Company Quick10K Filing
eWellness Healthcare
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 221 $-0
10-Q 2019-11-14 Quarter: 2019-09-30
10-Q 2019-08-14 Quarter: 2019-06-30
10-Q 2019-05-15 Quarter: 2019-03-31
10-K 2019-03-27 Annual: 2018-12-31
10-Q 2018-11-13 Quarter: 2018-09-30
S-1 2018-07-24 Public Filing
10-Q 2018-08-14 Quarter: 2018-06-30
10-Q 2018-05-11 Quarter: 2018-03-31
10-K 2018-03-28 Annual: 2017-12-31
10-Q 2017-11-13 Quarter: 2017-09-30
10-Q 2017-08-14 Quarter: 2017-06-30
10-Q 2017-05-15 Quarter: 2017-03-31
10-K 2017-03-31 Annual: 2016-12-31
10-Q 2016-11-22 Quarter: 2016-09-30
10-Q 2016-08-17 Quarter: 2016-06-30
10-Q 2016-05-12 Quarter: 2016-03-31
10-K 2016-03-30 Annual: 2015-12-31
10-Q 2015-11-16 Quarter: 2015-09-30
10-Q 2015-08-14 Quarter: 2015-06-30
10-Q 2015-05-12 Quarter: 2015-03-31
10-K 2015-04-07 Annual: 2014-12-31
10-Q 2014-11-19 Quarter: 2014-09-30
10-Q 2014-08-19 Quarter: 2014-06-30
10-Q 2014-05-15 Quarter: 2014-03-31
10-K 2014-03-06 Annual: 2013-12-31
10-Q 2013-11-07 Quarter: 2013-09-30
10-Q 2013-08-12 Quarter: 2013-06-30
10-Q 2013-05-15 Quarter: 2013-03-31
10-K 2013-04-01 Annual: 2012-12-31
10-Q 2012-11-14 Quarter: 2012-09-30
8-K 2019-10-11
8-K 2019-08-23 Enter Agreement
8-K 2019-07-11 Enter Agreement
8-K 2019-04-16 Enter Agreement, Exhibits
8-K 2019-02-15 Enter Agreement, Exhibits
8-K 2018-11-30 Enter Agreement
8-K 2018-09-17 Enter Agreement, Exhibits
8-K 2018-06-20 Enter Agreement, Other Events, Exhibits
8-K 2018-02-12 Other Events
EWLL 2019-09-30
Part I - Financial Statements
Item 1. Financial Statements
Note 1. The Company
Note 2. Summary of Significant Accounting Policies
Note 3. Related Party Transactions
Note 4. Convertible Notes Payable
Note 5. Equity Transactions
Note 6. Commitments, Contingencies
Note 7. Derivative Valuation
Note 8. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 2 Exhibits
EX-3.1C ex3-1c.htm
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

eWellness Healthcare Earnings 2019-09-30

EWLL 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
TCT 210 12 13 0 11 11 -200 0% -18.3 5%
WBHC 2,707 2,389 0 0 36 66 -141 -2.1 1%
POYE 0 0 0 0 -0 -0 -0 0.0 -1,973%
SLDV 25 6 2 0 13 19 -1 0% -0.0 53%
RMES 1 1 0 0 -0 -0 -0 0.5 -13%
CNHC 12,949 11,626 877 0 149 771 5,714 0% 7.4 1%
AOIP 9 2 1 1 0 1 -5 99% -9.8 3%
VDI 1,766 1,288 779 0 465 632 222 0% 0.4 26%
NDRAU 3 1 0 0 -10 -10 -2 0.2 -320%
MBCC 216 243 112 0 -7 10 215 0% 21.5 -3%

10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

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

 

For the quarterly period ended September 30, 2019

 

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

 

Commission file number 000-55203

 

 

eWELLNESS HEALTHCARE CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada   90-1073143

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

11825 Major Street, Culver City, California   90230
(Address of principal executive offices)   (Zip Code)

 

(855) 470-1700

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(g) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common shares   EWLL   OTCQB

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes [X] No [  ]

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
   
Non-accelerated filer [  ] (Do not check if a smaller reporting company) Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

The number of shares of Common Stock, $0.001 per share par value, outstanding on November 12, 2019 was 291,357,662 shares.

 

 

 

   
 

 

Table of Contents

 

  Page
PART I - FINANCIAL INFORMATION  
Item 1 Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21
Item 3 Quantitative and Qualitative Disclosures About Market Risk 35
Item 4 Controls and Procedures 35
PART II - OTHER INFORMATION  
Item 1 Unregistered Sales of Equity Securities and Use of Proceeds 35
Item 2 Exhibits 37
Signatures 38

 

 2 
 

 

PART I – FINANCIAL STATEMENTS

 

ITEM 1. FINANCIAL STATEMENTS

 

eWELLNESS HEALTHCARE CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(unaudited)

 

   September 30, 2019   December 31, 2018 
         
ASSETS        
         
CURRENT ASSETS          
Cash  $781,060   $383,335 
Prepaid Expenses   380,862    95,508 
           
Total current assets   1,161,922    478,843 
           
Property & equipment, net   24,172    14,092 
Intangible assets, net   9,500    11,000 
           
TOTAL ASSETS  $1,195,594   $503,935 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable and accrued expenses  $305,825   $236,741 
Accounts payable - related party   630,532    684,173 
Accrued expenses - related party   198,241    214,076 
Accrued compensation   776,464    1,113,470 
Contingent liability   90,000    90,000 
Convertible debt, net of discount   2,423,293    562,362 
Derivative liability   1,358,964    1,584,102 
           
Total current liabilities   5,783,319    4,484,924 
           
Total Liabilities   5,783,319    4,484,924 
           
COMMITMENTS AND CONTINGENCIES   -    - 
           
STOCKHOLDERS’ DEFICIT          
Preferred stock, authorized, 20,000,000 shares, $.001 par value, 125,000 and 0 shares issued and outstanding, respectively   125    - 
Common stock, authorized 1,900,000,000 shares, $.001 par value, 244,430,551 and 206,406,951 issued and outstanding, respectively outstanding, respectively   244,431    206,407 
Shares to be issued   19,150    - 
Additional paid in capital   21,173,934    17,213,838 
Accumulated deficit   (26,025,365)   (21,401,234)
           
