UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission
file number
(Exact name of registrant as specified in its charter)
(State
or other jurisdiction of |
(I.R.S.
Employer |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
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.
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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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
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 | ☐ |
| ☒ | 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
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The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day
of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s
common stock on December 31, 2021, as reported on the OTC Markets Group Inc. Pink tier (the “OTCPink”) was $
As of October 13, 2022 there were shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
GLOBAL WHOLEHEALTH PARTNERS CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
i
PART I
Forward-Looking Statements
This Annual Report on Form 10-K contains forward looking statements. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements contained in this Report speak only as of the date of this report, may be based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.
Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and factors that may cause actual results to be materially different from those discussed in these forward-looking statements. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Accordingly, you are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation.
All references to “we,” “us,” or “our” refer to Global WholeHealth Partners Corporation.
Item 1. Business
Background
Global WholeHealth Partners Corporation (the “Company”) was incorporated on March 7, 2013 in the State of Nevada. On May 9, 2019, the Company amended its Articles of Incorporation to effect a change of name to Global WholeHealth Partners Corporation and changed our ticker symbol to GWHP.
Our Business
The Company develops and markets in-vitro diagnostic (“IVD”) tests. The Company has developed over 125 Diagnostic Tests with the criteria that they be “low cost”, OTC or “self-administered”, “absolutely accurate”, and provide “immediate results”. Company scientists participated in the development of the original Pregnancy test which was the first diagnostic to include these criteria and these criteria have been included in all Diagnostic tests developed by the Company since. Tests with these criteria have become to be known as “Rapid Tests”. The Company has 45 FDA approved tests for distribution in the US which include tests for Troponin, Colorectal, and Drug testing among others. The remainder tests carry an FDA Certificate of Exportability for distribution in foreign countries and include tests such as Ebola, ZIKA, Dengue Fever, Malaria, Influenza, Tuberculosis, Yellow Fever, Corona Viruses, and other epidemic and vector borne diseases.
The Company currently markets a range of IVD test kits for consumer use through over-the-counter (“OTC” or consumer), or consumer-use and point-of-care (“POC” or professional) for use by health care professionals, generally located at medical clinics, physician offices and hospitals, including those within penal systems throughout the US and abroad.
All of the products we sell are manufactured in a U.S. Food and Drug Administration (“FDA”) Approved Facility in the USA. An FDA Approved facility is a facility that meets Good Manufacturing Practices (“GMP”) with the FDA.
We sell products internationally which are not FDA approved to sell in the US. These products include an FDA Certificate of Exportability and include tests such as Ebola, ZIKA, Dengue, Malaria, Influenza, Tuberculosis, Corona Viruses, and other vector borne diseases.
CoVid-19 Activities
From January of 2020 through January 2022, the Company was largely unsuccessful in it’s efforts to develop and sell COVID tests due to the commoditization of such tests and to the lack of recognition of the Company in the marketplace. The Company believes the opportunity here has diminished and is now focusing on its core business of manufacturing and distributing its vast product line of Diagnostic Tests.
1
Plan of Operation
The Company is currently focusing its attention on marketing its core FDA OTC approved products which includes tests for pregnancy, ovulation, colorectal, drugs of abuse, glucose strips and glucose monitors through various platforms, including Walmart, Amazon, eBay and a recent contract with PrimeCare America for distribution in the Midwestern part of the country.
Industry
The IVD testing industry encompasses the following two primary categories: the OTC market and the POC. The concepts that distinguish POC technology—operation simple enough for non-laboratory users; little or no maintenance requirement; and rapid, reliable results—mean that it can be applied equally well in many non-clinical settings, such as the OTC market. As advances in medical technology increasingly make it possible to diagnose diseases and physiological conditions from ever-smaller amounts of body fluids, certain diseases and conditions that once required diagnosis by physicians and/or medical technicians inside hospital emergency rooms, exam rooms/bedside studies, or private clinics, can now also be done by inexpensive, easy-to-use diagnostic devices that consumers can use in the comfort and anonymity of their home. Today, the average pharmacy, whether a privately owned neighborhood store, or chain owned, has become an outlet for selling IVD test kits for in-home use.
The Company believes, according to publicly available sources, that the IVD industry is a multi-billion-dollar industry that is increasing each year. This assessment includes all laboratory hospital-based products, over-the-counter devices, and rapid tests performed at the point-of-care. The Company believes that the following factors can be attributed to the increase in overall need and use of IVD test kits: an aging baby-boomer population; increasing healthcare costs; the ever-growing number of uninsured and under-insured in the U.S. and abroad; and a general increase in consumer awareness, in part due to the wealth of information available on the Internet.
Competition
Diagnostic products are subject to competition in technological innovation, price, convenience of use, service, instrument warranty provisions, product performance, laboratory efficiency, long-term supply contracts, and product potential for overall cost-effectiveness and productivity gains. Some products in this segment can be subject to rapid product obsolescence or regulatory changes. We compete with several companies around the world who possess significantly greater technical and financial resources and professional and consumer reach and recognition, including Accon Labs, Johnson & Johnson, DB, Abbott, and Roche all of whom carry similar products.
Marketing and Sales
The Company is focused on generating increased sales through online retail, large and small distributors and directly to doctors, hospitals, clinics and governments. The Company is taking steps and developing the materials needed to effect its marketing strategy.
Research and Development
We are continuing to look for needs in the world to create and work with our scientific team and science partners to make IVD tests for a variety of diseases as the need and opportunity arises.
Facilities
The Company manufactures at two FDA approved labs located in San Diego and Escondido, California. All products are manufactured in the United States. The Corporate headquarters is located separately in the San Clemente, California business district. The two facilities have capacity to produce 250,000 units per day on a single shift. Further, additional facilities for lease are plentiful and can be equipped and setup quickly. We also provide third party manufacturing services.
The Company has sufficient warehouse facilities to accommodate our maximum production volumes and to keep sufficient inventory requirements (three months inventory of client order size) for subsequent refill orders by customers.
Employees
The Company currently has two employees, including Mr. Rene Alvarez, Chairman, President, CEO, Treasurer and Secretary and Edgar Gonzales, Director and Vice President.
Mr. Charles Strongo resigned from all Officer positions as well as a member of the Board. All of his functions were delegated to Mr. Rene Alvarez. Also, the Board accepted resignations from Dr. Ciu, Dr. Ford. Dr. Paez de la Cerda, and Wolfgang Groeters; all were appointed by Mr. Strongo. Mr Alvarez is re-constituting the Board at this time and has accepted Mr. Edgar B. Gonzalez to Board membership. It is anticipated that three additional members will be accepted soon. At the present time, we have no full-time employees. Messrs. Alvarez and Gonzalez devote approximately 40 to 60 hours each per week or as much time as is necessary to conduct the affairs of the company. The company utilizes independent contractors when necessary.
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Other Information
Our website address is www.gwhpcorp.com. The public may read and copy any materials we file with the United States Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov which site contains reports, proxy and information statements, and other information regarding issuers, such as us, that file electronically with the SEC. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document(s) in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
The Company’s executive office is located at 1402 N El Camino Real, San Clemente, CA 92672 The Company’s telephone number is (714) 392-9752.
ITEM 1A. RISK FACTORS
Smaller reporting companies are not required to provide the information required by this Item 1A.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. Properties
We utilized approximately 1,500 square feet of office and warehouse space located at 1402 North El Camino Real, San Clemente, California 92672. The space is leased pursuant to a sublease on a month-to-month basis with monthly rent due of approximately $3,700.
Item 3. LEGAL PROCEEDINGS
See Note 9 to our financial statements for information related to the Securities and Commission Civil Complaint filed on February 17, 2022.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is quoted on the OTC Pink tier (the “OTCPink”) under the symbol “GWHP”.
The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.
On May 9, 2019, the Board of Directors authorized a one for five hundred (1:500) reverse stock split which became effective on May 20, 2019. All share amounts contained in this Annual Report reflect this reverse split
Holders
Our Certificate of Incorporation authorizes the issuance of up to 400,000,000 shares of common stock, par value $0.001 per share and 10,000 shares of preferred stock, par value $0.001 per share. As of September 8, 2021, there were 384 stockholders of record holding an aggregate of 82,057,885 shares of common stock (this number does not include stockholders who hold their stock through brokers, banks and other nominees). No preferred stock has been issued.
