10-Q 1 20190331prlxform10qinline.htm QUARTERLY REPORT Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2019

or

o   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to _________

Commission File Number 000-52534

 

PARALLAX HEALTH SCIENCES, INC.

(Exact name of registrant as specified in its charter)

 

 

Nevada

46-4733512

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

1327 Ocean Avenue, Suite B, Santa Monica, CA

90401

(Address of principal executive offices)

(Zip Code)

 

 

Registrant's telephone number, including area code:

(310) 899-4442

 

Copy of all Communications to:

Peter Hogan, Esq.

Buchalter

1000 Wilshire Blvd., Suite 1500

Los Angeles, CA 90017

(213) 891-0700

 

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 last 90 days.

Yes No

 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)

Yes No

 

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

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

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

Yes No

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

182,924,546 common shares issued and outstanding as of May 10, 2019


1


PART 1 – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

The Company’s unaudited interim consolidated financial statements for the three months ended March 31, 2019, form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

 

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2018, on Form 10-K, as filed with the Securities and Exchange Commission on April 1, 2019.


2


 

PARALLAX HEALTH SCIENCES, INC.

CONSOLIDATED BALANCE SHEETS

 

 

March 31, 2019

 

December 31, 2018

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

$

1,654

 

$

262

 

Accounts receivable, net

 

25,180

 

 

––

 

Total current assets

 

26,834

 

 

262

 

 

 

 

 

 

 

 

Intangible assets, net

 

548,880

 

 

579,035

 

Goodwill

 

785,060

 

 

785,060

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

1,360,774

 

$

1,364,357

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

$

2,774,710

 

$

2,655,138

 

Debentures, convertible

 

572,535

 

 

755,627

 

Debentures, convertible, related party

 

472,471

 

 

428,132

 

Notes payable

 

20,000

 

 

––

 

Notes payable, convertible

 

506,913

 

 

296,000

 

Notes payable, convertible, related party

 

20,000

 

 

––

 

Related party payables

 

1,259,858

 

 

1,004,720

 

Total current liabilities

 

5,626,487

 

 

5,139,617

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

License fees payable

 

433,000

 

 

430,000

 

Royalties payable

 

317,700

 

 

310,000

 

Debentures, convertible, net of unamortized discount

 

228,150

 

 

226,050

 

Notes payable, convertible

 

720,154

 

 

720,154

 

Notes payable, convertible, related party

 

491,100

 

 

491,100

 

Notes payable, bank

 

29,058

 

 

28,995

 

Total long-term liabilities

 

2,219,162

 

 

2,206,299

 

Total liabilities

 

7,845,649

 

 

7,345,916

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

Preferred stock, $.001 par, 10,000,000 shares authorized,

 

978

 

 

1,014

 

977,352 and 1,013,691 issued and outstanding

 

 

 

 

 

 

at March 31, 2019, and December 31, 2018, respectively

 

 

 

 

 

 

Common stock, $.001 par, 500,000,000 and 250,000,000 shares

 

170,259

 

 

158,113

 

authorized, 170,259,136 and 158,113,141 issued and outstanding

 

 

 

 

 

 

at March 31, 2019, and December 31, 2018, respectively

 

 

 

 

 

 

Additional paid in capital-preferred

 

1,315,689

 

 

1,415,653

 

Additional paid in capital-common

 

10,974,574

 

 

9,715,921

 

Accumulated deficit

 

(18,946,375

)

 

(17,272,260

)

Total stockholders' deficit

 

(6,484,875

)

 

(5,981,559

)

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

1,360,774

 

$

1,364,357

 

 

 

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


3


 

PARALLAX HEALTH SCIENCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

For the three months ended

 

 

March 31, 2019

 

March 31, 2018

 

 

 

 

 

 

 

 

Revenue

$

50,990

 

$

4,890

 

Cost of sales

 

5,111

 

 

5,538

 

Gross profit (loss)

 

45,879

 

 

(648

)

 

 

 

 

 

 

 

General and administrative expenses

 

1,456,288

 

 

1,951,161

 

 

 

 

 

 

 

 

Operating loss

 

(1,410,409

)

 

(1,951,809

)

 

 

 

 

 

 

 

Other income (expenses)

 

 

 

 

 

 

Loss on settlements

 

(33,272

)

 

––

 

Discount amortization

 

(130,420

)

 

(1,335,000

)

Interest expense

 

(100,014

)

 

(323,149

)

Total other income (expenses)

 

(263,706

)

 

(1,658,149

)

 

 

 

 

 

 

 

Net loss – continuing operations

 

(1,674,115

)

 

(3,609,958

)

 

 

 

 

 

 

 

Net loss – discontinued operations

 

––

 

 

(246,511

)

 

 

 

 

 

 

 

Net loss

$

(1,674,115

)

$

(3,856,469

)

 

 

 

 

 

 

 

Net income (loss) per common share - basic

 

 

 

 

 

 

Continuing operations

$

(0.010

)

$

(0.025

)

Discontinued operations

$

––

 

$

(0.002

)

 

 

 

 

 

 

Net income (loss) per common share - diluted

 

 

 

 

 

 

Continuing operations

$

(0.007

)

$

(0.017

)

Discontinued operations

$

––

 

$

(0.002

)

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

163,836,976

 

 

143,173,863

 

Weighted average common shares outstanding - diluted

 

233,000,282

 

 

202,447,083

 

 

 

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


4


 

PARALLAX HEALTH SCIENCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

For the three months ended

 

 

March 31, 2019

 

March 31, 2018

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

$

(1,674,115

)

$

(3,609,958

)

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

30,155

 

 

109,657

 

Stock compensation/stock option amortization

 

478,799

 

 

1,332,882

 

Discount amortization

 

130,420

 

 

1,335,000

 

Allowance for bad debt

 

––

 

 

236

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in trade and other receivables

 

(25,180

)

 

2,859

 

Increase in accounts payable and accrued expenses

 

54,135

 

 

384,124

 

Increase in royalties payable

 

2,700

 

 

––

 

Increase in related party payables

 

275,138

 

 

261,824

 

Net cash used by operating activities

 

(727,948

)

 

(183,376

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from convertible notes payable

 

229,340

 

 

225,000

 

Proceeds from issuance of common shares

 

500,000

 

 

41,000

 

Net cash provided by financing activities

 

729,340

 

 

266,000

 

 

 

 

 

 

 

 

Net cash provided by continuing operations

 

1,392

 

 

82,624

 

 

 

 

 

 

 

 

Cash flows from discontinued operations:

 

 

 

 

 

 

Net cash used by operating activities

 

––

 

 

(80,230

)

Net cash provided by financing activities

 

––

 

 

(3,636

)

Net cash used by discontinued operations

 

––

 

 

(83,866

)

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

1,392

 

 

(1,242

)

 

 

 

 

 

 

 

Cash - beginning of period

 

262

 

 

2,604

 

 

 

 

 

 

 

 

Cash - end of period

$

1,654

 

$

1,362

 

 

 

 

 

 

 

 

NON-CASH ACTIVITIES

 

 

 

 

 

 

Discounts on long-term liabilities

$

130,420

 

$

1,335,000

 

Conversion of short-term related party notes payable to long-term non-related party notes payable

$

––

 

$

185,000

 

Conversion of accounts payable to notes payable

$

40,000

 

$

––

 

Conversion of convertible notes payable to common stock

$

290,000

 

$

––

 

Conversion of related party convertible notes payable to non-related party convertible notes payable

$

––

 

$

576,154

 

Conversion of related party payables to non-related party payables

$

––

 

$

165,353

 

Subscriptions receivable

$

––

 

$

(592

)

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION

 

 

 

 

 

 

Interest paid

 

 

 

 

 

 

Continuing operations

$

2,000

 

$

798

 

Discontinued operations

$

––

 

$

106

 

Income taxes paid

$

––

 

$

––

 

 

 

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


5


PARALLAX HEALTH SCIENCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

 

NOTE 1. OVERVIEW AND NATURE OF BUSINESS

 

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2018. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements have been omitted.

 

Business Overview

 

The Company’s principal focus is on personalized patient care through remote healthcare services, behavioral health systems, and Point-of-Care diagnostic testing.  Parallax’s current family of companies that serve as the foundation for its cross-over business model of operations include:

 

Parallax Diagnostics, Inc. (“Parallax Diagnostics” or “PDI”) acquired a proprietary Point-of-Care diagnostic immunoassay testing platform and 25 test cartridges for the areas of infectious diseases, cardiac markers, drugs of abuse and various other medical conditions.  

 

Parallax Health Management, Inc. (“PHM”) develops RPM and telehealth market products and services, and commercializes them, including the Fotodigm® proprietary platform which allows for systems integration with a number of third-party services and solutions.  

 

Parallax Behavioral Health, Inc. (“PBH”) acquired the intellectual property known as REBOOT, the acronym for Reliable Evidence-Based Outcomes Optimization Technologies, as well as the Intrinsic Code technology, a software platform specifically designed to improve health treatment outcomes through cloud-based and mobile behavioral technology systems that enable its users and user groups to more effectively achieve goals within a prescribed timeline. 

 

Parallax Care is the Company’s technology-enabled digital healthcare system, structured with three separate divisions that can operate independently of one another, or integrate services to meet the various needs of the Company’s clientele: Optimized Outcomes, Connected Health and Smart Data.  Each of these divisions target a separate vertical market that are synergistic, compliment, and strengthen each other.

 

Optimized Outcomes

REBOOT / COMPASS

Behavioral modification

Connected Health

Fotodigm® platform

Remote patient monitoring, telehealth, and POC diagnostic testing

Smart Data

Intrinsic Code technology

Actionable insights to behavior modification

 

Operating Segments

 

The Company’s operations include the following operating segments for financial statement presentation: Remote Patient Monitoring (RPM), Behavioral Health Services (BHS), and Diagnostics/Corporate.

 

Remote Patient Monitoring  

 

The Company provides a distinctive technology platform that provides for the complete remote patient care delivery system: the patent-pending Fotodigm® platform, which utilizes proprietary software and technology to bridge clinical behavioral science with technology and logistics for payers, providers and clinical professionals across a variety of wellness and clinical devices, including both fitness and clinical applications. Fotodigm® is a secure and scalable platform for collecting, transmitting and analyzing biometric, pharmaceutical, and health data to healthcare providers, primarily hospitals, accredited nursing operations, and physicians.