Total Stockholders’ Deficit   (4,587,725)   (3,980,989)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $1,195,594   $503,935 

 

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

 

 3 
 

 

eWELLNESS HEALTHCARE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

For the Three and Nine Months ended September 30, 2019 and 2018

(unaudited)

 

    Three Months Ended     Nine Months Ended  
    September 30, 2019     September 30, 2018     September 30, 2019     September 30, 2018  
                         
OPERATING EXPENSES                                
Executive compensation     102,000       102,000       306,000       306,000  
General and administrative     709,205       322,266       1,284,556       809,704  
Professional fees     669,261       407,355       1,918,402       1,360,206  
                                 
Total Operating Expenses     1,480,466       831,621       3,508,958       2,475,910  
                                 
Loss from Operations     (1,480,466 )     (831,621 )     (3,508,958 )     (2,475,910 )
                                 
OTHER INCOME (EXPENSE)                                
Interest income     13       -       29       -  
Foreign exchange rate     -       4,507       -       12,598  
Gain (loss) on derivative liability     1,331,213       (89,579 )     1,949,180       303,898  
Gain (loss) on extinguishment of debt     -       -       -       (43,131 )
Disposal of fixed asset     -       (2,134 )     -       (2,134 )
Interest expense     (1,369,150 )     (173,306 )     (3,062,782 )     (493,106 )
                                 
Net Loss before Income Taxes     (1,518,750 )     (1,092,133 )     (4,622,531 )     (2,697,785 )
                                 
Income tax expense     (1,600 )     (29 )     (1,600 )     (1,656 )
                                 
Net Loss   $ (1,520,350 )   $ (1,092,162 )   $ (4,624,131 )   $ (2,699,441 )
                                 
Loss per common share                                
Basic   $ (0.01 )   $ (0.01 )   $ (0.02 )   $ (0.02 )
Diluted   $ (0.01 )   $ (0.01 )   $ (0.02 )   $ (0.02 )
                                 
Weighted average shares outstanding                                
Basic     231,454,650       174,369,861       220,916,826       158,927,170  
Diluted     231,454,650       174,369,861       220,916,826       158,927,170  

 

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

 

 4 
 

 

eWELLNESS HEALTHCARE CORPORATION

RECONCILIATION OF STOCKHOLDERS’ DEFICIT

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(unaudited)

 

   Preferred Shares   Common Shares  

Shares

to be

  

Additional

Paid in

   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Issued   Capital   Deficit   Deficit 
                                 
Balance at January 1, 2019   -   $-    206,406,951   $206,407   $-   $17,213,838   $(21,401,234)  $(3,980,989)
                                         
Contributed services   -    -    -    -    -    54,000    -    54,000 
                                         
Shares issued for debt conversion   -    -    5,097,255    5,098    -    342,389    -    347,487 
                                         
Shars issued for financing costs   -    -    1,000,000    1,000    -    114,000    -    115,000 
                                         
Shares issued for prepaid services   -    -    3,510,870    3,511    -    402,239    -    405,750 
                                         
Shares issued for services   -    -    1,324,560    1,325    -    180,224    -    181,549 
                                         
Derivative liability   -    -    -    -    -    492,340    -    492,340 
                                         
Net loss                                 (1,338,471)   (1,338,471)
                                         
Balance at March 31, 2019   -   $-    217,339,636   $217,341   $-   $18,799,030   $(22,739,705)  $(3,723,334)
                                         
Contributed services   -    -    -    -    -    54,000    -    54,000 
                                         
Shares issued for debt conversion   -    -    1,181,433    1,181    -    52,574    -    53,755 
                                         
Shares issued for cash   -    -    800,000    800    -    58,300    -    59,100 
                                         
Shares issued for prepaid services   -    -    500,000    500    -    52,500    -    53,000 
                                         
Shares issued for services   -    -    1,650,435    1,650    -    156,434    -    158,084 
                                         
Derivative liability   -    -    -    -    -    70,987    -    70,987 
                                         
Net loss                                 (1,765,310)   (1,765,310)
                                         
Balance at June 30, 2019   -   $-    221,471,504   $221,472   $-   $19,243,825   $(24,505,015)  $(5,039,718)
                                         
Contributed services   -    -    -    -    -    54,000    -    54,000 
                                         
Shares issued to officers, directors and consultants   125,000    125    -    -    -    374,875    -    375,000 
                                         
Shares issued for debt conversion   -    -    13,991,743    13,992    -    517,433    -    531,425 
                                         
Shares issued for prepaid services   -    -    6,692,307    6,692    -    440,769    -    447,461 
                                         
Shares issued for services   -    -    2,274,997    2,275    -    150,297    -    152,572 
                                         
Shares to be issued for services   -    -    -    -    19,150    -    -    19,150 
                                         
Derivative liability   -    -    -    -    -    392,735    -    392,735 
                                         
Net loss                                 (1,520,350)   (1,520,350)
                                         
Balance at September 30, 2019   125,000   $125    244,430,551   $244,431   $19,150   $21,173,934   $(26,025,365)  $(4,587,725)

 

   Preferred Shares   Common Shares  

Shares

to be

  

Additional

Paid in

   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Issued   Capital   Deficit   Deficit 
                                 
Balance at January 1, 2018   -   $-    142,352,406   $142,352   $-   $13,178,131   $(16,949,772)  $(3,629,289)
                                         
Contributed services   -    -    -    -    -    55,500    -    55,500 
                                         
Option expense   -    -    -    -    -    108,594    -    108,594 
                                         
Shares issued for debt conversion   -    -    3,945,407    3,945    -    209,347    -    213,292 
                                         
Shares issued for prepaid services   -    -    800,000    800    -    103,200    -    104,000 
                                         
Derivative liability                            219,525         219,525 
                                         
Shares issued for services   -    -    1,350,000    1,350    -    137,250    -    138,600 
                                         
Net loss   -    -    -    -    -    -    (473,973)   (473,973)
                                         
Balance at March 31, 2018        -   $       -      148,447,813   $148,447   $-   $  14,011,547   $(17,423,745)  $(3,263,751)
                                         