Transfer Agent
The transfer agent of our common stock is Nevada Agency and Transfer Company, having an office at 50 West Liberty Street, Suite 880, Reno, NV 89501; their phone number is (775) 322-0626.
Dividend Policy
We have never paid cash dividends on any of our capital stock and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. We do not intend to pay cash dividends to holders of our common stock in the foreseeable future.
Penny Stock
Our common stock trades at less than $5.00 per share and is therefore subject to the Securities and Exchange Commission’s penny stock rules.
Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect the ability of our stockholders to resell our common stock.
Securities Authorized for Issuance under Equity Compensation Plans
None.
4
Recent Sales of Unregistered Securities
During fiscal 2022, the Company issued 16,000,000 shares in exchange for services valued at $1,733,100, which includes the issuance of 9,000,000 shares, in total, to the Board of Directors, valued at $387,000.
During fiscal 2022, Firstfire 1) converted $164,000 or principal of Firstfire Note No. 1 at a per share price of $0.03, and received 5,466,666 shares; and 2) converted $31,500 or principal of Firstfire Note No. 2 at a per share price of $0.0063, and received 5,000,000 shares.
On July 10, 2021, the Company and LionsGate Funding Management LLC (“LGFM”) entered into a Media and Marketing Services Agreement (the “MMSA”). Pursuant to the MMSA, 1) LGFM provided services designed to increase the awareness and visibility in the investment community and market product to distributors throughout the world for a period of 12 months; and 2) the Company will pay LGFM $100,000 and issue 300,000 shares of restricted common stock valued at $129,000. The shares were issued on October 11, 2021. Lionsgate was also issued 2,500,000 shares on January 13, 2022 in exchange for services valued at $215,000.
The securities issued above were issued by the Company under the exemption from registration afforded by Section 4(a)(2) of the Securities Act, as amended and/or Regulation D promulgated thereunder, as the securities were issued to accredited investors, without a view to distribution, and were not issued through any general solicitation or advertisement.
Additional Information
Copies of our annual reports, quarterly reports, current reports, and any amendments to those reports, are available free of charge on the internet at www.sec.gov. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document(s) in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
Item 7. Management’s Discussion and Analysis of Financial condition and results of operations
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the consolidated results of operations and financial condition of Global WholeHealth Partners Corporation. The MD&A is provided as a supplement to, and should be read in conjunction with financial statements and the accompanying notes to the financial statements included in this Form 10-K.
Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Overview
Global WholeHealth Partners Corporation develops and markets in-vitro diagnostic tests for over-the-counter, or consumer-use and point-of-care which includes hospitals, physicians’ offices and medical clinics, including those within penal systems throughout the US and abroad. The Company currently markets a range of diagnostic test kits for consumer use through OTC sales, and for use by health care professionals, generally located at medical clinics, physician offices and hospitals known POC, in the United States. These test kits are known as in-vitro diagnostic test kits or IVD products.
The Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
5
As of June 30, 2022, we had negative working capital of $1,575,766, and a cash balance of $0. Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. During July 2022, the Company sold $239,675 face value of promissory notes from which the Company received $206,250 in proceeds. We expect to raise additional funds through private or public equity investment in order to expand the range and scope of our business operations. We will seek access to private or public equity but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Results of Operations
Year ended June 30, 2022 compared with the year ended June 30, 2021
| Year
Ended June 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| Revenue | $ | 7,375 | $ | 40,196 | $ | (32,821 | ) | |||||
| Cost of revenue | 119,681 | 201,495 | (81,814 | ) | ||||||||
| Gross profit | (112,306 | ) | (161,299 | ) | 48,993 | |||||||
| Operating expenses | ||||||||||||
| Professional fees | 176,174 | 83,790 | 92,384 | |||||||||
| Research and development | 1,372,697 | 481,740 | 890,957 | |||||||||
| Selling, general and administrative | 782,650 | 317,062 | 465,588 | |||||||||
| Stock compensation | 1,741,800 | 2,544,000 | (802,200 | ) | ||||||||
| Total operating expenses | 4,073,321 | 3,426,592 | 646,729 | |||||||||
| Loss from operations | (4,185,627 | ) | (3,587,891 | ) | (597,736 | ) | ||||||
| Other income (expense) | ||||||||||||
| Interest expense | (281,866 | ) | (64,732 | ) | (217,134 | ) | ||||||
| Interest recorded on compensatory warrants | - | (737,569 | ) | 737,569 | ||||||||
| Amortization of debt discount | (687,460 | ) | (163,931 | ) | (523,529 | ) | ||||||
| Loss on related party transfer of intangible assets | - | (4,480,000 | ) | 4,480,000 | ||||||||
| Total other income (expense) | (969,326 | ) | (5,446,232 | ) | 4,476,906 | |||||||
| Net loss | $ | (5,154,953 | ) | $ | (9,034,123 | ) | $ | 3,879,170 | ||||
Revenue and Cost of Revenue
During fiscal 2022, the Company’s sales included a $7,000 sale to a related party. Sales decreased due to the Company’s inability to secure and market test items. The cost of revenue in 2022 and 2021 included inventory adjustments of $115,681 and 171,811, respectively, due to shelf-life expiration of our products
Professional Fees
Professional fees relate to expenditures incurred primarily for legal, accounting and financing services. During fiscal 2022 professional fees increased primarily due to higher legal fees incurred related to the February 17, 2022 Securities and Exchange Commission lawsuit filed in the federal district court for the Southern District of California, for additional information see the notes to our financial statements, “NOTE 9 – Commitments and Contingencies”.
Research and Product Development
Research and Product Development (“R&D”) costs represent costs incurred to develop our tests and are incurred pursuant to certain internal R&D cost allocations, when applicable, and agreements with third-party providers, but primarily with Pan Probe Biotech, owned by Dr. Shujie Cui, our Chief Science Officer. R&D costs are expensed when incurred. During fiscal 2022 compared to fiscal 2021, R&D costs increased due to the development of a COVID antigen test.
6
Selling, General and Administrative
Selling, general and administrative (“SG&A”) costs include all expenditures related to personnel, rent, travel, public company costs, utilities, marketing and other office related costs. SG&A costs increased during fiscal 2022 compared to fiscal 2021 due increases in personnel costs of $127,500, travel and meals of $38,020, rent of $84,427, utilities of $31,363, impairment charges of $26,418, marketing costs of $155,672 and other SG&A costs of $2,188.
Stock Compensation
Stock compensation represents the expense associated with the issuance of stock in exchange for services and is non-cash in nature. Stock compensation is based on our stock price at the measurement date and can fluctuate significantly as a result. Stock compensation expense in fiscal 2022 consisted of the issuance of 16,000,000 shares of restricted common stock at a weighted average price of $0.11 per share compared to the fiscal 2021 issuance of 2,950,000 shares of restricted common stock at a weighted average price of $0.86 per share. All shares were issued free of obligation.
Other Income and (Expense)
Other expense includes “interest expense” which relates to the stated interest and penalties upon default of our outstanding promissory notes, and “amortization of debt discount” which represents the accretion of the discount applied to our notes as a result of the issuance of detachable warrants, the beneficial conversion feature contained certain notes and deductions from the proceeds of the promissory notes for various related fees. During fiscal 2022, interest expense included $191,400 of liquidated damages and penalties due to our default on the Firstfire Notes and $79,200 of interest expense related to the Firstfire Notes and $90,466 related to our promissory notes.
During fiscal 2021, the company recognized $64,732 of interest expense related to your outstanding promissory notes and $737,569 related to the July 22, 2020 Common Stock Purchase Agreement with EMC2 Capital, LLC and related Commitment Warrants valued at $737,569.
The loss on related party transfer of intangible assets represents value of two separate, exclusive, five-year, license agreements between the Company and Charles Strongo, our former CEO, one for the manufacture of Biodegradable plastic for medical devices under provisional patent 63/054,139 and the second license agreement for the use of the intellectual property described as “a Rapid, Micro-Well or Later flow test for Parkinson’s, Dementia, or Alzheimer or ASD” (collectively, the “License Agreements”). The License Agreements were both executed on January 12, 2021 and March 30, 2021. In exchange for entering into the License Agreements, the Company issued a total of 8 million shares of restricted common stock with a market value of $4,480,000. Due to this being a related party transfer with no available historical cost records, the full value of the stock issued was recorded as a loss.