 

The RPM segment generates revenues through fees charged for the license and utilization of its proprietary system that provides software integrations of the Fotodigm® platform.  Additionally, the RPM segment will generate incremental revenues through the delivery of acute, post-acute and chronic health patient management software systems that enable Parallax customers to bill for and collect payments from patients and third-party payers for telemonitoring and remote services that they deliver.

 

Behavioral Health Services 

 

The BHS segment commenced with the acquisition of the REBOOT and Intrinsic Code technologies in April 2017. The BHS segment will generate revenues primarily through licensing and subscription of software and systems. As of March 31, 2019, the BHS segment had not yet begun full operations, generating limited test market sales.

 

Diagnostics/Corporate  

 

The Diagnostics/Corporate Segment supports the costs and operating expenses related to the continued development and exploitation of the Company’s proprietary Target System POS diagnostic platform and processes.  In addition, the Diagnostics/Corporate Segment provides management and administrative services to support the Company and consists of certain aspects of the Company’s executive management, corporate relations, legal, compliance, human resources, corporate information technology and finance departments.

 

Going Concern

The Company has incurred losses since inception resulting in an accumulated deficit of $18,946,375, and a working capital deficit of $5,599,653, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms.  There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company will require additional financing in order to proceed with its plan of operations, including approximately $3,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities. There is no assurance that the financing will be completed as planned or at all. If the Company is unable to secure adequate capital to continue the Company’s planned operations, the Company’s shareholders may lose some or all of their investment and the Company’s business may fail.

 

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”).  The preparation of financial statements in conformity with 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 that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

The unaudited interim consolidated financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The unaudited interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.

 

NOTE: The following notes and any further reference made to “the Company”, "we", "us", "our" and "Parallax" shall mean Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc., and Parallax Behavioral Health, Inc. unless otherwise indicated.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements.  These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

 

The Company’s fiscal year-end is December 31.

 

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

 

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. When the Company loses control of a subsidiary, a gain or loss is recognized and is calculated as the difference between:

 

the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; 

and

the carrying amount of the net assets (liabilities) of the subsidiary and any noncontrolling interest. 

 

Upon deconsolidation of a subsidiary, any loans to the former subsidiary made by the Company are measured at fair value at the deconsolidation date.  Any difference between the carrying amount of the loan to the subsidiary and its fair value is included as part of the gain or loss calculation upon deconsolidation.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

 

Fair Value Hierarchy

The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:

 

Level 1:Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. 

 

Level 2:Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. 

 

Level 3:Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk. 

 

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of nine months or less at the time of issuance to be cash equivalents. As of March 31, 2019, and December 31, 2018, the Company had no cash equivalents.

 

Fair Value of Financial Instruments

As of March 31, 2019, and December 31, 2018, respectively, the carrying values of Company’s Level 1 financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and short-term debt approximate fair value. The fair value of Level 3 instruments is calculated as the net present value of expected cash flows based on externally provided or obtained inputs. Certain Level 3 instruments may also be based on sales prices of similar assets. The Company’s fair value calculations take into consideration the credit risk of both the Company and its counterparties as of the date of valuation. See Note 6 for additional information about long-term debt.

 

There were no outstanding derivative financial instruments held by the Company as of March 31, 2019, and December 31, 2018.

 

Accounts Receivable

Accounts receivable are stated net of an allowance for doubtful accounts. The accounts receivable balance primarily includes amounts due from customers.  Charges to bad debt are based on both historical write-offs and specifically identified receivables.

 

The activity in the allowance for doubtful accounts receivable for the three months ended March 31, 2019, and the year ended December 31, 2018, respectively, is as follows:

 

March 31, 2019

 

December 31, 2018

 

Beginning balance

$

––

 

$

4,000

 

Additions charged to bad debt expense

 

––

 

 

236

 

Write off of allowance for doubtful collections

 

––

 

 

(4,236

)

 

 

 

 

 

 

 

Ending balance

$

––

 

$

––

 

 

During the three months ended March 31, 2019, and the year ended December 31, 2018, the allowance for doubtful collections increased by $0 and $236, respectively.  

 

As of March 31, 2019, and December 31, 2018, no allowance for doubtful collections remained.

 

Intangible Assets

Product processes, patents and customer lists are amortized on a straight-line basis over their estimated useful lives between 4 and 20 years. Costs to extend and maintain patents and trademarks are charged directly to expense as incurred. See Note 4 for additional information about intangible assets.

 

Goodwill and Other Indefinitely-Lived Assets

Goodwill and other indefinitely-lived assets are not amortized, but are subject to impairment reviews annually, or more frequently if necessary.

 

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable.  When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount.  Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.

 

The Company believes that future projected cash flows are sufficient for the recoverability of its long-lived assets, and no impairment exists.  There can be no assurance, however, that market conditions will not change or demand for the Company’s products and products under development will continue.  Either of these could result in future impairment losses.

 

Convertible Debt

The Company recognizes the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert debt into common stock at a price per share that is less than the trading price to the public on the date of the debt. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of the debt, and is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the interest method.

 

Net Income (Loss) Per Common Share

Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible debt, convertible preferred shares and the exercise of the Company’s stock options and warrants.

 

Comprehensive Loss

As of March 31, 2019, and December 31, 2018, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

 

Revenue Recognition

Revenue is recognized when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured.

 

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

 

The Company may have net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established.

 

As of March 31, 2019, the Company has not yet filed its 2012 through 2017 annual corporate income tax returns.  Due to the Company’s recurring losses, it is anticipated that no corporate income taxes are due for these periods.

 

Stock-Based Compensation

The Company records stock-based compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

 

Recently Adopted Accounting Standards 

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has recently adopted the following new accounting standards:

 

Adopted:

 

In June 2018, the FASB issued ASU No 2018-07 (“ASU 2018-07”), Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting.  ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 will be effective for the Company for annual periods beginning after December 15, 2018, and interim periods.  Early adoption is permitted.

 

Not yet adopted:

 

In August 2018, the FASB issued ASU No. 2018-13 (“ASU 2018-13”), Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.  ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. ASU 2018-13 will be effective for the Company for annual periods beginning after December 15, 2019, and interim periods.  Early adoption is permitted.  The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.

 

In August 2018, the FASB issued ASU No. 2018-15 (“ASU 2018-15”), Intangibles-Goodwill and Other Internal-Use Software (Subtopic 350-40).  ASU 2018-15 was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license.  ASU 2018-15 will be effective for the Company for annual periods beginning after December 15, 2019, and interim periods.  Early adoption is permitted.  The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.

 

Recently Issued Accounting Standards Updates: 

There were other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

 

NOTE 3. ACCOUNTS RECEIVABLE, NET

 

Accounts receivable, net, consists of the following:

March 31, 2019

 

December 31, 2018

 

Customer receivables

$

25,180

 

$

––

 

Less: allowance for doubtful accounts

 

––

 

 

––

 

 

 

 

 

 

 

 

Accounts receivable, net

$

25,180

 

$

––

 

 

As of March 31, 2019, and December 31, 2018, respectively, the Company was owed $25,180 and $0 in accounts receivable due from customers.

 

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, the allowance for doubtful collections increased by $0 and $236, respectively.  As of March 31, 2019, and December 31, 2018, no allowance for doubtful collection remained.

 

NOTE 4. INTANGIBLE ASSETS

 

The following are the components of finite-lived intangible assets:

March 31, 2019

 

December 31, 2018

 

Products and processes

$

12,500

 

$

12,500

 

Trademarks and patents / technology

 

150,700

 

 

150,700

 

Customer lists / relationships

 

30,000

 

 

30,000

 

Non-compete agreement

 

30,000

 

 

30,000

 

Marketing related

 

64,000

 

 

64,000

 

Software

 

510,300

 

 

510,300

 

Sub-total

 

797,500

 

 

797,500

 

Accumulated amortization

 

(248,620

)

 

(218,465

)

Intangible assets, net

$

548,880

 

$

579,035

 

 

Amortization expense from continuing operations for the three months ended March 31, 2019 and 2018, was $30,155 and $120,620, respectively.


6


 

NOTE 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses consist of:

March 31, 2019

December 31, 2018

Accounts payable-vendors

$

858,218

 

$

830,590

 

Credit cards payable

 

42,552

 

 

42,552

 

Payroll taxes payable

 

79,362

 

 

78,608

 

Accrued interest

 

547,383

 

 

450,187

 

Accrued payroll and payroll taxes

 

482,047

 

 

402,053

 

Other liabilities

 

605,148

 

 

601,148

 

 

 

2,614,710

 

 

2,405,138

 

Reserve-legal fees

 

160,000

 

 

250,000

 

 

 

 

 

 

 

 

Total accounts payable and accrued expenses

$

2,774,710

 

$

2,655,138

 

 

Payroll taxes payable includes $17,476 and $17,476 in penalties, and $4,957 and $4,202 in interest, related to unpaid payroll taxes as of March 31, 2019, and December 31, 2018, respectively.

 

Other liabilities consists of certain payroll tax liabilities in the amount of $501,148 and $601,148 owed as of March 31, 2019, and December 31, 2018, respectively, by the bankrupt entity, RoxSan Pharmacy, Inc., that were not discharged under California bankruptcy laws.  The Company has retained a tax resolution specialist to aid the Company in resolving the liability with the taxing agencies on behalf of RoxSan. In addition, other liabilities includes $104,000 and $0 in costs related to certain legal settlements as of March 31, 2019, and December 31, 2018, respectively.  

 

During the year ended December 31, 2018, accounts payable and accrued expenses was reduced by $341,606, resulting from the extinguishment of debt consisting of accounts payable-vendors in the amount of $284,714 and accrued interest in the amount of $56,892.

 

In 2018, the Company established a reserve for future legal fees to be incurred in connection with pending legal actions (Note 16).  During the three months and the year ended March 31, 2019 and December 31, 2018, respectively, the reserve for legal fees was reduced by $90,000 and $0 for expenses incurred during the period.  As of March 31, 2019, and December 31, 2018, respectively, the reserve balance is $160,000 and $250,000.