Contributed services   -    -    -    -         55,500    -    55,500 
                                         
Option expense   -    -    -    -         108,594    -    108,594 
                                         
Shares issued for debt conversion   -    -    13,708,947    13,710         622,996    -    636,706 
                                         
Shares issued for prepaid services   -    -    1,500,000    1,500         103,500    -    105,000 
                                         
Shares issued for contributions   -    -    1,000,000    1,000         69,000         70,000 
                                         
Derivative liability                            154,388         154,388 
                                         
Shares issued for services   -    -    1,200,000    1,200    14,800    96,100    -    112,100 
                                         
Net loss                                 (1,133,306)   (1,133,306)
                                         
Balance at June 30, 2018   -   $-    165,856,760   $165,857   $14,800   $15,221,625   $(18,557,051)  $(3,151,769)
                                         
Contributed services   -    -    -    -         55,500    -    55,500 
                                         
Option expense   -    -    -    -         142,057    -    142,057 
                                         
Shares issued for debt conversion   -    -    12,943,900    12,944         607,546    -    620,490 
                                         
Shares issued for financing costs   -    -    1,590,331    1,590         70,410    -    72,000 
                                         
Derivative liability                            (49,741)        (49,741)
                                         
Shares issued for services   -    -    1,325,000    1,325    (14,800)   92,340    -    78,865 
                                         
Net loss                                 (1,092,162)   (1,092,162)
                                         
Balance at September 30, 2018   -   $-    181,715,991   $181,716   $-   $16,139,737   $(19,649,213)  $(3,327,760)

 

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

 

 5 
 

 

eWELLNESS HEALTHCARE CORPORATION

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2019 and 2018

(unaudited)

 

   For Nine Months Ended 
   September 30, 2019   September 30, 2018 
         
Cash flows from operating activities          
Net loss  $(4,624,131)  $(2,699,441)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   4,794    2,863 
Contributed services   162,000    166,500 
Shares issued for consulting services   511,355    329,565 
Shares issued for financing costs   115,000    72,000 
Shares issued to officers, directors and consultants   86,250    - 
Shares issued for contribution   -    70,000 
Options expense   -    359,245 
Amortization of debt discount to interest expense   2,690,435    284,392 
Amortization of prepaids   678,805    301,140 
Foreign currency exchange   -    12,598 
Loss on disposal of fixed asset   -    (2,134)
Gain on derivative liability   (1,949,180)   (303,898)
Loss on settlement of debt   -    43,131 
Changes in operating assets and liabilities          
Prepaid expense   (57,948)   (18,055)
Accounts payable and accrued expenses   111,801    194,332 
Accounts payable - related party   (19,891)   287,161 
Accrued expenses - related party   (15,835)   7,386 
Accrued compensation   (82,006)   72,901 
           
Net cash used in operating activities   (2,388,551)   (820,315)
           
Cash flows from investing activities          
Purchase of equipment   (13,374)   (2,037)
Net cash used in investing activities   (13,374)   (2,037)
           
Cash flows from financing activities          
Proceeds from issuance of common stock   59,100    - 
Issuance of convertible debt   4,400,500    969,300 
Payment on debt   (1,102,450)   (1,005)
Debt issuance costs   (577,500)   (125,150)
           
Net cash provided by financing activities   2,799,650    843,145 
           
Net increase in cash   397,725    20,793 
           
Cash, beginning of period   383,335    6,882 
           
Cash, end of period  $781,060   $27,675 
           
Supplemental Information:          
Cash paid for:          
Taxes  $1,856   $1,267 
Interest Expense  $475,519   $- 
Non cash items:          
Derivative liability and debt discount issued with new notes  $2,831,539   $359,732 
Shares issued for debt conversion  $932,667   $1,190,489 
Shares issued for prepaids  $906,211   $209,000 

 

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

 

 6 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(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 no revenues to date.

 

eWellness Healthcare Corporation is the first physical therapy telehealth company to offer real-time distance monitored assessments and treatments. Our business model is to have large-scale employers use our PHZIO platform as a fully PT monitored corporate musculoskeletal treatment (“MSK”) wellness program. The Company’s PHZIO home physical therapy assessment and exercise platform has been designed to disrupt the $30 billion physical therapy market, the $4 billion MSK market and the $8 billion corporate wellness industry. PHZIO re-defines the way MSK physical therapy can be delivered. PHZIO is the first real-time remote monitored 1-to-many MSK physical therapy platforms for home use.

 

We have commenced treating patients on various commercial contracts and anticipate generating initial revenues during the 4th quarter of 2019. Despite the lack of revenues, we continue to train physical therapist on how to use our PHZIO treatment platform, with many of these therapists treating various patients on our system on a complimentary basis. Our PHZIO system has delivered over 4,000 telerehab treatments to date.

 

Our latest challenges in the Workers Compensation space has been patient adoption of PHZIO, related to a patients’ choice to choose if they are treated in-clinic or digitally. They are nearly all choosing in-clinic care. Our pivot to address this issue was to develop and sell MSK 360 a pre-injury fitness exam and custom exercise platform that is just rolling out now. Next, we finally are getting traction for our Per-Hab product with several large TPA’s. Lastly, multiple clients are requesting an Rheumatoid Arthritis Exercise product (RA 360) that is currently being developed with a launch date of mid-January. With the success of MSK 360 we expect that more Workers Comp patients will choose digital care over in-clinic care.

 

We have now developed four key products with large scale users that need to turn on utilization in 2020. We have a large list of corporate self-insured, TPA and insurance company sales book that we are actively focused on selling to them our MSK-360 and Pre-Hab platforms. We expect good traction from many of these firms in 2020. These products are:

 

+ PHZIO: Realtime PT monitored Digital PT Treatments (post-injury)

 

+ MSK 360: Digital “PHZIOFIT" fitness exam and customer exercise plans for employees, (pre-injury)

 

+ Pre-Hab: Digital pre-surgery (non-monitored) for Total Knee, Hip and Shoulder surgery (post injury and pre-surgery)

 

+ RA 360: (Available January 2020) Rheumatoid Arthritis Exercise Plan

 

Note 2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense notes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. 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 nine months ended September 30, 2019 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2019. The unaudited condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these good faith estimates and judgments.