Liquidity and Capital Resources
As of June 30, 2022, the Company had no cash and a bank overdraft of $1,230 and current liabilities of $1,719,380. From inception to June 30, 2022, we have incurred an accumulated deficit of $18,937,685. This loss has been incurred through a combination of professional fees, R&D, SG&A and non-cash stock related costs of $13,235,369 to support our plans to develop our business. During fiscal 2022, the Company had negligible revenues and used cash in operations of $1,968,207. The Company has incurred losses since inception and may not be able to generate sufficient net revenue from its business in the future to achieve or sustain profitability. The Company currently has insufficient funds to operate over the next twelve months. To finance our operations, we have entered into a Common Stock Purchase Agreement with EMC2 Capital LLC, which provided us with $1,476,872 during fiscal 2022. Additionally, we entered into a Securities Purchase Agreement and related 12% senior secured convertible promissory note on June 18, 2021 and August 27, 2021, under which the Company received net proceeds of $224,500 on July 8, 2021 and $313,700 on September 2, 2021. Subsequent to fiscal 2022, in July 2022, the Company sold $239,675 face value of promissory notes from which the Company received $206,250 in proceeds. We are currently pursuing additional funds through equity or debt financing or a combination thereof. However, aside from the EMC2 SPA, the Company has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all.
7
Summary of Cash Flows
Presented below is a table that summarizes the cash provided or used in our activities and the amount of the respective increases or decreases in cash provided by (used in) those activities between the fiscal periods:
| Year
Ended June 30, | ||||||||||||
| 2021 | 2020 | Change | ||||||||||
| Operating activities | $ | (1,968,207 | ) | $ | (642,802 | ) | $ | (1,325,405 | ) | |||
| Investing activities | - | (3,505 | ) | 3,505 | ||||||||
| Financing activities | 1,893,505 | 706,512 | 1,186,993 | |||||||||
| Net increase (decrease) in cash | $ | (74,702 | ) | $ | 60,205 | $ | (134,907 | ) | ||||
Operating Activities
Net cash used in operating activities increased primarily due to increases in R&D, professional fees, personnel and other SG&A costs.
Investing Activities
The Company purchased computer equipment totaling $3,505 in fiscal 2021 .
Financing Activities
During fiscal 2022, the Company received $1,478,870 upon the sale of 7,856,514 shares of common stock, $2,000 upon the issuance of 2,000,000 shares pursuant to a warrant exercise, and $538,200 from the sale of convertible promissory notes offset by debt payments totaling $123,565.
During fiscal 2021, the Company received $680,051 upon the sale of 1,235,961 shares of common stock, $162,000 from the sale of convertible promissory notes, $75,000 from the sale of promissory notes and $144,576 from the sale of a related party note offset by payments of $73,000 on convertible promissory notes, $15,845 on promissory notes and $266,270 on related party notes.
Contractual Obligations
None.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and the related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on its historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Due to the level of activity and lack of complex transactions, we believe there are currently no critical accounting policies and estimates that affect the preparation of our financial statements.
8
Recently Issued Accounting Pronouncements
See “NOTE 2 – Significant Accounting Policies” to our consolidated financial statements under Item 8 in this Annual Report on Form 10-K.
Related Party Transactions
For a discussion of our Related Party Transactions, see “Note 5 - Transactions With Related Persons” to our Financial Statements included under Item 8 in this Annual Report on Form 10-K.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the information required by this item.
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Item 8. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Global WholeHealth Partners Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Global WholeHealth Partners Corporation as of June 30, 2022 and 2021, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ BF Borgers CPA PC
We have served as the Company’s auditor since 2019
October 13, 2022
F-2
GLOBAL WHOLEHEALTH PARTNERS CORPORATION
CONSOLIDATED BALANCE SHEETS
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Inventory, net | ||||||||
| Deferred financing costs | ||||||||
| Total current assets | ||||||||
| Equipment,
net of accumulated depreciation of $ | ||||||||
| Investment in related party common stock | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Related party note | $ | $ | ||||||
| Bank overdraft | ||||||||
| Convertible
notes payable, net of discount of $ | ||||||||
| Notes payable | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Related party payables | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock; $ par value, shares authorized, and shares issued and outstanding at June 30, 2022 and 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock payable | ||||||||
| Retained deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-3
GLOBAL WHOLEHEALTH PARTNERS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| Years
Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | $ | ||||||
| Revenue-related party | ||||||||
| Cost of revenue | ||||||||
| Cost of revenue-related party | ||||||||
| Gross profit | ( | ) | ( | ) | ||||
| Operating expenses | ||||||||
| Professional fees | ||||||||
| Research and development - related party | ||||||||
| Research and development | ||||||||
| Selling, general and administrative - related party | ||||||||
| Selling, general and administrative | ||||||||
| Total operating expense | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Loss on related party transfer of intangible assets | ( | ) | ||||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and Diluted Loss per Common Share | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-4
GLOBAL WHOLEHEALTH PARTNERS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
| Common Stock | Additional Paid-in | Common Stock | Retained | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Capital | Payable | Deficit | (Deficit) | |||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||
| Common stock sold pursuant to the EMC2 SPA | ( | ) | ||||||||||||||||||||||
| Common stock issued upon conversion of convertible promissory note | ||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||
| Common stock issued for license agreements with Charles Strongo | ||||||||||||||||||||||||
| Investment in related party common stock | ||||||||||||||||||||||||
| Common stock issued as compensation for financings | ||||||||||||||||||||||||
| Discount on convertible promissory notes due to beneficial conversion feature | - | |||||||||||||||||||||||
| Net loss for the year ended June 30, 2021 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Common stock sold pursuant to the EMC2 SPA | ||||||||||||||||||||||||
| Common stock issued upon conversion of convertible promissory note | ( | ) | ||||||||||||||||||||||
| Common stock issued upon exercise of warrant | ||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||
| Discount on convertible promissory notes due to beneficial conversion feature | - | |||||||||||||||||||||||
| Net loss for the year ended June 30, 2022 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-5
GLOBAL WHOLEHEALTH PARTNERS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years
Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net
loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||
| Loss on related party transfer of intangible assets | ||||||||
| Common stock issued for services | ||||||||
| Amortization of debt discount | ||||||||
| Penalties on default of Firstfire Notes | ||||||||
| Interest recorded on compensatory warrants | ||||||||
| Depreciation and amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in prepaid expenses and other assets | ( | ) | ||||||
| (Increase) decrease in inventory | ( | ) | ||||||
| Increase (decrease) in accounts payable and accrued expenses | ( | ) | ||||||
| Increase (decrease) related party payables | ( | ) | ||||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| Cash flows used in investing activity | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash flows used in investing activity | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from convertible promissory notes | ||||||||
| Payments of convertible promissory notes | ( | ) | ( | ) | ||||
| Proceeds from promissory notes | ||||||||
| Payments of promissory notes | ( | ) | ( | ) | ||||
| Proceeds from related party note, net | ||||||||
| Payments of related party note | ( | ) | ( | ) | ||||
| Net cash flows from financing activities | ||||||||
| Change in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid in cash | $ | $ | ||||||
| Income taxes paid in cash | $ | $ | ||||||
| Supplemental disclosure of non-cash transactions: | ||||||||
| Common stock issued for conversion of note payable | $ | $ | ||||||
| Debt discount recorded for beneficial conversion feature | $ | $ | ||||||
| Common stock issued for license agreements | $ | $ | | |||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-6
GLOBAL WHOLEHEALTH PARTNERS CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
NOTE 1 – Organization and Going Concern
Organization
Global WholeHealth Partners Corporation was incorporated on March 7, 2013 in the State of Nevada under the name Texas Jack Oil and Gas Corp. On May 9, 2019, the Company amended its Articles of Incorporation to effect a change of name to Global WholeHealth Partners Corporation. The Company’s ticker symbol changed to GWHP.