 

NOTE 6. NOTES AND LOANS PAYABLE

 

Notes and loans payable consists of the following:

March 31, 2019

December 31, 2018

Short-term:

 

 

 

 

 

 

Debentures, convertible

$

572,535

 

$

755,627

 

Notes payable

 

20,000

 

 

––

 

Notes payable, convertible , net of unamortized discount

506,913

 

296,000

 

Total short-term

 

1,099,448

 

 

1,051,627

 

 

 

 

 

 

 

 

Long-term:

 

 

 

 

 

 

Debentures, convertible, net of unamortized discount

 

228,150

 

 

226,050

 

Note payable, convertible

 

720,154

 

 

720,154

 

Note payable-bank

 

29,058

 

 

28,995

 

Total long-term

 

977,362

 

 

975,199

 

 

 

 

 

 

 

 

Total notes and loans payable

$

2,076,810

 

$

2,026,826

 

 

Non-related party convertible debt consist of the following:

 

Holder

 

Principal

 

APR

 

Accrued

Interest

 

Conversion

Price

 

Term/Due

 

 

 

 

 

 

 

 

 

 

Convertible promissory notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

Lender Group A

 

$

120,000

 

12% to 20%

 

$

203,460

 

$0.10

 

05/2018

 

Lender Group B

 

 

230,913

 

12%

 

 

––

 

$0.10 to $0.12

 

09/2019 to 11/2019

 

Investor Group A

 

 

156,000

 

10%

 

 

23,527

 

$0.10

 

09/2018

 

 

 

 

506,913

 

 

 

 

226,987

 

 

 

 

 

Long-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

The Kasper Group, Ltd.

 

 

144,000

 

7%

 

 

73,073

 

$0.10

 

10/2019

 

Joseph M. Redmond

 

 

576,154

 

5%

 

 

126,653

 

$0.10

 

07/2017

 

 

 

 

720,154

 

 

 

 

199,726

 

 

 

 

 

 

 

 

1,227,067

 

 

 

 

426,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible debentures:

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term

 

 

572,535

 

10%

 

 

22,131

 

$0.12

 

02/2019

 

Long-term

 

 

250,000

 

10%

 

 

––

 

$0.12

 

11/2021

 

Unamortized discount

 

 

(21,850

)

10%

 

 

––

 

 

 

 

 

 

 

 

800,685

 

 

 

 

22,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total convertible debt

 

$

2,027,752

 

 

 

$

448,844

 

 

 

 

 

 

As of March 31, 2019, and December 31, 2018, respectively, short-term non-related party debt in the amount of $1,099,448 and $1,051,627 consists of $572,155 and $755,627 in convertible debentures; $20,000 and $0 in notes payable; and $506,913 and $296,000 in convertible notes payable.  During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, principal in the amount of $0 and $50,000 was repaid in cash; principal in the amount of $20,000 and $620,000, along with interest in the amount of $2,000 and $55,613, was converted to common stock; and interest in the amount of $65,377 and $370,650 was expensed.  As of March 31, 2019, and December 31, 2018, respectively, a total of $249,118 and $185,741 in accrued interest remains, and is included as an accrued expense on the accompanying consolidated balance sheet.

 

As of March 31, 2019, and December 31, 2018, respectively, long-term non-related party debt in the amount of $977,362 and $975,199 consists of $250,000 and $250,000 in convertible debentures, less unamortized discount of $21,850 and $23,950; $720,154 and $720,154 in convertible notes payable; and $29,058 and $28,995 in notes payable to banks.  During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, $2,100 and $1,050 in discount amortization, and $10,139 and $40,956 in interest was expensed.  As of March 31, 2019, and December 31, 2018, respectively, a total of $200,462 and $40,956 in accrued interest remains, and is included as an accrued expense on the accompanying consolidated balance sheet.

 

The future maturities of notes payable are summarized as follows:

 

Year

 

2019

 

2020

 

2021

 

Total

 

 

 

 

 

 

Principal

 

$720,154

 

$29,058

 

$250,000

 

$999,212

 

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, interest on non-related party notes and loans payable in the amount of $75,516 and $40,956 has been expensed.  As of March 31, 2019, and December 31, 2018, respectively, a total of $449,580 and $376,127 in interest has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.

 

NOTE 7. RELATED PARTY TRANSACTIONS

 

Related party transactions consist of the following:

 

March 31, 2019

 

December 31, 2018

 

Related party payables:

 

 

 

 

 

 

Accrued compensation

$

950,325

 

$

869,859

 

Cash advances

 

309,533

 

 

134,861

 

Total related party payables

 

1,259,858

 

 

1,004,720

 

 

 

 

 

 

 

 

Debentures, convertible

 

472,470

 

 

428,132

 

 

 

 

 

 

 

 

Notes payable, convertible, related party

 

511,100

 

 

491,100

 

 

 

 

 

 

 

 

Total related party transactions

$

2,243,428

 

$

1,923,952

 

 

Related party convertible debt consist of the following:

Note Holder

 

Principal

 

APR

 

Accrued Interest

 

Conversion

Price

 

Term/Due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible promissory notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

Huntington Chase, Beneficial Owner

 

$

491,100

 

7%

 

$

82,537

 

$0.10

 

12/2023

 

John Ogden, Director

 

 

20,000

 

10%

 

 

––

 

$0.10

 

12/2019

 

 

 

$

511,100

 

 

 

$

82,537

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible debentures:

 

 

 

 

 

 

 

 

 

 

 

 

 

AvantGarde, LLC, Beneficial Owner

 

 

393,989

 

12%

 

 

12,729

 

$0.10

 

02/2019

 

Hamburg Investment Co., Beneficial Owner

 

 

78,482

 

12%

 

 

2,536

 

$0.10

 

02/2019

 

 

 

 

472,470

 

 

 

 

15,265

 

 

 

 

 

Total convertible debt-related parties

 

$

983,570

 

 

 

$

97,802

 

 

 

 

 

 

As of March 31, 2019, and December 31, 2018, respectively, related parties are due a total of $2,243,428 and $1,923,952, consisting of $950,325 and $869,859 in accrued compensation owed to officers; $309,533 and $134,861 in accrued benefits and cash advances from officers and beneficial owners to the Company for operating expenses; $472,470 and $428,132 in convertible debentures; and $511,100 and $491,100 in convertible promissory notes.

 

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, interest on related party notes payable in the amount of $23,742 and $123,133 was expensed, of which $0 and $798 was paid to the note holders in cash; and $0 and $128,132 was converted to principal. As of March 31, 2019, and December 31, 2018, respectively, a total of $97,802 and $74,060 in accrued interest remains and is included as part of accrued expenses on the accompanying consolidated balance sheets.

 

 

NOTE 8. COMMITMENTS AND CONTINGENCIES

 

On August 13, 2015, the Company issued a secured promissory note in the amount of $20,500,000 (the “Promissory Note”) in connection with the acquisition of RoxSan Pharmacy, Inc. (“RoxSan”). The Promissory Note bore interest at a rate of 6% per annum, and matured August 13, 2018 ("Maturity").  As part of the deconsolidation of RoxSan resulting from its Chapter 7 petition filed on May 14, 2018 (Note 16), management reevaluated the characteristics of the Promissory Note.  Included in the evaluation were the following considerations: 1) the related asset is no longer a part of the parent financial statements due to a loss of financial control; 2) the Company is currently in litigation as a result of material breaches by the note holder;  3) the Company has claims against the note holder for losses and damages directly related to the Promissory Note and its underlying assets; 4) there is a high likelihood that no obligation exists.  After careful consideration, management has determined that the current characteristics of the liability are contingent in nature, and the debt $20,500,000 and related $2,278,281 in accrued interest was extinguished in 2018, resulting in a gain of $22,778,281.

 

On August 31, 2016, as part of the Company’s acquisition of 100% of the issued and outstanding shares of Qolpom®’s common stock and its assets, inventory and intellectual property, the agreement provides for, among other things, the seller to receive up to $2,000,000 through a percentage of revenue generated from RPM business segment (“Revenue Share”), as well as a royalty of 3% (“Royalties”) of certain revenues generated from the Qolpom® intellectual property, as defined in the agreement.  As of March 31, 2019, and December 31, 2018, respectively, the present value of future Revenue Share was $433,000 and $430,000; and the present value of future Royalties was $315,000 and $310,000.

 

On April 26, 2017, as part of the Company’s acquisition of certain intellectual property (“Intellectual Property”) from ProEventa, Inc (“ProEventa”), the agreement provides for, among other things, ProEventa to receive a revenue sharing cash earn-out of up to $3,000,000 to be derived from certain net revenue generated by the Company; as well as Royalties of 3% of certain revenues generated from the Intellectual Property, ending at such time as the Company has paid ProEventa $25,000,000, as defined in the agreement. As of March 31, 2019, and December 31, 2018, respectively, the present value of future Revenue Share was $1,042,000 and $1,040,000; the present value of future Royalties was $693,000 and $690,000, and $2,700 and $0 in Royalties payable on earned revenues was accrued.

 

NOTE 9. CONVERTIBLE PREFERRED STOCK

 

The total number of authorized shares of preferred stock that may be issued by the Company is 10,000,000 with a par value of $0.001 per share.

 

On March 31, 2019, in connection with the settlement agreement with Mr. Dave Engert (Note 16), 36,339 shares of the Company’s Series A preferred stock held by Mr. Engert , with a book value of $100,000, were canceled and returned to treasury.  As a result, preferred paid in capital was reduced by $99,964.

 

As of March 31, 2019, and December 31, 2018, respectively, the Company had 977,352 and 1,013,691 shares of preferred stock issued and outstanding.

 

NOTE 10. COMMON STOCK

 

On January 28, 2019, pursuant to a majority shareholder consent, the Company increased its authorized common stock from 250,000,000 shares to 500,000,000 shares, with a par value of $0.001 per share.  

 

During the three months ended March 31, 2019, 3,689,328 shares of the Company’s common stock were issued in connection with the conversion of non-related party debt in the amount of $292,000.  As a result, $288,311 was recorded to paid in capital.

 

During the three months ended March 31, 2019, 2,716,667 shares of the Company’s common stock were issued in connection with stock awards to non-related parties, valued at $325,000. As  a result, $322,283 was recorded to paid in capital.

 

During the three months ended March 31, 2019, 5,000,000 shares of the Company’s common stock were issued in connection with a Simple Agreement Future Equity (“SAFE”) offering for cash in the amount of $500,000.  As a result, $495,000 was recorded to paid in capital.

 

During the three months ended March 31, 2019, 740,000 shares of the Company’s common stock were issued in connection with debt and debt service in the amount of $74,000.  As a result, $73,260 was recorded to paid in capital.  