 

Going Concern

 

For the nine months ended September 30, 2019, the Company had no revenues. The Company has an accumulated loss of $26,025,365. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue operations is dependent upon the Company’s ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations, of which there can be no guarantee. The Company intends to finance its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 7 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

Fair Value of Financial Instruments

 

As of September 30, 2019, the Company had the following assets and liabilities measured at fair value on a recurring basis.

 

   Total   Level 1   Level 2   Level 3 
Derivative Liability  $1,358,964   $-   $-   $1,358,964 
Total Liabilities measured at fair value  $1,358,964   $-   $-   $1,358,964 

 

As of December 31, 2018, the Company had the following assets and liabilities measured at fair value on a recurring basis.

 

   Total   Level 1   Level 2   Level 3 
Derivative Liability  $1,584,102   $-   $-   $1,584,102 
Total Liabilities measured at fair value  $1,584,102   $-   $-   $1,584,102 

 

Note 3. Related Party Transactions

 

In November 2016, the Company signed an agreement with a programming company (“PC”) within which one of the Company’s directors and Chief Technical Officer is the Chief Marketing Officer. The agreement is for additional features to be programmed for the launch of the PHZIO platform. The Company is to pay a monthly base fee of $100,000 for the development and compensation for the Company’s CEO and CTO. Following payment of the initial $100,000, the Company is obligated to only pay $50,000 monthly until the PC has successfully signed and collected the first monthly service fee for 100 physical therapy clinics to use the PHZIO platform. The agreement establishes that the Company is indebted to the PC for $225,000 for past programming services. For this amount, the Company issued 25,280,899 common shares at a value of $0.0089 per share on April 1, 2017. The PC will also have the right to appoint 40% of the directors. At the end of September 30, 2019, the Company had a payable of $627,832 due to this company.

 

Throughout the nine months ended September 30, 2019, the officers and directors of the Company incurred business expenses on behalf of the Company. The amounts payable to the officers as of September 30, 2019 and December 31, 2018 were $44,991 and $3,076, respectively. There were no expenses due to the board members, but the Company has accrued directors’ fees of $153,250 and $211,000 at September 30, 2019 and December 31, 2018, respectively. Because the Company is not yet profitable the officers have agreed to defer compensation. The Company had accrued executive compensation of $776,464 and $1,113,470 at September 30, 2019 and December 31, 2018 respectively.

 

Note 4. Convertible Notes Payable

 

Nine Months Ended September 30, 2019

 

On January 29, 2019, the Company received the third tranche of $60,000 relating to a note executed on July 13, 2018. During the nine months ending September 30, 2019, the Company accrued interest expense of $1,350. On July 12, 2019, the Company prepaid this note of $60,000 plus accrued interest and a prepayment penalty of $30,000. At September 30, 2019, this note is fully paid.

 

 8 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

On January 8, 2019, the Company executed an 8% Convertible Promissory Notes payable to an institutional investor in the principal amount of $308,000. The note, which is due on January 8, 2020, has an original issue discount of $28,000 and transaction costs of $10,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $17,547. During the nine months ended September 30, 2019, the investor converted $30,000 of principal and $1,687 of accrued interest for 905,333 shares of common stock at a price of $.035. At September 30, 2019, there is $278,000 principal outstanding.

 

On January 8, 2019, the Company executed an 8% Convertible Promissory Notes payable to an institutional investor in the principal amount of $308,000 each. The note, which is due on January 8, 2020, has an original issue discount of $28,000 and transaction costs of $10,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% of the average of the two lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $17,029. During the nine months ended September 30, 2019, the investor converted $162,000 of principal for 4,424,400 shares of common stock for prices ranging from $.035 to $.042. At September 30, 2019, there is $146,000 principal outstanding.

 

On January 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $114,000. The note, which is due on October 30, 2019, has an original issue discount of $11,000 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $6,028. On July 12, 2019, the Company prepaid this note of $114,000 plus accrued interest and a prepayment penalty of $42,010. At September 30, 2019, this note is fully paid.

 

On January 29, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is due on November 15, 2019, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 70% average of the two lowest per share trading prices for the ten (10) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $2,753. On July 12, 2019, the Company prepaid this note of $58,300 plus accrued interest and a prepayment penalty of $21,369. At September 30, 2019, this note is fully paid.

 

On February 22, 2019, the Company received the fourth tranche of $30,000 relating to a note executed on July 13, 2018. During the nine months ending September 30, 2019, the Company accrued interest of $534. On September 17, 2019, the convertible debt holder converted $9,700 of principal for 340,000 shares of common stock at a price of $.03. At September 30, 2019, there is $20,300 principal outstanding.

 

On March 18, 2019, the Company executed a Securities Purchase Agreement for Convertible Debentures to an institutional investor in the principal amount of $365,000 to be funded in six tranches: $65,000 at signing, $100,000 forty-five (45) days after the signing date and $200,000 forty-five (45) days after the second closing date. The debentures, which are payable on March 18, 2022, have a 10% original issue discount and a commitment fee of $5,000 payable with the signing debenture. The debentures convert into common stock of the Company at a conversion price equal to the lesser of (i) $.12 or (ii) seventy percent (70%) of the lowest traded price (as reported by Bloomberg LP) of the common stock for the ten (10) trading days prior to the conversion date. The first tranche of $65,000 was received on March 21, 2019. On September 12, 2019, the Company prepaid this note of $65,000 and a prepayment penalty of $19,500. At September 30, 2019, this note is fully paid.

 

 9 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

On March 18, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $47,300. The note, which is payable on January 30, 2020, has an original issue discount of $4,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,226. On September 12, 2019, the Company prepaid this note of $47,300 plus accrued interest and a prepayment penalty of $16,555. At September 30, 2019, this note is fully paid.

 

On March 21, 2019, the Company executed a 3% Convertible Promissory Note payable to an institutional investor in the principal amount of $360,000. The note, which is payable twelve (12) months after each tranche is funded, has an original issue discount of $60,000. The original issue discount will be prorated with each tranche paid. The first tranche of $60,000 is due at signing date. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the lesser of (i) lowest trading price or (ii) the lowest closing bid price on the OTCQB during the twenty-five (25) trading day period ending on the last complete trading day prior to the conversion date. The first tranche was received on March 29, 2019. The second tranche of $37,500 was received on July 19, 2019. During the nine months ended September 30, 2019, the Company accrued interest expense of $2,925. On September 30, 2019, the Company prepaid the first tranche of $60,000 plus accrued interest and a prepayment penalty of $30,000. At September 30, 2019, only the second tranche of $37,500 is outstanding.