The Company develops and markets in-vitro diagnostic tests. The Company has developed over 125 Diagnostic Tests with the criteria that they be “low cost”, OTC or “self-administered”, “absolutely accurate”, and provide “immediate results”. The Company has 45 FDA approved tests for distribution in the US which include tests for Troponin, Colorectal, and Drug testing among others. The remainder tests carry an FDA Certificate of Exportability for distribution in foreign countries and include tests such as Ebola, ZIKA, Dengue Fever, Malaria, Influenza, Tuberculosis, Yellow Fever, Corona Viruses, and other epidemic and vector borne diseases.
Going Concern
The Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. As shown in the accompanying financial statements, the Company incurred negative operating cash flows of $1,968,000 for the year ended June 30, 2022 and has an accumulated deficit of $18,943,000 from inception through June 30, 2022. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.
In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. Historically, the Company has relied upon internally generated funds, and funds from the sale of stock, issuance of promissory notes and loans from its shareholders and private investors to finance its operations and growth. Management is planning to raise necessary additional funds for working capital through loans and/or additional sales of its common stock. However, there is no assurance that the Company will be successful in raising additional capital or that such additional funds will be available on acceptable terms, if at all. Should the Company be unable to raise this amount of capital its operating plans will be limited to the amount of capital that it can access. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.
NOTE 2 – Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates made by management primarily relate to accounts receivable, inventories, deferred income tax valuation allowances, and identifiable intangible assets.
Cash and cash equivalents
The Company considers all highly liquid instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents.
F-7
Inventory
Inventory
is comprised of finished goods and stated at the lower of cost or net realizable value. Inventory cost is determined on a weighted
average basis in accordance with ASC 330-10-30-9. Provisions are made to reduce slow-moving, obsolete, or unusable inventories to
their estimated useful or scrap values. When necessary, the Company establishes reserves for this purpose. During the year ended
June 30, 2022 and 2021, the Company recognized $
Equipment
Fixed assets are carried at cost, less accumulated depreciation. Major improvements are capitalized, while repair and maintenance are expensed when incurred. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in that period.
Depreciation is computed on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:
| Estimated | ||
| Useful Lives | ||
| Computer equipment and software | ||
| Equipment, furniture and fixtures |
Intangible assets
Other definite-lived intangible assets are amortized over their useful lives. The Company reviews the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.
Revenue Recognition
The Company recognizes revenue from operations through the sale of products. Product revenue is comprised of the sale of consumables. To date, all products sold have been fully paid for in advance of shipment.
Revenue is recognized when control of products and services is transferred to the customer in an amount that reflects the consideration that the Company expects to receive from the customer in exchange for those products and services. This process involves identifying the contract with the customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, if applicable, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control.
Revenue from product sales is generally recognized upon shipment to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs prior to shipment and the term between invoicing and when payment is due is not significant.
Revenue is recorded net of discounts, and sales taxes collected on behalf of governmental authorities. Sales commissions are recorded as selling and marketing expenses when incurred.
The Company records any payments received from customers prior to the Company fulfilling its performance obligation(s) as deferred revenue.
The
Company had one customer that represented
F-8
Concentration of Credit Risk and Off-Balance Sheet Risk
The Company has no significant off-balance-sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially subject the Company to concentrations of credit risk are principally cash. The Company’s policy is to place its cash in high quality financial institutions. The Company does not believe significant credit risk exists with respect to these institutions.
Leases
The
Company recognizes leases with a term of greater than a year on the balance sheet by recording right-of-use assets and lease liabilities.
Leases can be classified as either operating leases or finance leases. Operating leases will result in straight-line lease expense, while
finance leases will result in front-loaded expense. The Company’s lease consists of an operating lease for office space. The Company
does not recognize a lease liability or right-of-use asset on the balance sheet for short-term leases. Instead, the Company recognizes
short-term lease payments as an expense on a straight-line basis over the lease term. A short-term lease is defined as a lease that,
at the commencement date, has a lease term of
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as 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 or more significant inputs or significant value drivers are unobservable.
During the periods covered by this report, the Company did not have any assets or liabilities that were required to be measured at fair value on a recurring basis or on a non-recurring basis.
Fair Value of Financial Instruments
The Company’s financial instruments consist of accounts payable and accrued expenses. The carrying amounts of the Company’s financial instruments approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect those estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively.
F-9
Transactions with Related Parties
Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal stockholders of the Company, its management, members of the immediate families of principal stockholders of the Company and its management and other parties with which the Company may deal where 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. The Company discloses all material related-party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as compensation or distribution to related parties depending on the transaction.
Basic net loss per common share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per common share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised of convertible notes and warrants to purchase common stock. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.
The potentially dilutive securities that would be anti-dilutive due to the Company’s net loss are not included in the calculation of diluted net loss per share attributable to common stockholders. The anti-dilutive securities are as follows (in common stock equivalent shares):
| Year
Ended June 30, 2022 | Year
Ended June 30, 2021 | |||||||
| Common stock warrants | ||||||||
| Convertible promissory notes | ||||||||
Research and Development
Research and development costs primarily consist of research contracts for the advancement of product development. The Company expenses all research and development costs in the period incurred.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718, Stock Based Compensation. ASC 718 requires all stock-based payments to directors, employees and consultants, including grants of stock options, to be recognized in the consolidated statements of operations based on their fair values. If a stock-based award contains performance-based conditions, at the point that it becomes probable that the performance conditions will be met, the Company records a cumulative catch-up of the expense from the grant date to the current date, and then amortizes the remainder of the expense over the remaining service period. Management evaluates when the achievement of a performance-based condition is probable based on the expected satisfaction of the performance conditions as of the reporting date.
Accounting Pronouncements
We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.
F-10
New Accounting Pronouncements Not Yet Adopted
None.
Accounting Pronouncements Recently Adopted
In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for the Company for fiscal years beginning after December 31, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year. The Company adopted ASU 2020-06 beginning with our fiscal year starting on July 1, 2021 with no impact on its Financial Statements.
In January 2020, the FASB issued ASU 2020-01 - Investments - Equity securities (Topic 321), Investments - Equity method and joint ventures (Topic 323), and Derivatives and hedging (Topic 815) - Clarifying the interactions between Topic 321, Topic 323, and Topic 815. The amendments in this Update improve the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting and clarify the scope considerations for forward contracts and purchased options on certain securities. The amendments are effective for public entities in fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2020-01 beginning with our fiscal year starting on July 1, 2021 with no impact on its Financial Statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions for recognizing deferred taxes for equity method investments, performing intra period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others. This guidance is effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company adopted ASU 2019-12 effective July 1, 2021 with no impact on its Financial Statements.
NOTE 3 – Equipment
Equipment consists of the following:
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Computers, office equipment and software | $ | $ | ||||||
| Total equipment | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Equipment, net | $ | $ | ||||||
During
the year ended June 30, 2021, the Company purchased $
F-11
NOTE 4 – Stockholder’s Equity
Preferred Stock
The Company has Preferred stock: $ par value; shares authorized with no shares issued and outstanding.
Common Stock
The Company has shares of Common Stock authorized of which and shares were issued and outstanding as of June 30, 2022 and June 30, 2021, respectively.
During
fiscal 2022, the Company issued shares in exchange for services valued at $
During
fiscal 2022, Firstfire 1) converted $
On
July 10, 2021, the Company and LionsGate Funding Management LLC (“LGFM”) entered into a Media and Marketing
Services Agreement (the “MMSA”). Pursuant to the MMSA, 1) LGFM will provide services designed to increase the
awareness and visibility in the investment community and market product to distributors throughout the world for a period of 12
months; and 2) the Company will pay LGFM $
On
April 20, 2021, the Company and Empire Associates, Inc. entered into a Stock Purchase Agreement whereby the Company agreed to issue
On
April 12, 2021, the Company and Nunzia Pharmaceutical, Inc. entered into a Mutual Sales and Marketing Agreement (the “MSMA”).
Pursuant to the terms of the MSMA, each company has mutual abilities to share their products for sale under nonexclusive but favorable
conditions and prices. The duration of the agreement is for an initial period of five years commencing on April 12, 2021. As consideration
for the MSMA, the Company agreed to issue
On
March 30, 2021, the Company entered into a License Agreement (the “IP License Agreement”) with Charles Strongo.
