UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ___________ to ___________
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
As of June 18, 2024, the issuer had shares of its common stock issued and outstanding.
MEDIXALL GROUP, INC. AND SUBSIDIARIES INDEX
| Page No. | ||
| PART I | FINANCIAL INFORMATION | |
| ITEM 1. | FINANCIAL STATEMENTS: | 1 |
| Condensed Consolidated Balance Sheets at September 30, 2023 (unaudited) and December 31, 2022 | 1 | |
| Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited) | 2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2023 and 2022 (unaudited) | 3 | |
| Condensed Consolidated Statements of Cash Flows for the nine months ended September 30 and 2022 (unaudited) | 4 | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | 5 | |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 15 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 20 |
| ITEM 4. | CONTROLS AND PROCEDURES | 20 |
| PART II | OTHER INFORMATION | |
| ITEM 1. | LEGAL PROCEEDINGS | 21 |
| ITEM 1A. | RISK FACTORS | 21 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 21 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 21 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 21 |
| ITEM 5. | OTHER INFORMATION | 21 |
| ITEM 6. | EXHIBITS | 22 |
| SIGNATURES | 23 | |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Other assets | ||||||||
| Total current assets | ||||||||
| Furniture and equipment, net | ||||||||
| Intellectual property | ||||||||
| Right-of-use-operating lease asset | ||||||||
| Website and development costs | ||||||||
| Total assets | ||||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses - related party | ||||||||
| Operating lease liability | ||||||||
| Senior Convertible Debentures, net of discount of $ | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| STOCKHOLDERS' DEFICIT: | ||||||||
| Series A Convertible Preferred Stock, $ par value, authorized; and issued and outstanding | $ | $ | ||||||
| Series B Convertible Preferred Stock, $ par value, authorized issued and outstanding | ||||||||
| Common Stock, $ par value shares authorized; and shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 1 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of Services | ||||||||||||||||
| Gross Margin | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Professional fees - related party | ||||||||||||||||
| Management fees - related party | ||||||||||||||||
| Personnel related expenses | ||||||||||||||||
| Other selling, general and administrative | ||||||||||||||||
| Interest Expense | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less preferred stock dividends | ||||||||||||||||
| Net Loss to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common stock | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding during the periods | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 2 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
| Series A Convertible Preferred Stock | Series B Convertible Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||
$0.001 Par Value | $0.001 Par Value | $0.001 Par Value | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| Proceeds received pursuant to Placement Memorandum, net of $ | — | — | ||||||||||||||||||||||||||||||||||
| Common stock issued for services (Unaudited) | — | — | ||||||||||||||||||||||||||||||||||
| Common stock issued in exchange for right-to-use intellectual property (Unaudited) | — | — | ||||||||||||||||||||||||||||||||||
| Fair Value of warrants Issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, March 31, 2022 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| Proceeds received pursuant to Placement Memorandum, net of $ | — | — | ||||||||||||||||||||||||||||||||||
| Common stock issued for services (Unaudited) | — | — | ||||||||||||||||||||||||||||||||||
| Fair Value of warrants Issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, June 30, 2022 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| Fair Value of warrants Issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Common stock issued for services (Unaudited) | — | — | ||||||||||||||||||||||||||||||||||
| Retirement of common shares issued for services (Unaudited) | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Proceeds from the sale of common stock (Unaudited) | — | — | ||||||||||||||||||||||||||||||||||
| Fair value of Warrants issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Net Loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| Conversion of shares from preferred stock to common stock (Unaudited) | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||
| Common stock issued for services (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Fair Value of warrants Issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, June 30, 2023 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| Common stock issued for services (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Fair Value of warrants Issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, September 30, 2023 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation & amortization | ||||||||
| Common stock issued as compensation for services | ||||||||
| Amortization of debenture discounts | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other assets | ( | ) | ||||||
| Prepaid expenses- related party | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable and accrued expenses - related party | ||||||||
| Net change in right-of-use operating lease asset and liability | ( | ) | ||||||
| Amortization of intellectual property | ||||||||
| Amortization of website and development | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from the sale of common stock, net of offering costs | ||||||||
| Proceeds from issuance of convertible debentures | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | ||||||||
| Supplemental disclosures of non-cash information | ||||||||
| Issuance of Common Stock in exchange for the Intellectual Property | $ | $ | ||||||
| Discount issued with Convertible Debentures | $ | $ | ||||||
| Cash paid during the period for interest | $ | $ | ||||||
| Retirement of common shares issued for services | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - Organization and Nature of Operation
MediXall Group, Inc. (the "Company “or “MediXall”) was incorporated on December 21, 1998 under the laws of the State of Nevada under the name of IP Gate, Inc. The Company had various name changes since, to reflect changes in the Company’s operating strategies.
MediXall Group, Inc. (OTCQB: MDXL) is an innovation-driven healthcare solutions company exemplifying robust and purpose-driven solutions. Our company is meticulously crafted to deliver practical, value-based healthcare solutions tailored to enhance the physical health, mental well-being, and overall productivity of individuals, employers, and organizations. By providing customized, forward-thinking services, we empower our clients to control costs while prioritizing comprehensive care. Through an AI-driven engagement platform, our unique solutions are readily accessible, ensuring timely and high-quality care for individuals, employees, and members alike. Health Karma Inc., our operational subsidiary, embodies our mission of combining 'health' and 'karma' to elevate the well-being of our valued clients and members.