 

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, a total of 12,145,995 and 21,358,611 shares of the Company’s common stock were issued.  A total of $74,000 and $434,000 in deferred stock compensation was recorded, and $124,357 and $1,095,193 was expensed. As of December 31, 2018 and 2017, respectively, there remains $1,098,452 and $1,148,809 in deferred stock compensation to be expensed over the next nineteen (19) months.

 

As of March 31, 2019 and December 31, 2018, respectively, the Company had 170,259,136 and 158,113,141 common shares issued and outstanding.

 

NOTE 11. WARRANTS AND OPTIONS

 

As of March 31, 2019, and December 31, 2018, respectively, the Company had 20,968,750 and 19,668,750 warrants, and 19,060,000 and 18,060,000 options, issued and outstanding.

 

During the three months and the year ended March 31, 2019 and December 31, 2018, respectively, 1,600,000 and 12,513,750 warrants were granted, and 300,000 and 100,000 expired.  The warrants carry an exercise price of between $0.001 to $0.600 per share, and expire between 2019 to 2023.

 

Warrants Outstanding

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Remaining

 

Exercise Price

 

Weighted

 

 

 

Common

 

Contractual Life

 

Times Number

 

Average

 

Exercise Price

 

Shares

 

(in years)

 

Of Shares

 

Exercise Price

 

 

 

 

 

 

 

$0.001

 

300,000

 

4.25

 

$

300

 

$0.17

 

$0.01

 

75,000

 

1.75

 

 

750

 

$0.19

 

$0.10

 

62,500

 

4.00

 

 

6,250

 

$0.27

 

$0.10

 

3,000,000

 

2.25

 

 

300,000

 

$0.19

 

$0.10

 

4,688,750

 

2.00

 

 

468,875

 

$0.21

 

$0.10

 

250,000

 

1.50

 

 

25,000

 

$0.29

 

$0.15

 

300,000

 

5.00

 

 

45,000

 

$0.17

 

$0.15

 

600,000

 

4.75

 

 

90,000

 

$0.19

 

$0.15

 

1,000,000

 

1.75

 

 

150,000

 

$0.26

 

$0.17

 

62,500

 

4.00

 

 

10,625

 

$0.27

 

$0.18

 

62,500

 

4.00

 

 

11,250

 

$0.27

 

$0.20

 

1,300,000

 

5.00

 

 

260,000

 

$0.18

 

$0.21

 

62,500

 

4.00

 

 

13,125

 

$0.27

 

$0.21

 

100,000

 

1.50

 

 

21,000

 

$0.31

 

$0.25

 

3,375,000

 

2.50

 

 

843,750

 

$0.18

 

$0.25

 

475,000

 

1.75

 

 

118,750

 

$0.25

 

$0.25

 

3,255,000

 

1.50

 

 

813,750

 

$0.29

 

$0.25

 

1,500,000

 

1.25

 

 

375,000

 

$0.34

 

$0.35

 

250,000

 

1.50

 

 

87,500

 

$0.29

 

$0.60

 

250,000

 

1.50

 

 

150,000

 

$0.31

 

 

 

20,968,750

 

 

 

 

3,790,925

 

$0.18

 

 

Warrant Activity

 

 

 

Weighted

 

 

Number of

 

Average

 

Shares

 

Exercise Price

 

Outstanding at December 31, 2018

 

19,668,750

 

$0.18

 

Issued

 

1,600,000

 

$0.18

 

Exercised

 

––

 

––

 

Expired / Forfeited

 

(300,000

)

$0.18

 

Outstanding at March 31, 2019

 

20,968,750

 

$0.18

 

 

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, 1,000,000 and 6,000,000 stock options were granted, which vest periodically over a two (2) year period, are exercisable for a period of between 3 to 5 years at an exercise price of between $0.05 to $0.50 per share, and were valued at $96,100 and $833,700 using the Black-Scholes method. The assumptions used in valuing the options were: expected term between 3.00 to 3.75 years; expected volatility between 1.82 to 2.29; risk free interest rate of between 2.25% to 2.78%; and a dividend yield of 0%.

 

Options Outstanding

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Remaining

 

Exercise Price

 

Weighted

 

 

 

Common

 

Contractual Life

 

Times Number

 

Average

 

Exercise Price

 

Shares

 

(in years)

 

Of Shares

 

Exercise Price

 

 

 

 

 

 

 

$0.05

 

90,000

 

3.25

 

$

4,500

 

$0.14

 

$0.05

 

1,140,000

 

3.00

 

 

57,000

 

$0.09

 

$0.05

 

100,000

 

2.50

 

 

5,000

 

$0.08

 

$0.05

 

60,000

 

1.75

 

 

3,000

 

$0.06

 

$0.05

 

170,000

 

1.50

 

 

8,500

 

$0.12

 

$0.10

 

500,000

 

1.50

 

 

50,000

 

$0.14

 

$0.10

 

250,000

 

0.50

 

 

25,000

 

$0.06

 

$0.15

 

1,000,000

 

1.50

 

 

150,000

 

$0.14

 

$0.25

 

1,000,000

 

4.75

 

 

250,000

 

$0.23

 

$0.25

 

5,000,000

 

4.00

 

 

1,250,000

 

$0.16

 

$0.25

 

7,000,000

 

3.25

 

 

1,750,000

 

$0.16

 

$0.25

 

1,000,000

 

1.50

 

 

250,000

 

$0.15

 

$0.25

 

1,000,000

 

1.00

 

 

250,000

 

$0.10

 

$0.25

 

250,000

 

0.50

 

 

62,500

 

$0.06

 

$0.35

 

250,000

 

0.50

 

 

87,500

 

$0.07

 

$0.60

 

250,000

 

0.50

 

 

150,000

 

$0.08

 

 

 

19,060,000

 

 

 

$

4,353,000

 

$0.23

 

 

Options Activity

 

 

 

Weighted

 

 

Number of

 

Average

 

Shares

 

Exercise Price

 

Outstanding at December 31, 2018

 

18,060,000

 

$0.23

 

Issued

 

1,000,000

 

$0.23

 

Exercised

 

––

 

––

 

Expired / Forfeited

 

––

 

––

 

Outstanding at March 31, 2019

 

19,060,000

 

$0.23

 

 

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, 1,000,000 and 6,000,000 options were issued, 0 and 1,973,189 options were exercised, 0 and 1,000,000 options expired, and 0 and 5,641,811 options were forfeited. A total of $96,100 and $649,327 in deferred stock option compensation was recorded, net of forfeitures, and $29,442 and $572,870 was expensed during the three months and the year ended March 31, 2019, and December 31, 2018, respectively.  There remains $1,462,124 and $1,395,466 in deferred compensation as of March 31, 2019, and December 31, 2018, respectively, to be expensed over the next 21 months.

 

NOTE 12. LEASES

 

The Company sub-leases office space for its headquarters in Santa Monica, California, for $5,600 per month, on a month-to-month basis.

 

Rent expense for the three months ended March 31, 2019 and 2018, was $17,360 and $19,397, respectively.


7


 

NOTE 13. INCOME TAXES

 

A reconciliation of the expected statutory federal and state taxes and the total income tax expense (benefit) at March 31, 2019, and December 31, 2018, was as follows:

 

March 31 2019

 

December 31, 2018

 

 

 

 

 

 

 

 

Income (loss) before taxes

$

(1,674,115

)

$

17,113,718

 

Statutory rate (Fed & State(s))

 

30%

 

 

30%

 

 

 

 

 

 

 

 

Computed expected tax payable (recovery)

 

(422,200

)

 

5,230,900

 

 

 

 

 

 

 

 

Effect of release of net operating loss carryforwards

 

(927,100

)

 

(2,738,100

)

 

 

 

 

 

 

 

Tax effect of non-deductible expenses:

 

 

 

 

 

 

Gain on extinguishment of debt-principal

 

––

 

 

(6,230,700

)

Stock compensation/amortization of stock options

 

142,900

 

 

1,026,600

 

Discount amortization

 

38,900

 

 

837,300

 

Other

 

800

 

 

1,500

 

Total tax effect of non-deductible expenses

 

182,600

 

 

(4,365,300

)

 

 

 

 

 

 

 

Change in valuation allowance

 

1,166,700

 

 

(1,872,500

)

 

 

 

 

 

 

 

Income tax expense

$

––

 

$

––

 

 

 

 

 

 

 

 

Reported income taxes:

 

 

 

 

 

 

Federal

$

––

 

$

––

 

State

 

––

 

 

––

 

Total

$

––

 

$

––

 

 

The significant components of deferred income tax assets and liabilities at March 31, 2019, and December 31, 2018, are as follows:

 

March 31, 2019

 

December 31, 2018

 

 

 

 

 

 

 

 

Net operating loss carried forward

$

1,137,500

 

$

––

 

Bad debt allowance

 

––

 

 

––

 

Officers’ accrued compensation

 

265,900

 

 

243,400

 

Accrued related party interest

 

27,400

 

 

20,700

 

Valuation allowance

 

(1,430,800

)

 

(264,100

)

 

 

 

 

 

 

 

Net deferred income tax asset

$

––

 

$

––

 

 

During the year ended December 31, 2018, the company realized extinguishment of debt principal in the amount of $20,880,688.  Per Internal Revenue Code (“IRC”) Section 108(a) (1) (A) the extinguishment of debt principal is excluded from taxable income for the Company.  However, any available tax attributes must be released up and to the amount of the extinguishment. Therefore, net operating loss carryforwards were released for the amount of income excluded from taxable income.  The remaining net operating losses available to use toward future taxable income are as follows:  

 

Tax Year

 

Net Operating Loss

 

Expires

 

 

 

2016

 

 

442,900

 

2036

2017

 

 

2,115,400

 

2037

2018

 

 

548,900

 

No Expiration

2019 to date

 

 

957,900

 

No Expiration

 

 

 

 

 

 

Total

 

$

4,065,100

 

 

 

As at March 31, 2019, the Company had approximately $4,065,100 of federal net operating losses, of which $1,506,800 have no expiration date. The Company is open to examinations for the tax year 2011 through the current tax year.

