, Mr. McLaren, as a result of his control of the Shareholder, obtained control over the Company upon the closing of the transactions contemplated by the Exchange Agreement, as he obtained voting control over 60% of the Company’s outstanding voting stock due to his ownership of the New Series A Shares.

 

As of March 31, 2023, 1,000,000 Series A Convertible Preferred shares, of which were fully owned by the Chief Executive office, were issued and outstanding.

 

Common Stock

 

The Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, 195,000,000 common stock shares were issued and outstanding as of March 31, 2023.

 

During the three months ended March 31, 2023, the Company converted a total of $457,952 of its outstanding convertible debt into 119,398,125 shares of common stock and at various prices per share of common stock ranging from $0.0063 to $.0023 per share.

 

Note 15 – Going Concern