 

On March 21, 2019, the Company executed a 12% Convertible Promissory Note to an institutional investor in the principal amount of $1,500,000 to be funded over separate tranches; the first tranche to be funded on signing. The note, which is due and payable six (6) months after the funding date of each tranche, has an original issue discount of 10%. The Company issued 3,260,870 shares of restricted common stock on the closing date. These are deemed returnable shares which the investor must return if the Company repays the note prior to the maturity date. In addition, the Company issued 1,000,000 shares of restricted common stock as a commitment fee. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the lowest trading price during the thirty (30) day trading period ending on the last complete trading day prior to the conversion date. The first tranche of $750,000 was received on March 25, 2019. The second tranche of $350,000 was received on July 12, 2019 and the Company issued 2,692,307 shares of restricted common stock. These shares are redeemable if the Company pays the note prior to the maturity date of January 20, 2020. The third and final tranche was received on September 9, 2019 and the Company issued 4,000,000 shares of restricted common stock. These shares are redeemable if the Company pays the note prior to the maturity date of March 12, 2020. During the nine months ended September 30, 2019, the Company accrued interest expense of $57,337.

 

On April 1, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is payable on February 15, 2020, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $3,811. On September 12, 2019, the Company prepaid this note of $58,300 plus accrued interest and a prepayment penalty of $20,405. At September 30, 2019, this note is fully paid.

 

On May 6, 2019, the Company executed a convertible note conversion period extension agreement on a note dated October 28, 2018, within which the period of conversion by note holder was extended to May 27, 2019. The Company paid $16,031 to note holder for this extension agreement. On May 28, 2019, the Company executed a second extension agreement on this note within which the period of conversion by note holder was extended to June 11, 2019. The Company paid $16,105 to note holder for this extension agreement. During the nine months ended September 30, 2019, the note holder converted the $308,000 note and accrued interest of $16,337 into 8,987,253 shares of common shares at prices ranging from $.035 $.04508. At September 30, 2019, this note has been fully converted.

 

 10 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

On May 13, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. The note, which is due on February 13, 2020, has an original issue discount of $10,000 and transactions costs of $3,000. The convertible note converts into common stock of the Company at conversion price that shall be equal to the 65% of the lowest closing price for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $5,063.

 

On July 2, 2019, two Back-End notes executed in October 2018 with an institutional investor was funded for $154,000 each. Each note, which is due on October 29, 2019, has an original issue discount of $16,500. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the prior twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,038 for each note.

 

On July 5, 2019, the Company signed an amendment to a convertible note issued on March 21, 2019 revising the conversion price from 75% to 65% of the lowest trading price during the thirty (30) trading days prior to the conversion date.

 

On July 8, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $140,800. The note, which is payable on April 30, 2020, has an original issue discount of $12,800 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $3.379.

 

On July 8, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within which the period of conversion by note holder was extended to August 9, 2019. The Company paid $21,560 to note holder for this extension agreement.

 

On July 9, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $113,000. The note, which is due on July 9, 2020, has an original issue discount of $10,000 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of the lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $2,712.

 

On July 9, 2019, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $235,000. The note, which is due on July 11, 2020, has an original issue discount of $25,200 and transaction costs of $10,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to the 65% average of the lowest per share trading prices for the prior twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $3,605.

 

On July 10, 2019, the Company executed a convertible note conversion period extension agreement on a note dated January 8, 2019 within which the period of conversion by note holder was extended to August 9, 2019. The Company paid $22,410 to note holder for this extension agreement.

 

 11 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

On July 11, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $250,000. The note, which is due on April 19, 2020, has an original issue discount of $37,500 and transaction costs of $5,000. The convertible note converts into common stock of the Company at a conversion price that shall be equal to 65% of the average of the lowest per share trading prices for the twenty-five (25) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $5,425.

 

On July 30, 2019, the Company executed two 12% Convertible Promissory Notes payable to two institutional investors in the principal amount of $38,500 each. Each note, which is due on April 30, 2020, has an original issue discount of $3,500 and transaction costs of $1,500. The convertible notes convert into common stock of the Company at a conversion price that shall be equal to the 65% of the lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $1,380 for the two notes.

 

On September 4, 2019, the Company executed a 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is payable on July 15, 2020, has an original issue discount of $5,300 and transaction costs of $3,000. The convertible note converts into common stock of the Company at a conversion price equal to 70% of the average of the lowest two (2) trading prices during the ten (10) trading day period ending on the last complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest of $364.

 

On September 9, 2019, a Back-End note executed in January 2019 with an institutional investor was funded for $154,000. The note, which is due on January 9, 2020, has an original issue discount of $14,000 and transaction costs of $5,000. The convertible note converts into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $641.

 

On September 19, 2019, two Back-End notes executed in January 2019 with an institutional investor was funded for $154,000 each. Each note, which is due on January 8, 2020, has an original issue discount of $14,000 and transactions costs of $5,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the prior twenty (20) trading days including the conversion date. During the nine months ended September 30, 2019, the Company accrued interest expense of $371 for each note.

 

Year Ended December 31, 2018

 

In January 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. During the year ended December 31, 2018, the note, which was due on October 12, 2018, and accrued interest totaling $4,489 was fully converted into 2,412,827 shares of common stock at a price of $.04745 per share.

 

In January 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $91,300. During the year ended December 31, 2018, the note, which was due on October 30, 2018, and accrued interest totaling $4,980 was fully converted into 1,630,799 shares of common stock at prices ranging from $.0583 to $.0603.

 

In February 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $63,800. During year ended December 31, 2018, the note, which was due on November 30, 2018, and accrued interest totaling $3,480 was fully converted into 1,309,799 shares of common stock at prices ranging from $.0487 to $.0532.

 

 12 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

In March 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. During the year ended December 31, 2018, the note, which was due on December 5, 2018, and accrued interest totaling $5,928 was fully converted into 2,402,436 shares of common stock at a price of $.036.