 

NOTE 14. DISCONTINUED OPERATIONS

 

In December 2017, the Company discontinued all operations related to the Retail Pharmacy Segment (RPS) involving the Company’s wholly-owned subsidiary, RoxSan Pharmacy, Inc. (“RoxSan”).  On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan and Parallax Health Sciences, Inc., RoxSan filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California.  Mr. Timothy Yoo was appointed trustee on May 15, 2018. In connection with the filing, RoxSan sought to discharge approximately $5 million of liabilities owed to various parties, and intercompany loans in excess of $1 million owed to the Company.  The Chapter 7 bankruptcy proceeding by was fully discharged and the case was closed on March 13, 2019.

 

Due to, among other things, the reduction in RoxSan’s cash flows during 2016 and 2017, RoxSan became delinquent in its payroll tax depository obligations, resulting in a liability owed to federal and state taxing agencies in the aggregate of $1,148,811, which includes $601,148 in taxes withheld from employees (“Trust Fund Taxes”), employer taxes of $183,172, and penalties and interest of $364,491 through December 31, 2018. The liability was included as part of the Chapter 7 bankruptcy petition, and certain portions of the liability may be discharged.  However, in accordance with California bankruptcy laws, federal and state Trust Fund Taxes are not dischargeable.  The Company has retained a tax resolution specialist and is in communications with the taxing agencies in order to resolve RoxSan’s liability (Note 5).

 

As a result of the loss of financial control of RoxSan, the Company derecognized the subsidiary effective May 14, 2018. The derecognition resulted in a gain of $4,478,268.  The Company also extinguished $22,778,281 in debt and accrued interest related to the acquisition of RoxSan.

 

The results of the discontinued operations of RoxSan Pharmacy, Inc. for the three months ending Mach 31, 2018, are summarized as follows:

 

 

March 31, 2018

 

 

 

 

Revenue

$

––

 

Cost of sales

 

––

 

Gross profit

 

––

 

General and administrative expenses

 

224,919

 

Operating loss

 

(224,919

)

Interest expense

 

(21,592

)

Net loss from discontinued operations

$

(246,511

)

 

NOTE 15. SEGMENT REPORTING

 

The Company has the following business segments: Remote Care Services (RCS), Behavioral Health Services (BHS), and Diagnostics/Corporate (DCS).  See Note 1 and 2 for a description of each segment and related significant accounting policies.

 

The following table is a reconciliation of the Company’s business segments to the consolidated financial statements:

.

 

Remote Care

Segment

 

Behavioral

Health Segment

 

Diagnostics/

Corporate

Segment

 

Discontinued

Operations

 

Consolidated

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

540

 

$

50,450

 

$

––

 

 

––

 

$

50,990

 

Gross profit (loss)

 

(4,571

)

 

50,450

 

 

––

 

 

––

 

 

45,879

 

Operating loss

 

(86,483

)

 

(271

)

 

(1,323,655

)

 

––

 

 

(1,410,409

)

Depreciation and amortization

 

2,299

 

 

27,440

 

 

416

 

 

––

 

 

30,155

 

Interest expense

 

755

 

 

––

 

 

99,259

 

 

––

 

 

100,014

 

Loss on settlements

 

––

 

 

––

 

 

(33,272

)

 

––

 

 

(33,272

)

Discount amortization

 

8,000

 

 

––

 

 

122,420

 

 

––

 

 

130,420

 

Total assets

 

911,240

 

 

437,127

 

 

12,407

 

 

––

 

 

1,360,774

 

Goodwill

 

785,060

 

 

––

 

 

––

 

 

––

 

 

785,060

 

Additions to property and equipment

 

––

 

 

––

 

 

––

 

 

––

 

 

––

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

4,440

 

 

450

 

 

––

 

 

––

 

 

4,890

 

Gross profit (loss)

 

(1,098

)

 

450

 

 

––

 

 

––

 

 

(648

)

Operating loss

 

(72,258

)

 

(126,387

)

 

(1,753,165

)

 

––

 

 

(1,951,810

)

Depreciation and amortization

 

2,466

 

 

106,775

 

 

416

 

 

––

 

 

109,657

 

Interest expense

 

708

 

 

––

 

 

322,442

 

 

––

 

 

323,150

 

Discount amortization

 

10,000

 

 

50,000

 

 

1,275,000

 

 

––

 

 

1,335,000

 

Discontinued operations

 

––

 

 

––

 

 

––

 

 

(246,511

)

 

(246,511

)

Total assets

 

931,060

 

 

2,030,841

 

 

13,133

 

 

242,454

[1]

 

3,217,488

 

Goodwill

 

785,060

 

 

––

 

 

––

 

 

––

 

 

785,060

 

Additions to property and equipment

 

––

 

 

––

 

 

––

 

 

––

 

 

––

 

[1]Assets held for sale 

 

NOTE 16. LEGAL MATTERS

 

The Company knows of no material developments to its legal matters other than those disclosed below:

 

Dispute with Former Owner of RoxSan

 

Action No. SC125702:

In the Matter, action No. SC125702, in the Superior Court of the State of California, County of Los Angeles, West District, the former owner of RoxSan Pharmacy, Inc., Shahla Melamed (“Melamed”), alleges that the Company is in default under the terms of the Purchase Agreement and Secured Note, and the Company’s termination of Melamed’s employment agreement.  The Company firmly believes that it had adequate grounds to justify the termination of the employment, that it acted within its rights, and shall prevail in these proceedings.  A trial date, previously set for December 2018, is currently set for January 2020.

 

Action No. SC 124898:

The Company initiated legal action against Melamed and filed a complaint, action number SC 124898, in the Superior Court of the State of California, County of Los Angeles, West District, Parallax Health Sciences, et al. v. Shahla Melamed, et al.  The Complaint in that action alleges that Melamed has breached several obligations under the Purchase Agreement, and the Company is seeking to reduce the Secured Note due to undisclosed material changes in the business. A trial date, previously set for December 2018, is currently set for January 2020.

 

Disputes with Former Executives

 

Action No. CV2017-052804

On March 9, 2017, Dave Engert former Executive Chairman and director of the Company filed a lawsuit in Arizona and then on or about May 5, 2017, Mr. Engert, changed the venue and filed suit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000.  On October 23, 2017, the Company filed an answer and counterclaims against Mr. Engert for an amount exceeding $100,000.  The counterclaims include possible fraud and negligence committed by Mr. Engert and Mr. J. Michael Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.

 

On October 8, 2018, a settlement was reached between Mr. Engert and the Company (the “Settlement”). The Settlement includes, among other things, a cash payment to Mr. Engert in the amount of $139,000, and the cancellation of all of Mr. Engert’s equity holdings in the Company.  The Settlement resulted in a net loss to the Company of $33,272. On April 10, 2019, a stipulation for dismissal was filed, and the matter has been fully resolved.

 

NOTE 17. SUBSEQUENT EVENTS

 

The Company has evaluated the events and transactions for recognition or disclosure subsequent to March 31, 2019, through the date of the issuance of the financial statements, and has determined that there have been no events that would require disclosure, except for the following:

 

In April 2019, the Company issued 12% convertible promissory notes in the aggregate principal sum of $214,000.  The notes matures by April 2, 2020, and contain repayment provisions for the holders of the notes to convert the principal sum and any accrued interest into shares of the Company’s common stock at a conversion rate of the lesser of (i) $0.12 per share, or (ii) 65% of the average lowest trading prices during the trading days immediately preceding the conversion date.  In addition, the Company issued warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five (5) years.

 

In April 2019, in connection with a certain convertible debenture, the holder elected to convert $105,000 into 2,340,410 shares of the Company’s restricted common stock.  As a result, $102,660 was recorded to paid in capital.

 

In April 2019, the Company issued 825,000 shares of its restricted common stock for various services valued at $80,500. As a result, $79,675 was recorded to paid in capital.

 

In April 2019, the Company entered into an employment agreement with Mr. David Appell to serve as the Company’s Chief Operating Officer. The agreement commences May 15, 2019, is for an initial term of two (2) years, and provides a base compensation of $250,000 year one, and $275,000 in year two, as well as various performance bonuses, and customary employee benefits. In addition, the agreement includes a grant to purchase 3,000,000 restricted common shares at $0.001 per share, of which 25% vest immediately, and the remainder vest when certain earnings goals are met, as well as options granted to purchase 3,000,000 shares of the Company's Common Stock at an exercise price of $0.25 per share.  The options are for a period of five (5) years, and vest annually over the term of the agreement, with an initial vesting of 25%.

 

In addition, the Company entered into an employment agreement with Ms. Amanda L. Perry to serve as the Company’s Chief Legal Officer. The agreement commences May 15, 2019, is for an initial term of two (2) years, and provides a base compensation of $130,000 year one, and $140,000 in year two, as well as various performance bonuses, and customary employee benefits. In addition, the agreement includes a grant to purchase 500,000 restricted common shares at $0.001 per share, of which 25% vest immediately, and the remainder vest when certain earnings goals are met, as well as options granted to purchase 500,000 shares of the Company's Common Stock at an exercise price of $0.25 per share.  The options are for a period of five (5) years, and vest annually over the term of the agreement, with an initial vesting of 25%.

 

On May 1, 2019, the Company entered into a sub-lease for office space located at 28 West 36th Street, 8th Floor, New York, NY 10018.  The lease is for a term of thirteen (13) months, with a monthly rent payment of $8,900.

 

In May 2019, the Company amended the private placement equity offering (the “Offering”) previously established in March 2019.  The revised Offering is for the purchase of the 50,000,000 shares, or a maximum of $6,000,000, in Common Stock, plus equal Warrants at an exercise price of $0.25 per share for a term of three (3) years (the Common Stock and the Warrants together, the “Units”).  The Offering provides for, among other thing, the purchase of the Units at a price of $0.125 per share, with a minimum total Offering of $1,000,000, and a minimum investment of 200,000 shares, or $25,000.  Prior to the Offering, the Company is selling $1,000,000 in Units through a Simple Agreement Future Equity (“SAFE”) offering.  The SAFE Units are sold at a 20% discount of the offering Unit price of $0.125, and are not a part of, nor reduce, the $1,000,000 minimum. The initial closing will occur on or before June 15, 2019, unless extended by the Company in its discretion.  The Company may sell Units in one or more closings.

 

In connection with the SAFE offering, the Company issued 2,500,000 shares of its restricted common stock at $0.10 per share, for cash in the amount of $250,000.  As a result, $247,500 was recorded to paid in capital.