Under the terms of the IP License Agreement, the Company has the exclusive license to use the intellectual property, “A Rapid,
Micro-Welt or Later flow text for Parkinson’s, Dementia, or Alzheimer or ASD.” The Company agreed to issue
On
March 15, 2021, the Company issued
On
February 21, 2021, the Company agreed to issue and on February 25, issued
On
January 12, 2021, the Company entered into a License Agreement (the “Patent License Agreement”) with Charles
Strongo. Under the terms of the Patent License Agreement, the Company has the exclusive license to manufacture, sell and license to be
manufactured the only Biodegradable plastic for medical devices. The devices include cassettes, midstream, small buffer bottles, urine
cups, and any other plastic type of medical device used in testing or for medical services under provisional patent number 63/054,139.
The Company agreed to issue
F-12
On
January 5, 2021, the Board appointed a new member, Dr. Miriam Lisbeth Paez De La Cerda and issued shares of restricted common
stock to each of the six Directors for a total issuance of
On
December 15, 2020, the Company sold
On September 24, 2020, the Company and Dr. Scott Ford, Director, entered into a subscription agreement for the purchase shares of restricted common stock at a price of $1.14 per share ($250,000 total) which represents a 50% discount to the share price due to the lack of marketability and the thinly traded nature of our common stock on the OTC. These shares were issued on February 5, 2021.
On July 9, 2020, the Company and Dr. Scott Ford, Director, entered into a subscription agreement for the purchase shares of restricted common stock at a price of $ per share which represents a 50% discount to the share price due to the lack of marketability and the thinly traded nature of our common stock on the OTC. These shares were issued on February 5, 2021.
EMC2 Capital
On
July 22, 2020, the Company entered into a Common Stock Purchase Agreement (the “EMC2 SPA”) and a Registration
Rights Agreement with EMC2 Capital, LLC (“EMC2 Capital”) pursuant to which EMC2 Capital agreed to invest up to One
Hundred Million Dollars ($
The
value of the Commitment Shares on the measurement date was $ per share or $. The value of the Commitment Warrant on the
Measurement Date was $
As
a result of the Securities and Exchange Commission declaring our Registration on Form S-1 effective, the pre conditions necessary for
the Company to begin selling Purchase Shares to EMC2 Capital were removed. As a result, the Company determined the relative fair value
of the Commitment Warrants and Commitment Shares to be $
During
fiscal 2021, from March 3, 2021 through June 30, 2021, the Company sold
During
fiscal 2022, the Company sold
EMC2
also exercised their warrant to purchase shares in exchange for the exercise price resulting in $
F-13
Warrants
Each of the Company’s warrants outstanding entitles the holder to purchase one share of the Company’s common stock for each warrant share held. A summary of the Company’s warrants outstanding and exercisable as of June 30, 2022 and 2021 is as follows:
| Shares of Common Stock Issuable from Warrants Outstanding as of | Weighted Average | ||||||||||||||||
| Description | June 30, 2022 | June 30, 2021 |
Exercise Price | Date of Issuance | Expiration | ||||||||||||
| Total | |||||||||||||||||
NOTE 5 – Transactions with Related Persons
On
March 30, 2022, the Board issued a total of
On March 30, 2022, Michael Mitsunaga made a $
On
July 10, 2021, the Company and LionsGate Funding Management LLC (“LGFM”) entered into a Media and Marketing
Services Agreement (the “MMSA”). LGFM is a shareholder, has provided significant funding to the Company and
former officers of the Company are affiliates of LGFM. Pursuant to the MMSA, 1) LGFM provided services designed to increase the
awareness and visibility in the investment community and market product to distributors throughout the world for a period of 12
months; and 2) the Company will pay LGFM $
Lionsgate
was issued shares on January 13, 2022 in exchange for services valued at $
On April 12, 2021, the Company and Nunzia Pharmaceutical, Inc. entered into a Mutual Sales and Marketing Agreement pursuant to which Nunzia and the Company exchanged shares of common stock. For additional information, see “NOTE 4 – Stockholder’s Equity.”
On March 30, 2021, the Company entered into a five-year License Agreement with Charles Strongo and issued shares of restricted common stock. For additional information, see “NOTE 4 – Stockholder’s Equity.”
On February 21, 2021 the Company agreed to issue and on February 25, issued shares to LionsGate. The Company recorded compensation expense of $.
On January 12, 2021, the Company entered into a five-year License Agreement with Charles Strongo and issued shares of restricted common stock. For additional information, see “NOTE 4 – Stockholder’s Equity.”
On
January 5, 2021, the Board appointed a new member, Dr. Miriam Lisbeth Paez De La Cerda and issued shares of restricted
On July 9, 2020 and September 24, 2020, the Company and Dr. Scott Ford entered into a subscription agreement for the purchase of restricted common stock resulting in the payment of $to the Company, see “Note 4 – Stockholders’ Equity” above for additional information.
F-14
Beginning
in January 2020, the Company utilizes the R&D capabilities of Pan Probe Biotech to perform studies and work towards the development
of the Company’s COVID-19 tests. Dr. Shujie Cui is the Company’s former Chief Science Officer and 100% owner of Pan Probe.
During the year ended June 30, 2022, the Company incurred R&D costs of $
Related Party Note
From
time-to-time the Company receives shareholder advances from LionsGate to cover operating costs. On March 29, 2020, the Company issued
a Promissory Note (the “Note”), and on June 30, 2020, amended the Note (the “Note Amendment”).
Pursuant to the Note and Note Amendment, the terms provided for total funding of up to $585,000, interest at the rate of 5% per annum
with the principal and interest due in-full on June 30, 2021. On January 27, 2021, the Company and LionsGate entered into a
Loan Agreement (the “Loan Agreement”) and Promissory note (the “Promissory Note”) pursuant to which
the Company may borrow up to $250,000 at an annual interest rate of 5% and default interest rate of 15%. The Loan Agreement supersedes
the Note and Note Amendment and included a beginning balance of $29,951 which was the balance of advances and accrued interest owing
under the Note as of January 27, 2021. The Promissory Note matured on December 31, 2021. During fiscal 2022 and 2021, LionsGate
provided advances under the Note, Note Amendment and Promissory Note totaling $ and $, respectively. During fiscal 2022 and 2021,
the Company repaid amounts owing under the Note, Note Amendment and Promissory Note totaling $
During
fiscal 2022 and 2021, the Company recognized $
NOTE 6 – Convertible Promissory Notes
On
April 18, 2020, the Company issued five separate unsecured convertible promissory notes in exchange for $
Firstfire Global Opportunities Fund LLC
Firstfire Note No. 1
On
June 18, 2021, the Company entered into a Securities Purchase Agreement with Firstfire Global Opportunities Fund LLC (“Firstfire”),
for the sale of a secured, 12% senior secured convertible promissory note in the principle amount of $
F-15
Additionally, the Company entered into a Registration Rights Agreement with Firstfire whereby the Company agreed to file within 90 days and have declared effective within 120 days from June 18, 2021, a registration statement to cover the shares issuable under the Firstfire Note No. 1 and Firstfire Warrant No. 1. Failure to file within 90 days and have the registration declared effective before 120 days will result in liquidated damages of 1% principal amount.
Due
to the Company not filing a registration statement to cover the shares underlying a Firstfire Note No. 1 conversion by the dates specified
in the Registration Rights Agreement, the Firstfire Note No. 1 fell into default resulting in the Firstfire Note No. 1 becoming immediately
due and
As
additional consideration, the Company granted Firstfire a warrant to purchase
During
the year ended June 30, 2022, Firstfire converted $
During
the year ended June 30, 2022, the Company recognized $
As
of June 30, 2022, the total amount due, including interest and penalties, under the Firstfire Note 1 is $
Firstfire Note No. 2
On
August 27, 2021, the Company entered into a Securities Purchase Agreement with Firstfire, for the sale of a secured, 12% senior
secured convertible promissory note in the principle amount of $
Additionally, the Company entered into a Registration Rights Agreement with Firstfire whereby the Company agreed to file within 90 days and have declared effective within 120 days from August 27, 2021, a registration statement to cover the shares issuable under the Firstfire Note No. 2 and Firstfire Warrant No. 2. Failure to file within 90 days and have the registration declared effective before 120 days will result in liquidated damages of 1% of the principal amount.