 

In March 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $72,450. During the year ended December 31, 2018, the note, which was due on December 30, 2018, and accrued interest totaling $3,780 was fully converted into 1,877,796 shares of common stock at prices ranging from $.0393 to $.0437.

 

In May 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $125,000. During the year ended December 31, 2018, the note, which is due on May 10, 2019, and accrued interest totaling $415 was fully converted into 1,626,268 shares of common stock at prices ranging from $.0628 to $.1032. At the year ended December 31, 2018, the Company is still liable for $5,288 of accrued interest that has not yet been converted.

 

In May 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $51,750. During the year ended December 31, 2018, the note, which is due on March 1, 2019, and accrued interest of $2,700 was fully converted into 658,722 shares of common stock at prices ranging from $.081 and $.085.

 

In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $56,500. The note, which is due on April 17, 2019, has an original issue discount of $6,500. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 100,000 shares of common stock valued at $8,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized interest expense of $2,991.

 

In July 2018, the Company executed an 3% Convertible Promissory Note payable to an institutional investor in the principal amount of $180,000 for funding in six tranches. The note, which is due twelve months from the date of each individual tranche, has an original issue discount of $10,000 per tranche. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 75% of the market price which is lowest trading price during the twenty (20) trading day period ending on the last complete trading day prior to the conversion date. The trading price is the lesser of: (i) lowest traded price or (ii) the lowest closing bid price on the OTCQB. The first tranche of $60,000 was received in the month of July and second tranche of $30,000 was received in the month of August. During the year ended December 31, 2018, the Company recognized interest expense of $1,102.

 

In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $28,250. The note, which is due on April 17, 2019, has an original issue discount of $3,250. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per share trading price for the thirty (30) trading days before the issued date of this note. The Company issued 50,000 shares of common stock valued at $4,000 upon the execution of this note. During the year ended December 31, 2018, the Company recognized interest expense of $1,495.

 

 13 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. As of September 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500. The note, which is due on April 5, 2019, has an original issue discount of $7,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $0.06 or (ii) 75% of the lowest per share trading price for the ten (10) trading days before the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,870.

 

In July 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $60,950. The note, which is due on April 30, 2019, has an original issue discount of $7,950. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price which is 75% of the average of the lowest (2) VWAP for the ten (10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $3,647.

 

In August 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $58,300. The note, which is due on June 15, 2019, has an original issue discount of $5,300. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price which is 75% of the average of the two (2) lowest VWAP for the ten (10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $2,338.

 

In October 2018, the Company executed an 12% Convertible Promissory Note payable to an institutional investor in the principal amount of $47,300. The note, which is due on July 15, 2019, has an original issue discount of $7,300. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the variable conversion price which is 70% of the average of the two (2) lowest VWAP for the ten(10) trading day period ending on the latest compete trading day prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $1,291.

 

In October 2018, the Company executed an 8% Convertible Promissory Note payable to an institutional investor in the principal amount of $165,000. The note, which is due on October 12, 2019, has an original issue discount of $15,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 65% of the lowest per share closing price during the fifteen (15) trading days immediately preceding the date of the notice of conversion. The first tranche of $110,000 was received in the month of October and the second tranche of $55,000 was received in the month of November. During the year ended December 31, 2018, the Company recognized interest expense of $2,594.

 

In October 2018, the Company executed two 8% Convertible Promissory Notes payable to two institutional investors, each in the principal amount of $308,000. Each note, which is due on October 29, 2019, has an original issue discount of $33,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to the 70% of the average of the two (2) lowest per share trading prices for the twenty (20) trading days prior to the conversion date. During the year ended December 31, 2018, the Company recognized interest expense of $4,118 for each note.

 

In November 2018, a Back-End note executed in May 2018 with an institutional investor was funded. The Back-End note is an 8% Convertible Promissory Note payable in the principal amount of $125,000. The note, which is due on May 10, 2019, has an original issue discount of $10,000. The convertible notes convert into common stock of the Company at conversion price that shall be equal to 72% of the lowest VWAP for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common stock can commence following the 180thcalendar day after the Original Issue Date. During the year ended December 31, 2018, the Company recognized interest expense of $1,123.

 

 14 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

Note 5. Equity Transactions

 

Preferred Stock

 

The total number of shares of preferred stock which the Company shall have authority to issue is 20,000,000 shares with a par value of $0.001 per share. During the nine months ended September 30, 2019, the Company authorized the issuance of 1,000,000 shares of preferred stock to officers, directors and consultants as deferred compensation and/or expense. The shares are eligible for conversion after 24 months into 40 shares of common stock per each preferred share. The value of the issued shares was calculated on the basis of 40 shares per preferred share at the common share value on the date of issuance. The deferred compensation value of the shares will vest monthly at 1/24th of the calculated value of $3,000,000 and requisite expense or reduction of accrued compensation and/or accrued directors fees will be recorded. At the recording of the requisite vested share value, the corresponding number of preferred shares will be recorded as being issued. At the end of September 30, 2019, there were 125,000 vested preferred shares and $255,000 was recorded to reduce accrued compensation; $33,750 was recorded to reduce accrued directors’ fees, and $86,250 was recorded as expense for a total of $375,000.

 

Common Stock

 

On July 9, 2019, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of authorizing the increase in the number of authorized shares of Common Stock from four hundred million (400,000,000) shares of Common Stock to nine hundred million (900,000,000) shares of Common Stock (the “Authorized Common Stock Share Increase”). On July 9, 2019, the Company filed Articles of Amendment to the Company’s Articles of Incorporation to implement the Authorized Common Stock Share Increase with the State of Nevada.

 

On October 10, 2019, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of authorizing the increase in the number of authorized shares of Common Stock from nine hundred million (900,000,000) shares of Common Stock to one billion nine hundred million (1,900,000,000) shares of Common Stock (the “Authorized Common Stock Share Increase”). On October 15, 2019, the Company filed Articles of Amendment to the Company’s Articles of Incorporation to implement the Authorized Common Stock Share Increase with the State of Nevada.

 

Nine Months Ended September 30, 2019

 

On February 7, 2019, the Company executed an amendment to a contract executed on April 8, 2018 for twelve months for consulting services. The Company issued 250,000 shares of common stock at the signing of the contract valued at $30,500 that is being amortized over the life of the contract.