 

The Company retained Maxim Group, LLC (“Maxim”) to serve as its placement agent for the Offering. The Company has agreed to pay the placement agent a placement fee equal to 7% of the aggregate gross proceeds raised in the Offering and warrants exercisable for a term of five years to purchase 7% of the number of shares of common stock included in the Units sold in the Offering at an exercise price of $0.125 per share.

 

In connection with the Company’s agreement with Maxim, the Company issued Maxim 1,000,000 shares of its restricted common stock, valued at $71,000.  As a result, $70,000 was recorded to paid in capital.

 

On May 6, 2019, in connection with an equity funding, the Company issued 6,000,000 shares of its restricted common stock for cash in the amount of $500,000.  As a result, $494,000 was recorded to paid in capital

 

 

 

*    *    *    *    *


8


 

 

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

This quarterly report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, forward-looking statements can be identified by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause the Company’s or the Company’s industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

The Company’s unaudited interim consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to "common shares" refer to the common shares in the Company’s capital stock. The following discussion should be read in conjunction with the Company’s financial statements and the related notes that appear elsewhere in this quarterly report.

 

NOTE: The following sections of this quarterly report and any further reference made to “the Company”, "we", "us", "our" and "Parallax " shall mean Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc., and Parallax Behavioral Health, Inc., unless otherwise indicated.

 

Description of Business  

 

Parallax Health Sciences, Inc. (“Parallax”), incorporated in the State of Nevada on July 6, 2005, is an innovative digital healthcare company headquartered in Santa Monica, California. The Company’s principal focus is to build and expand an integrated digital healthcare network with products and services that can provide remote communication, diagnosis, treatment, and monitoring of patients on a single proprietary platform. The Parallax Care system being developed  provides scalable connected products, services and actionable data integrated on a single interoperable platform.  The Company’s principal mission is to deliver solutions that empower patients, reduce costs and improve the quality of care through patented leading-edge technologies.

 

The Parallax Care technology-enabled digital healthcare system is structured with three separate divisions that can operate independently of one another, or integrate services to meet the various needs of the Company’s clientele: Optimized Outcomes, Connected Health and Smart Data.  Each of these divisions target a separate vertical market that are synergistic, compliment, and strengthen each other and the  Company value proposition as a whole.

 

Optimized Outcomes

REBOOT / COMPASS

Behavioral modification

Connected Health

Fotodigm® platform

Remote patient monitoring, telehealth, and POC diagnostic testing

Smart Data

Intrinsic Code technology

Actionable insights to behavior modification

 

Operating Segments

 

The Company’s current operations include the following business segments for financial statement presentation: Remote Patient Monitoring (RPM), Behavioral Health Services (BHS), and Corporate.

 

Remote Patient Monitoring  

 

The RPM segment generates revenues through fees charged for the license and utilization of its proprietary system that provides software integrations of the Fotodigm® platform.  Additionally, the RPM segment generates incremental revenues through the delivery of acute, post-acute and chronic health patient management software systems that enable Parallax customers to bill for and collect payments from patients and third-party payers for telemonitoring and remote services that they deliver.

 

Behavioral Health Services 

 

The BHS segment commenced with the acquisition of the REBOOT and Intrinsic Code technologies. The BHS segment will generate revenues primarily through licensing and subscription of software and systems. As of March 31, 2019, the BHS segment had not yet begun full operations, generating limited test market sales.

 

Diagnostics/Corporate  

 

The Diagnostics/Corporate Segment supports the costs and operating expenses related to the continued development and exploitation of the Company’s proprietary Target System POS medical diagnostic and monitoring platform and processes.  In addition, the Diagnostics/Corporate Segment provides management and administrative services to support the Company and consists of certain aspects of the Company’s executive management, corporate relations, legal, compliance, human resources, and corporate information technology and finance departments.  

 

Recent Developments

 

On January 28, 2019, pursuant to a majority shareholder consent, the Company increased its authorized common stock from 250,000,000 shares to 500,000,000 shares, with a par value of $0.001 per share.

 

In April 2019, the Company entered into an employment agreement with Mr. David Appell to serve as the Company’s Chief Operating Officer. The agreement commences May 15, 2019, is for an initial term of two (2) years, and provides a base compensation of $250,000 year one, and $275,000 in year two, as well as various performance bonuses, and customary employee benefits. In addition, the agreement includes a grant to purchase 3,000,000 restricted common shares at $0.001 per share, of which 25% vest immediately, and the remainder vest when certain earnings goals are met, as well as options granted to purchase 3,000,000 shares of the Company's Common Stock at an exercise price of $0.25 per share.  The options are for a period of five (5) years, and vest annually over the term of the agreement, with an initial vesting of 25%.

 

In addition, the Company entered into an employment agreement with Ms. Amanda L. Perry to serve as the Company’s Chief Legal Officer. The agreement commences May 15, 2019, is for an initial term of two (2) years, and provides a base compensation of $130,000 year one, and $140,000 in year two, as well as various performance bonuses, and customary employee benefits. In addition, the agreement includes a grant to purchase 500,000 restricted common shares at $0.001 per share, of which 25% vest immediately, and the remainder vest when certain earnings goals are met, as well as options granted to purchase 500,000 shares of the Company's Common Stock at an exercise price of $0.25 per share.  The options are for a period of five (5) years, and vest annually over the term of the agreement, with an initial vesting of 25%.

 

In May 2019, the Company amended the private placement equity offering (the “Offering”) previously established in March 2019.  The revised Offering is for the purchase of the 50,000,000 shares, or a maximum of $6,000,000, in Common Stock, plus equal Warrants at an exercise price of $0.25 per share for a term of three (3) years (the Common Stock and the Warrants together, the “Units”).  The Offering provides for, among other thing, the purchase of the Units at a price of $0.125 per share, with a minimum total Offering of $1,000,000, and a minimum investment of 200,000 shares, or $25,000.  Prior to the Offering, the Company sold $1,000,000 in Units through a Simple Agreement Future Equity (“SAFE”) offering.  The SAFE Units were sold at a 20% discount of the offering Unit price of $0.125, and are not a part of, nor reduce, the $1,000,000 minimum. The initial closing will occur on or before June 15, 2019, on a date chosen by the Company, unless extended by the Company in its discretion.  The Company may sell Units in one or more closings.

 

In May 2019, the Company established a second location at 28 West 36th Street, 8th Floor, New York, NY 10018.

 

NOTE: The financial information of Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc., and Parallax Behavioral Health, Inc., is provided below on a consolidated basis, unless otherwise indicated. All significant intercompany accounts and transactions have been eliminated.  

 

Balance Sheet

 

As of March 31, 2019, the Company had total assets of $1,360,774 compared with total assets of $1,364,357 at December 31, 2018. The decrease in total assets of $3,583 is attributable to an increase in cash of $1,392, an increase in accounts receivable of $25,180, and $30,155 of amortization related to intangible assets.

 

As of March 31, 2019, the Company had total liabilities of $7,845,649 compared with total liabilities of $7,345,916 at December 31, 2018. The increase in total liabilities of $499,766 is attributable to an increase in accounts payable and accrued expenses of $119,572, a decrease in short-term debentures of $183,092, an increase in related party short-term debentures of $44,339, an increase in notes payable of $20,000, an increase in convertible notes payable of $210,913, an increase in related party convertible notes payable of $20,000, an increase in related party payables of $255,138, an increase in license fees payable of $3,000, an increase in royalties payable of $7,700, an increase in long-term debentures, net of unamortized discount, of $2,100, and an increase in secured notes payable of $63.

 

Results of Operations

 

The three months ended March 31, 2019, compared to the three months ended March 31, 2018.

 

 

For the three months ended

 

 

March 31, 2019

 

March 31, 2018

 

Revenue

$

50,990

 

$

4,890

 

Cost of sales

$

5,111

 

$

5,538

 

Gross profit (loss)

$

45,879

 

$

(648

)

General and administrative expenses

$

1,456,288

 

$

1,951,161

 

Operating loss

$

(1,410,409

)

$

(1,951,809

)

Loss on settlements

$

(33,272

)

$

––

 

Discount amortization

$

(130,420

)

$

(1,335,000

)

Interest expense

$

(100,014

)

$

(323,149

)

Net loss – continuing operations

$

(1,674,115

)

$

(3,609,958

)

Net loss – discontinued operations

$

––

 

$

(246.511

)

Net loss

$

(1,674,115

)

$

(3,856,469

)

 

Revenue

 

Revenue in the amount of $50,990 for the three months ended March 31, 2019, consists of license fees of $50,000 related to behavioral health software, contract fees related to the Company’s remote health care systems in the amount of $540, and subscription fees related to its behavioral health services in the amount of $450.

 

Revenue in the amount of $4,890 for the three months ended March 31, 2018, consists contract fees and equipment sales related to the Company’s remote health care systems in the amount of $4,440, and subscription fees related to its behavioral health services in the amount of $450

 

The Company has not yet fully launched the medical diagnostics and testing activities of the Company’s Connected Health division.


9


 

Cost of sales

 

Costs of sales in the amount of $5,111 for the three months ended March 31, 2019, consists of equipment and other costs related to the Company’s remote health care systems.

 

Costs of sales in the amount of $5,538 for three months ended March 31, 2018, consists of equipment and other costs related to the Company’s remote health care systems.

 

The Company has not yet fully launched the medical diagnostics and testing activities of the Company’s Connected Health division.

 

General and Administrative Expenses

 

 

For the three months ended

 

 

 

 

March 31, 2019

 

March 31, 2018

 

Variances

 

Legal, accounting, and management services

$

597,413

 

$

401,866

 

$

195,547

 

Stock compensation/stock option amortization

 

478,799

 

 

1,332,882

 

 

(854,083

)

Salaries, fees, taxes and benefits

 

152,424

 

 

69,648

 

 

82,776

 

Depreciation and amortization

 

30,155

 

 

109,657

 

 

(79,502

)

Rent expense-office

 

17,360

 

 

19,397

 

 

(2,037

)

Travel, meals and entertainment

 

11,126

 

 

1,440

 

 

9,686

 

Office supplies and miscellaneous expenses

 

169,011

 

 

16,271

 

 

152,740

 

Total general and administrative expenses

$

1,456,288

 

$

1,951,161

 

$

(494,873

)

 

General and administrative expenses in the amount of $1,456,288 for the three months ended March 31, 2019, were comprised of $597,413 in legal, accounting and management fees, $478,799 in stock compensation/stock option amortization, $152,424 in salaries, fees and related taxes and benefits, $30,155 in depreciation and amortization, $17,360 in rent expense, $11,126 in travel, meals and entertainment, and $169,011 in office overhead and other general and administrative expenses.