Due
to the Company not filing a registration statement to cover the shares underlying a Firstfire Note No. 2 conversion by the dates specified
in the Registration Rights Agreement, the Firstfire Note No. 2 fell into default resulting in the Firstfire Note No. 2 becoming immediately
due and
F-16
As
additional consideration, the Company granted Firstfire a warrant to purchase
During
the year ended June 30, 2022, Firstfire converted $
During
the year ended June 30, 2022, the Company recognized $
As
of June 30, 2022, the total amount due, including interest and penalties, under the Firstfire Note 2 is $
Geneva Promissory Note dated April 26, 2021
On
April 26, 2021, the Company and Geneva Roth Remark Holdings, Inc. (“Geneva”) entered into a Securities Purchase
Agreement (the “SPA”). Pursuant to the SPA, The Company sold to Geneva a Promissory Note for the principal amount
of $
During
the year ended June 30, 2022 and 2021, the Company made payments totaling $
Geneva Convertible Promissory Notes dated July 13, 2020, August 3, 2020 and September 8, 2020
On
July 13, 2020, August 3, 2020 and September 8, 2020 (the “Issue Dates”), the Company and Geneva entered
into separate and identical Securities Purchase Agreements (the “Geneva SPAs”). Pursuant to the Geneva SPAs, Geneva
and the Company entered into separate and identical Convertible Promissory Notes also dated as of July 13, 2020, August 3,
2020 and September 8, 2020 for principal amounts of $
On
December 21, 2020,
On
February 16, 2021, Empire Associates, Inc., an unaffiliated company, paid off the balance, in-full, on the note dated August 3,
2020. The payment totaled $
F-17
On
March 15, 2021, the Company issued shares of common stock to Geneva upon their conversion, in-full, of $
The
debt discount attributable to the legal fees paid and fair value of the beneficial conversion feature contained in the Geneva CPNs amounted
to $
The
Geneva CPNs were repaid in full in fiscal 2021. During the year ended June 30, 2021, the Company recognized $
NOTE 7 – Leases
On
September 14, 2021, in anticipation of increased business,
On July 13, 2022, the Company received a notice
to pay rent or surrender the premises located at 1130 Calle Cordillera, San Clemente, California due to non payment of rent for the months
of April 2022 – July 2022 and totaling $
As of June 30, 2022, the Company has not entered into any leases other than the lease described above which have not yet commenced and would entitle the Company to significant rights or create additional obligations.
F-18
NOTE 8 – Income Taxes
Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized.
There is no current or deferred tax expense for 2022 and 2021, due to the Company’s loss position. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes and has recorded a full valuation allowance against the deferred tax asset.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets at June 30, 2022 and 2021 are as follows:
| 2022 | 2021 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Statutory tax rate | % | % | ||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | $ | $ | ||||||
A reconciliation between the amount of income tax benefit determined by applying the applicable U.S. statutory income tax rate to pre-tax loss for the years ended June 30, 2022 and 2021 is as follows:
| 2022 | 2021 | |||||||
| Federal Statutory Rate | $ | $ | ||||||
| Nondeductible expenses | ( | ) | ( | ) | ||||
| Change in allowance on deferred tax assets | ||||||||
| Income tax benefit | $ | $ | ||||||
The
net increase in the valuation allowance for deferred tax assets was $
For
federal income tax purposes, the Company has net U.S. operating loss carry forwards at June 30, 2022 available to offset future
federal taxable income, if any, of approximately $
The fiscal years 2019 through 2021 remain open to examination by federal authorities and other jurisdictions in which the Company operates.
NOTE 9 – Commitments and Contingencies
On September 14, 2021, the Company leased 6,900 square feet of office and light industrial space located at 1130 Calle Cordillera, San Clemente, California. See “Note 6 - Leases” and “Note 10 – Subsequent Events” for additional information.
F-19
On
February 17, 2022, the Securities and Exchange Commission filed a lawsuit in the federal district court for the Southern
District of California, charging the Company, former CEO Charles Strongo, and four stock promoters with violations of
section 10(b) of the Securities Exchange Act of 1934 and section 17(a) of the Securities Act of 1933. The SEC’s
complaint seeks injunctive relief, disgorgement of funds allegedly received from illegal conduct plus pre-judgment interest, and the
civil penalties. On the same day, the US Attorney’s Office for the Southern District of California announced the unsealing of
an indictment charging Mr. Strongo and the promoters with conspiring to manipulate the market for the Company’s stock in an
alleged “pump-and-dump” scheme through allegedly false and misleading statements in press releases and SEC filings
concerning the Company’s emergency use authorization submissions to the Food and Drug Administration for COVID-19 tests. The matter is presently stayed pending the conclusion of the criminal case,
United States of America v. Brian Volmer et. al., United States District Court, Southern District Case No. 21-cr-1310-WQH, in which Mr.
Strongo is also named as a defendant. Mr.
Strongo adamantly denies the allegations and has entered a plea of not guilty to the charges. Total legal costs recognized through
fiscal 2022 were $
NOTE 10 – Subsequent Events
Management has reviewed material events subsequent of the period ended June 30, 2022 and prior to the filing of our consolidated financial statements in accordance with FASB ASC 855 “Subsequent Events”.
On
July 25, 2022, Firstfire converted $
On
Agust 3, 2022, Firstfire converted $
On
September 6, 2022, Firstfire converted $
On
July 13, 2022, the Company received a notice to pay rent or surrender the premises located at 1130 Calle Cordillera, San
Clemente, California due to non payment of rent for the months of April 2022 – July 2022 and totaling $
On
July 21, 2022,
On
July 27, 2022,
F-20
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2022, that our disclosure controls and procedures were effective such that the information required to be disclosed in our SEC filings is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Management’s Report on Internal Control over Financial Reporting
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with US GAAP. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of June 30, 2022, our management, including our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting using the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (comm. only referred to as COSO). Based on this assessment, our management concluded that our internal control over financial reporting was effective based on those criteria as of June 30, 2022.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
10
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of all of our directors and executive officers as of the date of this report. We have a Board comprised of two members. Each director holds office until a successor is duly elected or appointed. Executive officers serve at the discretion of the Board and are appointed by the Board. Also provided herein are brief descriptions of the business experience of each of the directors and officers during the past five years, and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities law.
| Name | Age | Current Position With Us | Director
or Officer Since | |||
| Rene Alvarez | 84 | Chairman, CEO, President, Treasurer, COO and Secretary | August 1, 2019 | |||
| Edgar B. Gonzalez | 58 | Executive Vice President and Director | July 27, 2022 |
Former Officers and Directors
Dr. Miriam Lisbeth Paez De La Cerda, Director from August 1, 2019 to her resignation on August 5, 2022.
Dr. Shuijie Cui, Chief Science Officer and Director from August 1, 2019 to his resignation on July 19, 2022.
Wolfgang Groeters, Director from August 1, 2019 to his resignation on July 19, 2022.
Dr. Scott Ford, Director from August 1, 2019 to his resignation on July 19, 2022.
Charles Strongo, Chairman, CEO from August 1, 2019 and Secretary from April 15, 2020 to his resignation on July 12, 2022.
Biographical Information
Set forth below are the names of all of our directors and executive officers, all positions and offices held by each person, the period during which each has served as such, and the principal occupations and employment of such persons during at least the last five years, and other director positions held currently or during the last five years:
Current Directors and Officers
Rene Alvarez. Mr. Alvarez currently serves as the Company’s COO/President as of May 8, 2020 and Director since August 1, 2019. Mr. Alvarez is a graduate of Canisius College (BS in Accounting) and earned a law degree at the State University of New York at Buffalo (LLB and JD degrees). He was admitted to the New York State Bar Association in 1969. Mr. Alvarez also spent two years in the U.S. Army where he attained the rank of Captain and earned the Bronze Star while serving in Viet Nam. After fulfilling his military service, he joined Ford Motor Company in 1969 where he held various key executive positions including Senior Vice President of a Ford subsidiary from which he retired in 1999. After retiring, Mr. Alvarez joined LA Fitness International, LLC as Corporate Vice President until he once again retired in June of 2011. Mr. Alvarez also served as Chairman of the Board of L. L. Knickerbocker Company, a major marketing and distribution source for celebrity products and currently serves on the Boards of Planet Electric, Inc., Whole Health Product, Inc., Las Vegas Cares, and Nevco Co. Mr. Alvarez resides in Newport Beach, California with his wife and two children.