 

On March 22, 2019, the Company issued 3,260,870 shares of common stock to an institutional investor as part of a promissory note for the first tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $375,000 which was recorded as prepaid until the six-month maturity has passed. The Company also issued 1,000,000 shares of common stock to the institutional investor as a commitment fee. The value of these shares is $115,000.

 

On April 2, 2019, the Company issued 800,000 shares of common stock pursuant to a capital call notice in relation to an Equity Purchase Agreement dated June 18, 2018. The capital call totaled $59,100.

 

On May 17, 2019, the Company executed a contract for three months for consulting services. The Company issued 500,000 shares of common stock at the signing of the contract valued at $53,000 that is being amortized over the life of the contract. The contract further indicated that another 500,000 shares were to be issued at the end of three months. The Company issued the second 500,000 shares of common stock on August 20, 2019. The value of the shares is $31,200 and was expensed.

 

On July 10, 2019, the Company issued 2,692,307 shares of common stock to an institutional investor as part of a promissory note for the second tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $167,462 which was recorded as prepaid until the six-month maturity has passed.

 15 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

On September 30, 2019, the Company issued 4,000,000 shares of common stock to an institutional investor as part of a promissory note for the third and final tranche payment. These shares are returnable if the Company repays the promissory note before the maturity date. The value of these shares is $280,000 which was recorded as prepaid until the six-month maturity has passed.

 

On September 25, 2019, the Company executed a contract for six months for consulting services. The contract included the issuance of 250,000 shares of common stock. The value of these shares is $13,750. The shares had not yet been issued at the nine months ended September 30,2019, so the value was recorded as Shares to be Issued.

 

During the nine months ended September 30, 2019, the Company issued 4,749,992 shares of common stock to consultants for services rendered in accordance to consulting agreements. The value of these shares is $466,403

 

During the nine months ended September 30, 2019, the Company issued 20,270,431 shares of common stock for debt conversion totaling $932,667 which includes $889,950 principal, $40,217 accrued interest and $2,500 due diligence fee.

 

Nine Months Ended September 30, 2018

 

In January 2018, the Board of Directors approved the extension of an Advisory Agreement dated February 15, 2015 for one year. The Company issued 800,000 shares of common stock as compensation with a value of $104,000. This value is being amortized over the life of the contract.

 

During the nine months ended September 30, 2018, the Company issued a total of 26,598,252 shares of common stock per debt conversion of convertible notes. The total of the debt conversion was $1,190,189 which includes $163,157 of accrued interest.

 

During the nine months ended September 30, 2018, the Company issued 3,875,000 shares of common stock for marketing and consulting services valued at $329,565.

 

During the nine months ended September 30, 2018, the Company issued 4,000,000 shares of common stock for settlement of a complaint filed in the United States Federal District Count (see Footnote 4). The debt settled totaled $236,868 which includes $56,817 of accrued interest.

 

During the nine months ended September 30, 2018, the Company issued 1,590,331 shares of common stock for financing fees for convertible debt issued. These shares were valued at $72,000.

 

In June 2018, the Company entered into a consulting agreement within which the Company agreed to issue 125,000 shares of common stock per month beginning in July 2018 and 1,500,000 shares of common stock upon signing of the agreement. The 1,500,000 shares of common stock were issued with a value of $105,000 which is being amortized over the life of the contract.

 

In June 2018, the Company executed an Equity Purchase Agreement with an institutional investor within which the investor agrees to purchase up to $1,500,000 of the Company’s common stock, par value $0.001. As an inducement to the investor to enter into the agreement, the Company issued 1,000,000 restricted shares of common stock to the investor valued at $70,000.

 

 16 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

In January 2018, the Board of Directors agreed to form a new eWellness Healthcare Corporation 2018 Equity Incentive Plan (“Plan”). The Plan shall be for 20,000,000 shares of common stock that will be placed in a 10b5-1 Sales Plan that will be registered under an S-8 Registration Statement. Under the sales plan, each recipient will open an account with Garden State Securities (“GSS”) for management of all sales of shares issued under the Plan. Quarterly limitations are placed on the number of shares that can be sold. The Company initially allocated 17,400,000 shares to officers, directors and consultants. As of September 30, 2018, no shares were issued.

 

Stock Options

 

The following is a summary of the status of all Company’s stock options as of September 30, 2019 and changes during the nine months ended on that date:

 

       Weighted         
   Number
of Stock
   Average
Exercise
   Remaining   Intrinsic 
   Options   Price   Life (yrs)   Value 
Outstanding at December 31, 2018   2,850,000   $0.80    2.2   $      - 
Granted   -    -           
Exercised   -    -           
Cancelled   -    -           
Outstanding at September 30, 2019   2,850,000    0.80    1.4   $- 
Options exercisable at September 30, 2019   2,850,000   $0.80    1.4   $- 

 

The Company recognized stock option expense of $0 and $217,188 for the nine months ended September 30, 2019 and 2018, respectively.

 

Warrants

 

In March 2018, the Board of Directors, at the request and with the approval of the investors, determined that it was in the best interests of the Company and the Investors, based upon market price and relatively limited liquidity of the shares of common stock that the Company revised the expiration date and exercise price for 417,429 unexercised warrants granted on April 9, 2015. The original expiration date of April 9, 2018 was extended to April 9, 2019. During the nine months ended September 30, 2019, these warrants expired.

 

The following is a summary of the status of the Company’s warrants as of September 30, 2019 and changes during the nine months ended on that date:

 

       Weighted         
   Number of   Average
Exercise
   Remaining   Intrinsic 
   Warrants   Price   Life (yrs.)   Value 
Outstanding at December 31, 2018   3,778,179   $0.48    1.4   $- 
Granted   -    -    -    - 
Exercised   -    -    -    - 
Cancelled   477,429    -    -    - 
Outstanding at September 30, 2019   3,300,750   $0.52    1.1   $22.240 
Warrants exercisable at September 30, 2019   3,300,750   $0.52    1.1   $22,240 

 

 17 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

Note 6. Commitments, Contingencies

 

The Company may be subject to lawsuits, administrative proceedings, regulatory reviews or investigations associated with its business and other matters arising in the normal conduct of its business. The following is a description of an uncertainty that is considered other than ordinary, routine and incidental to the business.