 

General and administrative expenses in the amount of $1,951,161 for the three months ended March 31, 2018, were comprised of $401,866 in legal, accounting and management fees, $1,332,882 in stock compensation/stock option amortization, $69,648 in salaries, fees and related taxes and benefits, $109,657 in depreciation and amortization, $19,397 in rent expense, $1,440 in travel, meals and entertainment, and $16,271 in office overhead and other general and administrative expenses.

 

General and administrative expenses of $1,456,288  for the three months ended March 31, 2019 as compared to $1,951,161 for the three months ended March 31, 2018, resulted in a decrease in general and administrative expenses for the current period of $494,873. The decrease in in general and administrative expenses of $494,873 were attributable to the following items:

 

an increase in legal, accounting and management fees of $195,547, due to an increase in legal fees of $10,724; an increase in accounting and audit fees of $11,483; and an increase in management fees of $35,150 primarily resulting from the addition of director compensation effective January 2019; and an increase in professional fees of $138,190 related to investor relations and private placement due diligence; and 

a decrease in stock compensation/stock option amortization of $854,083 primarily due to amortization expense of $24,025 resulting from stock options granted in the current period; a decrease in amortization expense of $188,067 resulting from stock options granted in prior years; stock compensation of $325,000 for stock awards granted in the current period; and decreases in deferred stock compensation amortization of $25,791 and stock compensation expense of $989,250 resulting from stock awards granted in the prior year; and 

an increase in salaries and fees, and related taxes and benefits of $82,776, primarily due to a decrease in staff salaries of $12,679, an increase in related payroll taxes of $21,525; an increase in benefits of $2,930 resulting from changes in benefits; and an increase in miscellaneous fees for outside services in the amount of $71,000 resulting from additional contracted services; and 

a decrease in depreciation and amortization of $79,502, primarily due to fully depreciated/amortized assets; and 

a decrease in rent expense of $2,037 due to miscellaneous fees charged by lessor in the prior period not charged in the current period; and 

an increase in travel, meals and entertainment of $9,686, primarily due to an increase in travel costs of $6,913; and an increase meals and entertainment of $2,773; and 

an increase in office supplies and miscellaneous expenses of $152,740, due to an increase in automobile expenses and allowances of $39,077, computer and internet expenses of $3,724, transfer agent costs of $6,240, insurance expense of $4,592, marketing and publicity of $58,070, product development and patent costs of $19,643, repairs and maintenance of $8,750, taxes, licenses and permits of $8,509, telephone expense of $2,166, and other general office expenses of $1,969. 

 

Net Loss

 

During the three months ended March 31, 2019, the Company generated a net loss from continuing operations of $1,674,115, compared with a net loss from continuing operations of $3,609,958 for the three months ended March 31, 2018. The decrease in net loss from continuing operations of $1,935,843 is primarily attributable to an increase in revenue of $46,100, a decrease in cost of goods sold of $427, a decrease in general and administrative expenses of $494,873, a loss on settlement of $33,272, a decrease in discount amortization of $1,204,580, and a decrease in interest expense of $223,135.

 

Liquidity and Capital Resources

 

Working Capital

 

 

 

 

Increase

 

 

At March 31, 2019

 

At December 31, 2018

 

(Decrease)

 

Current Assets

$

26,834

 

$

262

 

$

26,572

 

Current Liabilities

 

5,626,487

 

 

5,139,617

 

 

486,870

 

Working Capital (Deficit)

$

(5,599,653

)

$

(5,139,355

)

$

(460,298

)

 

As of March 31, 2019, the Company had cash in the amount of $1,654 compared to $262 as of December 31, 2018.

 

The Company had a working capital deficit of $5,599,653 as of March 31, 2019, compared to a working capital deficit of $5,139,355 as of December 31, 2018. The increase in working capital deficit of $460,298 is primarily attributable to an increase in cash of $1,392, an increase in accounts receivable of $25,180, an increase in accounts payable and accrued expenses of $119,572, a decrease in convertible debentures of $183,092, an increase in related party convertible debentures of $44,339, an increase in notes payable of $20,000, an increase in convertible notes payable of $210,913, an increase in related party convertible notes payable of $20,000, and an increase in related party payables of $255,138.

 

 

Cash Flows

For the three months ended

 

Increase

 

 

March 31, 2019

 

March 31, 2018

 

(Decrease)

 

Net cash used by operating activities

$

(727,948

)

$

(183,376

)

$

(544,572

)

Net cash used by investing activities

 

––

 

 

––

 

 

––

 

Net cash used by financing activities

 

729,340

 

 

266,000

 

 

463,340

 

Net cash provided by continuing operations

 

1,392

 

 

82,624

 

 

(81,232

)

Net cash used by discontinued operations

 

––

 

 

(83,866

)

 

83,866

 

Increase (decrease) in cash

$

1,392

 

$

(1,242

)

$

2,634

 

 

Cash Flows from Operating Activities

 

During the three months ended March 31, 2019, the Company used $727,948 of cash flow for operating activities compared with $183,376 for the three months ended March 31, 2018. The increase in cash used by operating activities of $544,572 is primarily attributable to a decrease in the net loss of $1,935,843; decreases in depreciation and amortization of $79,502, stock compensation/stock option amortization of $854,083, discount amortization of $1,204,580, and allowance for bad debt of $236; increases in the changes in accounts receivable of $28,039, royalties payable of $2,700, and related party payables of $13,314; and a decrease in the change in accounts payable and accrued expenses of $329,989.

 

Cash Flows from Investing Activities

 

During the three months ended March 31, 2019 and 2018, the Company used no cash flow for investing activities.

 

Cash Flows from Financing Activities

 

During the three months ended March 31, 2019, the Company was provided with $729,340 of cash flow from financing activities, compared with $266,000 for the three months ended March 31, 2018.  The increase in cash flows provided by financing activities of $463,340 is attributable to an increase in proceeds from convertible notes payable of $4,340, and an increase in proceeds from the issuance of common stock of $459,000.

 

The Company’s principal sources of funds have been from the Company’s sales of its preferred and common stock, loans from related parties and third-party lenders, net revenues generated from the sale and licensing of its remote healthcare products and services.

 

During the three months ended March 31, 2019, the Company received $500,000 in funds from the issuance common shares, compared to $41,000 during the three months ended March 31, 2018.

 

As of March 31, 2019, related parties are due a total of $2,243,428, consisting of $950,325 in accrued compensation owed to officers; $309,533 in accrued benefits and cash advances from officers and beneficial owners to the Company for operating expenses; $472,470 in convertible debentures; and $511,100 in convertible promissory notes.

 

During the three months ended March 31, 2019, interest on related party notes payable in the amount of $23,742 was expensed. As of March 31, 2019, a total of $23,742 in accrued interest remains.

 

Future Financings

 

The Company has suffered recurring losses from operations. The continuation of the Company’s operations is dependent upon the Company’s attaining and maintaining profitable operations and raising additional capital as needed. The Company anticipates that it will have to raise additional funds through private placements of the Company’s equity securities and/or debt financing to complete its business plan.

 

The Company will require additional financing in order to proceed with its plan of operations, including approximately $3,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities. There is no assurance that the financing will be completed as planned or at all. If the Company is unable to secure adequate capital to continue the Company’s planned operations, the Company’s shareholders may lose some or all of their investment and the Company’s business may fail.

 

In May 2019, the Company amended the private placement equity offering (the “Offering”) previously established in March 2019.  The revised Offering is for the purchase of the 50,000,000 shares, or a maximum of $6,000,000, in Common Stock, plus equal Warrants at an exercise price of $0.25 per share for a term of three (3) years (the Common Stock and the Warrants together, the “Units”).  The Offering provides for, among other thing, the purchase of the Units at a price of $0.125 per share, with a minimum total Offering of $1,000,000, and a minimum investment of 200,000 shares, or $25,000.  Prior to the Offering, the Company is selling $1,000,000 in Units through a Simple Agreement Future Equity (“SAFE”) offering.  The SAFE Units are sold at a 20% discount of the offering Unit price of $0.125, and are not a part of, nor reduce, the $1,000,000 minimum. The initial closing will occur on or before June 15, 2019, on a date chosen by the Company, unless extended by the Company in its discretion.  The Company may sell Units in one or more closings.

 

The Company retained Maxim Group, LLC to serve as its placement agent for the Offering. The Company has agreed to pay the placement agent a placement fee equal to 7% of the aggregate gross proceeds raised in the Offering and warrants exercisable for a term of five years to purchase 7% of the number of shares of common stock included in the Units sold in the Offering at an exercise price of $0.125 per share.

 

The Company anticipates continuing to rely on equity sales of its common stock and preferred stock in order to continue to fund its business operations. Issuances of additional shares will result in dilution to the Company’s existing stockholders. There is no assurance that the Company will achieve any additional sales of its equity securities or arrange for debt or other financing to fund its planned business activities.

 

Contractual Obligations

 

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

 

Going Concern

 

The Company has incurred losses since inception resulting in an accumulated deficit of $18,946,375, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms  There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

The unaudited interim consolidated financial statements included with this quarterly report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the unaudited interim consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Critical Accounting Policies

 

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s unaudited interim consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. The Company believes that understanding the basis and nature of the estimates and assumptions provided within the notes to the Company’s financial statements are sufficient to an understanding of its consolidated financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Management’s Report on Disclosure Controls and Procedures

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s president, chief executive officer and chief financial officer to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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 March 31, 2019, the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s president, chief executive officer and chief financial officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s president, chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in the Company’s internal controls over financial reporting that occurred during the three-month period ended March 31, 2019, that have materially or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

Audit Committee

 

The Company established an audit committee of the board of directors comprised of John L. Ogden and E. William “Bill” Withrow Jr. The audit committee’s duties are to recommend to the Company’s board of directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Company’s board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.


10


 

 

PART II

OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business.  The Company knows of no material, existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation, beyond those defined in the Company’s Annual Report on Form 10-K filed April 1, 2019, with the exception of those updates disclosed below:

 

Dispute with Former Owner of RoxSan

 

Action No. SC125702:

In the Matter, action No. SC125702, in the Superior Court of the State of California, County of Los Angeles, West District, the former owner of RoxSan Pharmacy, Inc., Shahla Melamed (“Melamed”), alleges that the Company is in default under the terms of the Purchase Agreement and Secured Note, and the Company’s termination of Melamed’s employment agreement.  The Company firmly believes that it had adequate grounds to justify the termination of the employment, that it acted within its rights, and shall prevail in these proceedings.  A trial date, previously set for December 2018, is currently set for January 2020.