11
Mr. Edgar B. Gonzalez. Mr. Gonzalez is the Executive Vice President of Sales, Operations, Marketing and sits on the Board Of Directors of the Company. Mr. Gonzalez has over 30+ years of experience in Business Finance and Corporate Management. Previously, Mr. Gonzalez founded and was President of California Investments which he owned and operated for 25 years and exceeded sales of over 700 million Dollars worldwide. Mr. Gonzalez has been a leader within the international community in contracts and financing, is considered a stakeholder with Federal Drug Administration having been a participant with them and has international contacts throughout the world, many of whom hold high positions within their governments and in their Ministry of Health Departments.
All of our directors are elected annually to serve for one year or until their successors are duly elected and qualified.
Family Relationships and Other Matters
There are no family relationships among or between any of our officers and directors.
Legal Proceedings
None of or directors or officers are involved in any legal proceedings as described in Regulation S-K (§229.401(f)).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Because we do not have a class of equity securities registered pursuant to section 12 of the Exchange Act we are not required to make the disclosures required by Item 405 of Regulation SK.
CODE OF ETHICS
We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, because of the small number of persons involved in the management of the Company.
CORPORATE GOVERNANCE
Director Independence
We are not listed on a major U.S. securities exchange and, therefore, are not subject to the corporate governance requirements of any such exchange, including those related to the independence of directors However, Our Board considers that a director is independent when the director is not an officer or employee of the Company, does not have any relationship which would, or could reasonably appear to, materially interfere with the independent judgment of such director, and the director otherwise meets the independence requirements under the listing standards of FINRA and the rules and regulations of the SEC. At this time, after considering all of the relevant facts and circumstances, our Board has determined that Wolfgang Groeters and qualify as an “independent” director. Upon our listing on any national securities exchange or any inter-dealer quotation system, we will elect such independent directors as is necessary under the rules of any such securities exchange.
Board Leadership Structure
We currently have one executive officer and two directors. Our Board has reviewed our current Board leadership structure — which consists of a Chief Executive Officer who is also the Treasurer, Secretary and Chairman of the Board — in light of the composition of the Board, our size, the nature of our business, the regulatory framework under which we operate, our stockholder base, our peer group and other relevant factors, and has determined that this structure is currently the most appropriate Board leadership structure for our company. Nevertheless, the Board intends to carefully evaluate from time to time whether our Executive Officer and Chairman positions should be separated based on what the Board believes is best for us and our stockholders.
12
Board Role in Risk Oversight
Risk is inherent in every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including strategic risks, enterprise risks, financial risks, and regulatory risks. While our management is responsible for day-to-day management of various risks we face, the Board, as a whole, is responsible for evaluating our exposure to risk and to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The Board reviews and discusses policies with respect to risk assessment and risk management. The Board also has oversight responsibility with respect to the integrity of our financial reporting process and systems of internal control regarding finance and accounting, as well as its financial statements.
Board of Directors Meetings, Committees of the Board of Directors, and Annual Meeting Attendance
During the fiscal year ended June 30, 2022, the Board held a total of one (1) meeting. Shareholders were invited to attend via Zoom. We did not, however, have a qualifying annual meeting of shareholders during the fiscal years ended June 30, 2022 and 2021.
We do not currently have any standing committees of the Board. The full Board is responsible for performing the functions of: (i) the Audit Committee, (ii) the Compensation Committee and (iii) the Nominating Committee.
13
ITEM 11. EXECUTIVE COMPENSATION
Our Board is responsible for establishing the compensation and benefits for our executive officers. The Board reviews the performance and total compensation package for our executive officers, and considers the modification of existing compensation and the adoption of new compensation plans. The board has not retained any compensation consultants.
Summary Compensation Table
The following table sets forth information concerning compensation earned for services rendered to us by our executive officers who were serving as executive officers during the fiscal years ended June 30, 2022 and 2021:
| Name and Principal Position | Year Ended June 30, |
Salary ($) |
Stock Awards |
Total ($) |
|||||||||||
| Charles Strongo (1) (2) Former CEO, President, CFO, Treasurer, Secretary and Chairman | 2022 | 75,000 | 150,500 | 225,500 | |||||||||||
| 2021 | 75,000 | 4,624,000 | 4,699,000 | ||||||||||||
| Richard Johnson (1) Former CFO, Treasurer and Director | 2021 | 20,000 | - | 20,000 | |||||||||||
| Rene Alvarez (3) CEO, President, CFO, Treasurer, COO, Secretary and Chairman | 2022 | 75,000 | 150,500 | 225,500 | |||||||||||
| 2021 | 79,800 | 144,000 | 223,800 | ||||||||||||
| Dr. Shuijie Cui (4) Former Chief Science Officer and Director | 2022 | - | 21,500 | 21,500 | |||||||||||
| 2021 | - | 144,000 | 144,000 | ||||||||||||
| (1) | On August 1, 2019, the Company appointed Charles Strongo to serve as the Company’s CEO, President and Chairman and Richard Johnson to serve as the Company’s CFO, Treasurer and Director. Richard Johnson served a CFO, Treasurer and Director through August 21, 2020. |
| (2) | During 2022, as compensation for his services on the Board, Mr. Strongo was granted 3,500,000 shares of restricted common stock valued at the close price of our common stock ($0.043 per share) valued at $150,500. During 2021, During 2021, Mr. Strongo was granted 1) 200,000 shares of restricted common stock on January 5, 2021 valued at the close price of our common stock ($0.72 per share) or $144,000; 2) 3,000,000 shares of restricted common stock pursuant to the Patent License Agreement dated January 12, 2021 valued at the close price of our common stock ($0.46 per share) or $1,380,000; and 3) 5,000,000 shares of restricted common stock pursuant to the IP License Agreement dated March 30, 2021 valued at the close price of our common stock ($0.62 per share) or $3,100,000. For additional information see “NOTE 4 – Stockholders’ Equity”, under Item 8 of this Annual Report. |
| (3) | During 2022, as compensation for his services on the Board, Mr. Alvarez was granted 3,500,000 shares of restricted common stock valued at the close price of our common stock ($0.043 per share) valued at $150,500. During 2021, as compensation for his services on the Board, Mr. Alvarez was granted 200,000 shares of restricted common stock valued at the close price of our common stock ($0.72 per share) or $144,000. |
| (4) | During 2022, as compensation for his services on the Board, Mr. Cui was granted 500,000 shares of restricted common stock valued at the close price of our common stock ($0.043 per share) valued at $21,500. During 2021, as compensation for his services on the Board, Mr. Cui was granted 200,000 shares of restricted common stock valued at the close price of our common stock ($0.72 per share) or $144,000. |
Employment Agreements
We currently have no employment agreements in place. The Board approved cash compensation to be paid to Mr. Strongo and Mr. Alvarez for fiscal 2021 in the amount of $75,000 and $79,800, respectively, and to compensate each of Messrs. Strongo and Alvarez $75,000 during fiscal 2022.
Outstanding Equity Awards as Fiscal Year-End
None.
Payments Upon Termination of Change in Control
There are no understandings or agreements known by management at this time which would result in a change in control.