 

The closing of the Initial Exchange Agreement with Private Co. was conditioned upon certain, limited customary representations and warranties, as well as, among other things, our compliance with Rule 419 (“Rule 419”) of Regulation C under the Securities Act of 1933, as amended (the “Securities Act”) and the consent of our shareholders as required under Rule 419. Accordingly, we conducted a “Blank Check” offering subject to Rule 419 (the “Rule 419 Offering”) and filed a Registration Statement on Form S-1 to register the shares of such offering; the Registration Statement was declared effective on September 14, 2012. We used 10% of the subscription proceeds as permitted under Rule 419 and the amount remaining in the escrow trust as of the date of the closing of the Share Exchange was $90,000 (the “Trust Account Balance”).

 

Rule 419 required that the Share Exchange occur on or before March 18, 2014, but due to normal negotiations regarding the transactions and the parties’ efforts to satisfy all the closing conditions, the Share Exchange did not close on such date. Accordingly, after numerous discussions with management of both parties, they entered into an Amended and Restated Share Exchange Agreement (the “Share Exchange Agreement”) to reflect a revised business combination structure, pursuant to which we would: (i) file a registration statement on Form 8-A (“Form 8A”) to register our common stock pursuant to Section 12(g) of the Exchange Act, which we did on May 1, 2014 and (ii) seek to convert the participants of the Rule 419 Offering into participants of a similarly termed private offering (the “Converted Offering”), to be conducted pursuant to Regulation D, as promulgated under the Securities Act.

 

Fifty-two persons participated in the Rule 419 Offering and each of them gave the Company his/her/its consent to use his/her/its escrowed funds to purchase shares of the Company’s restricted common stock in the Converted Offering (the “Consent”) rather than have their funds returned. To avoid further administrative work for the investors, we believe that we took reasonable steps to inform investors of the situation and provided them with an appropriate opportunity to maintain their investment in the Company, if they so choose, or have their funds physically returned. Management believed the steps it took constituted a constructive return of the funds and therefore met the requirements of Rule 419.

 

However, pursuant to Rule 419(e)(2)(iv), “funds held in the escrow or trust account shall be returned by first class mail or equally prompt means to the purchaser within five business days [if the related acquisition transaction does not occur by a date that is 18 months after the effective date of the related registration statement].” As set forth above, rather than physically return the funds, we sought consent from the investors of the Rule 419 Offering to direct their escrowed funds to the Company to instead purchase shares in the Converted Offering. The consent document (which was essentially a form of rescission) was given to the investors along with a private placement memorandum describing the Converted Offering and stated that any investor who elected not to participate in the Converted Offering would get 90% of their funds physically returned. Pursuant to Rule 419(b)(2)(vi), a blank check company is entitled to use 10% of the proceed/escrowed funds; therefore, if a return of funds is required, only 90% of the proceed/escrowed funds need be returned. The Company received $100,000 proceeds and used $10,000 as per Rule 419(b)(2)(vi); therefore, only $90,000 was subject to possible return.

 

As disclosed therein, we filed the amendments to the initial Form 8-K in response to comments from the SEC regarding the Form 8-K and many of those comments pertain to an alleged violation of Rule 419. The Company continued to provide the SEC with information and analysis as to why it believes it did not violate Rule 419 but was unable to satisfy the SEC’s concerns. Comments and communications indicate that Rule 419 requires a physical return of funds if a 419 offering cannot be completed because a business combination was not consummated within the required time frame; constructive return is not permitted.

 

 18 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

Because of these communications and past comments, we are disclosing that we did not comply with the requirements of Rule 419, which required us to physically return the funds previously submitted to escrow pursuant to the Rule 419 Offering. Because of our failure to comply with Rule 419, the SEC may bring an enforcement action or commence litigation against us for failure to strictly comply with Rule 419. If any claims or actions were to be brought against us relating to our lack of compliance with Rule 419, we could be subject to penalties (including criminal penalties), required to pay fines, make damages payments or settlement payments. In addition, any claims or actions could force us to expend significant financial resources to defend ourselves, could divert the attention of our management from our core business and could harm our reputation.

 

Ultimately, the SEC determined to terminate its review of the Initial Form 8-K and related amendments, rather than provide us with additional opportunities to address their concerns and therefore, we did not clear their comments. It is not possible at this time to predict whether or when the SEC may initiate any proceedings, when this issue may be resolved or what, if any, penalties or other remedies may be imposed, and whether any such penalties or remedies would have a material adverse effect on our consolidated financial position, results of operations, or cash flows. Litigation and enforcement actions are inherently unpredictable, the outcome of any potential lawsuit or action is subject to significant uncertainties and, therefore, determining currently the likelihood of a loss, any SEC enforcement action and/or the measurement of the amount of any loss is complex. Consequently, we are unable to estimate the range of reasonably possible loss. Our assessment is based on an estimate and assumption that has been deemed reasonable by management, but the assessment process relies heavily on an estimate and assumption that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change that estimate and assumption. Considering the uncertainty of this issue and while Management evaluates the best and most appropriate way to resolve same, management determined to create a reserve on the Company’s Balance Sheet for the $90,000 that was subject to the Consent.

 

From time to time the Company may become a party to litigation matters involving claims against the Company. Except as may be outlined above, the Company believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

 

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. We elected to recognize the notes under ASU paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. We elected to initially and subsequently measure the notes and warrants in their entirety at fair value, with changes in fair value recognized in earnings.

 

The debt discount is amortized over the life of the note and recognized as interest expense. For the nine months ended September 30, 2019 and 2018, the Company amortized the debt discount of $2,690,435 and $284,390, respectively.

 

 19 
 

 

eWellness Healthcare Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2019

(unaudited)

 

During the nine months ended September 30, 2019, the Company had the following activity in the derivative liability account:

 

   Notes   Warrants   Total 
Derivative liability at December 31, 2018  $1,402,721   $181,381   $1,584,102 
Addition of new conversion option derivatives   3,631,177    -    3,631,177 
Conversion of note derivatives   (1,107,498)   -    (1,107,498)
Change in fair value   (2,582,681)   (166,137)   (2,748,818)
Derivative liability at September 30, 2019  $1,343,719