 

Action No. SC 124898:

The Company has initiated legal action against Melamed and filed a complaint, action number SC 124898, in the Superior Court of the State of California, County of Los Angeles, West District, Parallax Health Sciences, et al. v. Shahla Melamed, et al.  The Complaint in that action alleges that Melamed has breached several obligations under the Purchase Agreement, and the Company is seeking to reduce the Secured Note due to undisclosed material changes in the business. A trial date, previously set for December 2018, is currently set for January 2020.

 

Disputes with Former Executives

 

Action No. CV2017-052804

On March 9, 2017, Dave Engert former Executive Chairman and director of the Company filed a lawsuit in Arizona and then on or about May 5, 2017, Mr. Engert, changed the venue and filed suit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000.  On October 23, 2017, the Company filed an answer and counterclaims against Mr. Engert for an amount exceeding $100,000.  The counterclaims include possible fraud and negligence committed by Mr. Engert and Mr. J. Michael Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.

 

On October 8, 2018, a settlement was reached between Mr. Engert and the Company (the “Settlement”). The Settlement includes, among other things, a cash payment to Mr. Engert in the amount of $139,000, and the cancellation of all of Mr. Engert’s equity holdings in the Company.  The Settlement resulted in a net loss to the Company of $33,272. On April 10, 2019, a stipulation for dismissal was filed, and the matter has been fully resolved.

 

The Company knows of no other material existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to the Company.

 

ITEM 1A. RISK FACTORS

 

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On January 24, 2019, in connection with a certain senior secured promissory note, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $15,000.

 

On January 30, 2019, in connection with a certain convertible debenture, the holder elected to convert $175,000 into 1,750,000 shares of its restricted common stock at a conversion rate of $0.10 per share.  

 

On January 31, 2019, in connection with a certain senior secured promissory note, the Company issued 250,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $25,000.

 

On January 31, 2019, in connection with a certain consulting agreement, the Company issued 1,666,667 shares of its restricted common stock to the consultant for services valued at $200,000.

 

On January 31, 2019, in connection with a Simple Agreement Future Equity (“SAFE”) offering, the Company issued 500,000 shares of its restricted common stock at $0.10 per share for $50,000 cash.  

 

On February 6, 2019, in connection with certain convertible debt in the amount of $20,000 and accrued interest in the amount of $2,000, the Company issued 220,000 shares of its restricted common stock at a conversion rate of $0.10 per share.  

 

On February 12, 2019, in connection with a certain senior secured promissory note, the Company issued 40,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $4,000.

 

On February 23, 2019, in connection with a certain senior secured promissory note, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $15,000.

 

On February 25, 2019, in connection with a SAFE offering, the Company issued 3,750,000 shares of its restricted common stock at $0.10 per share for $375,000 cash.

 

On February 25, 2019, in connection with a certain consulting agreement, the Company issued 25,000 shares of its restricted common stock to the consultant for services valued at $2,500.

 

On February 27, 2019, in connection with a certain consulting agreement, the Company issued 1,000,000 shares of its restricted common stock to the consultant for services valued at $120,000.

 

In March 2019, in connection with a certain convertible debenture, the holder elected to convert $95,000 into 1,719,328 shares of the Company’s restricted common stock.  

 

On March 25, 2019, in connection with a certain senior secured promissory note, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $15,000.

 

On March 25, 2019, in connection with a certain consulting agreement, the Company issued 25,000 shares of its restricted common stock to the consultant for services valued at $2,500.

 

On March 25, 2019, in connection with a SAFE offering, the Company issued 750,000 shares of its restricted common stock at $0.10 per share for $75,000 cash.  

 

In April 2019, in connection with a certain convertible debenture, the holder elected to convert $105,000 into 2,340,410 shares of the Company’s restricted common stock.  

 

On April 15, 2019, the Company issued 400,000 shares of its restricted common stock for services valued at $50,000. As a result, $49,600 was recorded to paid in capital.

 

On April 25, 2019, in connection with a certain consulting agreement, the Company issued 25,000 shares of its restricted common stock to the consultant for services valued at $2,500.

 

On April 25, 2019, in connection with a SAFE offering, the Company issued 2,000,000 shares of its restricted common stock at $0.10 per share for $200,000 cash.  

 

On April 26, 2019, in connection with a certain stock purchase agreement, the Company issued 400,000 shares of its restricted common stock, valued at $28,000, for cash in the amount of $400.  

 

On May 2, 2019, in connection with a SAFE offering, the Company issued 500,000 shares of its restricted common stock at $0.10 per share for $50,000 cash.  

 

Exemption From Registration. The shares of Common Stock referenced herein were issued in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation D promulgated thereunder, or Regulation S for offers and sales of securities outside the U.S.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY STANDARDS

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

None.


11


ITEM 6. EXHIBITS

 

Exhibits required by Item 601 of Regulation S-B

 

Exhibit

Number

Description of Exhibit

Filing Reference

(3)

Articles of Incorporation and Bylaws

3.1

Articles of Incorporation

Filed with the SEC on March 5, 2007 as part of the Company’s Registration Statement on Form SB-2.

3.1(a)

Amended and Restated Articles of Incorporation

Filed with the SEC on May 17, 2010 as part of the Company’s Annual Report on Form 10-K.

3.1(b)

Amended and Restated Articles of Incorporation

Filed with the SEC on April 1, 2019 as part of the Company’s Annual Report on Form 10-K.

3.2

Bylaws

Filed with the SEC on March 5, 2007 as part of the Company’s Registration Statement on Form SB-2.

3.2(a)

Amended Bylaws

Filed with the SEC on May 17, 2010 as part of the Company’s Annual Report on Form 10-K.

3.3

Articles of Merger between Endeavor Power Corporation and Parallax Diagnostics, Inc. filed with Secretary of State of Nevada on November 6, 2012

Filed with the SEC on November 15, 2012 as part of the Company’s Current Report on Form 8-K.

3.4

Certificate of Amendment filed with the Secretary of State of Nevada on January 9, 2014

Filed with the SEC on April 14, 2014 as part of the Company’s Annual Report on Form 10-K.

3.5

Certificate of Designation effective June 17, 2011-Series A Preferred Stock

Filed with the SEC on March 19, 2019 as part of the Company's Current Report on Form 8-K

3.6

Certificate of Designation effective December 2, 2016-Series B Preferred Stock

Filed with the SEC on March 19, 2019 as part of the Company's Current Report on Form 8-K

3.7

Certificate of Designation effective August 10, 2018-Series C Preferred Stock

Filed with the SEC on March 19, 2019 as part of the Company's Current Report on Form 8-K

(4)

Instruments Defining the Rights of Security Holders, Including Indentures

4.1

Form of 12% Senior Secured Convertible Debenture dated December 31, 2018

Filed with the SEC on January 7, 2019 as part of the Company's Current Report on Form 8-K

4.2

Form of 12% Convertible Promissory Note dated February 27, 2019

Filed with the SEC on March 15, 2019 as part of the Company's Current Report on Form 8-K

4.3

Form of Warrant dated February 27, 2019

Filed with the SEC on March 15, 2019 as part of the Company's Current Report on Form 8-K

4.4

Form of 12% Fixed Convertible Promissory Note dated March 18, 2019

Filed with the SEC on March 22, 2019 as part of the Company's Current Report on Form 8-K

4.5

Form of Warrant dated March 18, 2019

Filed with the SEC on March 22, 2019 as part of the Company's Current Report on Form 8-K

4.6

12% Convertible Promissory Note dated April 8, 2019

Filed with the SEC on April 19, 2019 as part of the Company's Current Report on Form 8-K

4.7

Form of Warrant dated April 8, 2019

Filed with the SEC on April 19, 2019 as part of the Company's Current Report on Form 8-K

4.8

Securities Purchase Agreement dated May 6, 2019

Filed with the SEC on May 7, 2019 as part of the Company's Current Report on Form 8-K

4.9

Registration Rights Agreement dated May 6, 2019

Filed with the SEC on May 7, 2019 as part of the Company's Current Report on Form 8-K

4.10

Warrant dated May 6, 2019

Filed with the SEC on May 7, 2019 as part of the Company's Current Report on Form 8-K

(10)

Material Contracts

 

10.1

Form of Letter Agreement dated December 31, 2018

Filed with the SEC on January 7, 2019 as part of the Company's Current Report on Form 8-K

10.2

Form of Exchange Agreement dated December 31, 2018

Filed with the SEC on January 7, 2019 as part of the Company's Current Report on Form 8-K

10.3

Form of Securities Purchase Agreement dated February 27, 2019

Filed with the SEC on March 15, 2019 as part of the Company's Current Report on Form 8-K

(31)

Section 302 Certifications

31.1*

Section 302 Certification of Paul R. Arena

Filed herewith.

31.2*

Section 302 Certification of Calli R. Bucci

Filed herewith.

(32)

Section 906 Certifications

32.1*

Section 906 Certification of Paul R. Arena

Filed herewith.

32.2*

Section 906 Certification of Calli R. Bucci

Filed herewith.

(99)

Additional Exhibits

99.1

Parallax Health Sciences, Inc. Investor Presentation dated March 29, 2019

Filed with the SEC on April 1, 2019 as part of the Company's Current Report on Form 8-K

(100)

XBRL Related Documents

101.INS**

XBRL Instance Document

Filed herewith.

101.SCH**

XBRL Taxonomy Extension Schema Document

Filed herewith.

101.CAL**

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.LAB**

XBRL Taxonomy Extension Labels Linkbase Document

Filed herewith.

101.PRE**

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

101.DEF**

XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith.

 

 

 

*Filed herewith. 

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or 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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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

PARALLAX HEALTH SCIENCES, INC.

 

 

 

 

 

 

 

 

 

 

Dated: May 10, 2019

/s/ Paul R. Arena

 

 

 

Paul R. Arena

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dated: May 10, 2019

/s/ Calli R. Bucci

 

 

 

Calli R. Bucci

 

 

 

Chief Financial Officer

 

 

 

 

 


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