14
COMPENSATION OF DIRECTORS
Our directors play a critical role in guiding our strategic direction and overseeing the management of our Company. Ongoing developments in corporate governance and financial reporting have resulted in an increased demand for such highly qualified and productive public company directors. The many responsibilities and risks and the substantial time commitment of being a director of a public company require that we provide adequate incentives for our directors’ continued performance by paying compensation commensurate with our directors’ workload. In establishing director compensation, the Board is guided by the following goals:
| ● | compensation should consist of cash and/or equity awards that are designed to fairly pay the directors for work required for a company of our size and scope; |
| ● | compensation should align the directors’ interests with the long-term interests of stockholders; and |
| ● | compensation should assist with attracting and retaining qualified directors. |
For their services as directors, on March 30, 2022, the Board granted 9,000,000 shares of restricted common stock to its directors. The stock was valued at the close price of our common stock ($0.043 per share) or $387,000 in total to the following individuals:
| Name | Fees
Earned or paid in cash ($) | Stock awards ($) | ||||||
| Charles Strongo | - | 150,500 | ||||||
| Rene Alvarez | - | 150,500 | ||||||
| Dr. Scott Ford | - | 21,500 | ||||||
| Dr. Shujie Cui | - | 21,500 | ||||||
| Wolfgang Groeters | - | 21,500 | ||||||
| Dr. Miriam Lisbeth De La Cerda | - | 21,500 | ||||||
For their services as directors, on January 5, 2021, the Board granted 200,000 shares of restricted common stock to each of the six (6) directors. The stock was valued at the close price of our common stock ($0.72 per share) or $144,000 per director and $864,000 in total.
Limitation on Directors’ Liabilities; Indemnification of Officers and Directors
Our Bylaws designate the relative duties and responsibilities of our officers and establish procedures for actions by directors and stockholders and other items. Our bylaws also contain indemnification provisions, which will permit us to indemnify our officers and directors to the maximum extent provided by Nevada law. For additional information, see Exhibit 3.2 to this Annual Report.
Directors’ and Officers’ Liability Insurance
We have not obtained directors’ and officers’ liability insurance.
15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of the date of this report by (i) all persons who are known by us to beneficially own more than 5% of our outstanding shares of common stock, (ii) each director, director nominee, and Named Executive Officer; and (iii) all executive officers and directors as a group:
| Name and Address of Beneficial Owner(1) | Number
of shares Beneficially Owned(2) | Percent
of Class Owned(2) | ||||||
| Directors and Officers | ||||||||
| Rene Alvarez | 10,451,274 | 8.0 | ||||||
| Wolfgang Groeters | 2,730,000 | 2.1 | ||||||
| Edgar B. Gonzalez | 350,000 | * | ||||||
| All Directors and Officers as a Group | 13,531,274 | 10.3 | ||||||
| 5% shareholders | ||||||||
| Rene Alvarez | 10,451,274 | 8.0 | ||||||
| Total Directors and Officers and 5% Shareholders | 13,531,274 | 10.3 | ||||||
| * | less than 1% |
| (1) | Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock and except as indicated the address of each beneficial owner is 1402 N El Camino Real, San Clemente, CA 92672. |
| (2) | Calculated pursuant to rule 13d-3(d) of the Exchange Act. Beneficial ownership is calculated based on 131,287,079 shares of common stock issued and outstanding as of September 22, 2022. Under Rule 13d-3(d) of the Exchange Act, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person listed. All the share amounts listed represent common stock held. No derivatives are owned by the parties listed in the table. |
16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We do not have a formal written policy for the review and approval of transactions with related parties; however, our Corporate Governance Principles require actual or potential conflict of interest to be reported to the Board. Our employees are expected to disclose personal interests that may conflict with ours and they may not engage in personal activities that conflict with their responsibilities and obligations to us. Periodically, we inquire as to whether or not any of our Directors have entered into any transactions, arrangements or relationships that constitute related party transactions. If any actual or potential conflict of interest is reported, our entire Board and outside legal counsel review the transaction and relationship disclosed and the Board makes a formal determination regarding each Director’s independence. If the transaction is deemed to present a conflict of interest, the Board will determine the appropriate action to be taken.
Transactions with Related Persons
The Board is responsible for review, approval, or ratification of “related-person transactions” involving Global WholeHealth Partners or its subsidiaries and related persons. Under SEC rules (Section 404 (a) of Regulation S-K), a related person is a director, officer, nominee for director, or 5% stockholder of our outstanding shares of common stock since the beginning of the previous fiscal year, and their immediate family members. Immediate family members include spouses, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant)
The Board has determined that, barring additional facts or circumstances, a related person does not have a direct or indirect material interest in the following categories of transactions:
| ● | any transaction with another company for which a related person’s only relationship is as an employee (other than an executive officer), director, or beneficial owner of less than 10% of that company’s shares, if the amount involved does not exceed the greater of $1 million or 2% of that company’s total annual revenue; |
| ● | compensation to executive officers determined by the Board; |
| ● | compensation to directors determined by the Board; |
| ● | transactions in which all security holders receive proportional benefits; and |
| ● | banking-related services involving a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar service. |
Review, Approval or Ratification of Transactions with Related Persons
The Board reviews transactions involving related persons who are not included in one of the above categories and makes a determination whether the related person has a material interest in a transaction and may approve, ratify, rescind, or take other action with respect to the transaction in its discretion. An interested related party who serves on the Board shall recuse their self from the review and approval of a related party transaction in which they have an interest in the transaction. In the event of a potential conflict of interest, the Board will generally evaluate the transaction in terms of the following standards: (i) the benefits to us; (ii) the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; (iii) the availability of other sources for comparable products or services; (iv) the terms and conditions of the transaction; and (v) the terms available to unrelated parties or the employees generally.
The following is a description of each transaction since the beginning of 2019, and each currently proposed transaction, in which:
| ● | we have been or are to be a participant; |
| ● | the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets for the last two completed fiscal years; and |
| ● | any of our directors, executive officers or holders of more than 5% of any class of our capital stock at the time of the transactions in issue, or any immediate family member of or person sharing the household with any of these individuals, had or will have a direct or indirect material interest. |
For additional information see “NOTE 5 – Transactions with Related Persons”, under Item 8 of this Annual Report.
Director Independence
Please refer to “Director Independence” under the section titled “CORPORATE GOVERNANCE” in “ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.”
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Independent Public Accountants
BFBorgers CPA PC currently serves as our independent registered public accounting firm to audit our financial statements for the fiscal year ended June 30, 2022 and 2021. To the knowledge of management, neither such firm nor any of its members has any direct or material indirect financial interest in us or any connection with us in any capacity otherwise than as independent accountants.
Our Board, in its discretion, may direct the appointment of different public accountants at any time during the year, if the Board believes that a change would be in the best interests of the stockholders. The Board has considered the audit fees, audit-related fees, tax fees and other fees paid to our auditors, as disclosed below, and has determined that the payment of such fees is compatible with maintaining the independence of the accountants.
Principle Accounting Fees and Services
Audit Fees
We have incurred fees totalling $57,300 and $43,200 for professional services related to the audit of our financial statements for the fiscal years ended June 30, 2022 and 2021, respectively.
Audit-Related Fees
None.
Tax Fees
The Company did not pay an outside accountant to prepare tax returns for the year ended June 30, 2022 and 2021.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as a part of this Form 10-K:
1. Financial Statements
The following financial statements are included in Part II, Item 8 of this Form 10-K:
| ● | Report of Independent Registered Public Accounting Firm; |
| ● | Balance Sheets as of June 30, 2022 and 2021; |
| ● | Statements of Operations for the years ended June 30, 2022 and 2021; |
| ● | Statements of Stockholders’ Deficit for the years ended June 30, 2022 and 2021; |
| ● | Statements of Cash Flows for the years ended June 30, 2022 and 2021; and |
| ● | Notes to Financial Statements |
2. Exhibits
The exhibits listed in the Exhibit Index, which appears immediately following the signature page, are incorporated herein by reference, and are filed as part of this Form 10-K.
3. Financial Statement Schedules
Financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the consolidated financial statements or notes described in Item 15(a)(1) above.
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SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Global WholeHealth Partners Corporation (Registrant) | ||
| October 13, 2022 | By: | /s/ Rene Alvarez |
| Rene Alvarez | ||
| Chief Executive Officer, Treasurer, Secretary and Chairman | ||
| (Principal Executive Officer and Principal Financial Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Rene Alvarez | Chief Executive Officer, Treasurer, | October 13, 2022 | ||
| Rene Alvarez | Secretary and Chairman | |||
| (Principal Executive Officer and | ||||
| Principal Financial Officer) | ||||
| /s/ Edgar B. Gonzalez | Executive Vice President and Director | October 13, 2022 | ||
| Edgar B. Gonzalez |
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Exhibit Index
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| * | Filed herewith. |
| § | Management contract or compensatory plan. |
| ** | Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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