The
Company saw minimal revenue for the nine months ended September 30, 2022 due to the developmental stage of its online healthcare platform
along with a restructuring of its product offerings and targeted markets. During 2023, the Company has undergone a substantial transformation
in both the Board of Directors and management. This shift has led to significant financial growth, with revenue of $
Moreover, the Company
successfully reduced its net loss in the first nine months of 2023 by over $
The Company has the following wholly-owned subsidiaries: (1) Health Karma, Inc. which was established in 2020 to carry out the operations of MediXall Group Inc., (2) Medixaid, Inc., (3) MediXall.com, Inc., (4) IHL of Florida, Inc., which is dormant, and (5) Medixall Financial Group, which is dormant.
NOTE 2 – Going Concern
The Company had an
accumulated deficit of $
Since the Company has
generated minimal revenues from its planned operations, its ability to continue as a going concern is wholly dependent upon its ability
to obtain additional financing. Since inception, the Company has funded operations through short-term borrowings, and the proceeds from
equity sales in order to meet its strategic objectives. The Company's future operations are dependent upon its ability to generate revenues
along with additional external funding as needed. However, there can be no assurance that the Company will be able to obtain sufficient
funds to continue the development of its business plan. Subsequent to September 30, 2023, the Company issued $
In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These condensed consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 5 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of September 30, 2023 and the condensed consolidated results of operations and cash flows for the periods presented. The condensed consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on August 9, 2023.
Principles of Consolidation
These unaudited condensed consolidated financial statements presented are those of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of the unaudited condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.
A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of website and development cost and intellectual property. The Company uses various assumptions it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustments are reflected in current operations.
Risks and Uncertainties
The Company's operations are subject to significant risks and uncertainties including financial, operational, and regulatory risks, including the potential risk of business failure.
Income Taxes
The Company accounts for income taxes using the liability method prescribed by the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 740, "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely- than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the year that includes the enactment date.
| 6 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies (continued)
Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more- likely-than-not threshold to determine the amount of benefit to be recognized in the consolidated financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than -not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de- recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de- recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.
The Company assessed its earnings history, trends, and estimates of future earnings, and determined that the deferred tax asset could not be realized as of September 30, 2023. Accordingly, a valuation allowance was recorded against the net deferred tax asset.
Revenue Recognition
In accordance with GAAP, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.
For the nine months ended September 30, 2023 and 2022, the Company generated revenues from selling bundle healthcare and well-being services to individuals, employer groups, organizations, associations, resellers, and third-party administrators. Our product offerings operate on a monthly subscription model with agreements and contracts typically spanning a 12-month commitment. We derive significant revenue stability and visibility from this structure. Under our per-membership-per-month (“PMPM”) subscription model, our client customers pay a monthly fee based on the total number of active memberships for that month times the contracted PMPM fee. This revenue generation model enables strong revenue stability as we establish long-term commitments with our clients, fostering a mutually beneficial partnership. The predictable monthly fee structure and the long-term nature of the contracts contribute to increased revenue visibility and forecasting accuracy. It also allows us to align our resources efficiently to meet the needs of our clients, ensuring high-quality service delivery throughout the contracted period. We recognize revenue monthly as the services are rendered and performance obligations are satisfied.
Senior Convertible Debentures and Warrants
At issuance, the senior convertible debentures (Convertible Debt) are recorded at its fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant establishing the cost basis.
Warrants issued with the Convertible Debt are accounted for under the fair value and relative fair value method. The warrants are first analyzed per its terms as to whether it has derivative features or not. The warrants were determined to not have derivative features and were recorded into equity at their fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of their fair value to the total fair value including the fair value of the Convertible Debt. The warrants relative fair values are recorded as a discount to the Convertible Debt and as additional paid-in-capital. Discount on the Convertible Debt is amortized to interest expense over the life of the debt.
The Company applies the fair value method in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values the stock-based compensation at the market price for the Company's stock as of the date of issuance.
| 7 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies (continued)
The computation of basic loss per share (“LPS”) is based on the weighted average number of shares that were outstanding during the periods, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted LPS is based on the number of basic weighted-average shares outstanding. The computation of diluted LPS does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on LPS. Therefore, when calculating LPS, there is no inclusion of dilutive securities as their inclusion in the LPS calculation is antidilutive due to net loss for the periods.
Following is the computation of basic and diluted loss per share for the three and nine-months periods ended September 30, 2023 and 2022:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Basic and Diluted LPS Computation | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Series B Preferred Stock Dividends | ||||||||||||||||
| Loss available to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Basic and diluted LPS | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
Potentially dilutive securities not included in the calculation of diluted LPS attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Series A Preferred Stock (convertible) | ||||||||||||||||
| Series B Preferred Stock (convertible) | ||||||||||||||||
| Senior Convertible Debentures and Warrants | ||||||||||||||||
Recoverability of Long-Lived Assets
The Company assesses the recoverability of long-lived assets annually or whenever events or changes in circumstances indicate that expected future undiscounted cash flows might not be sufficient to support the carrying amount of an asset. The Company deems an asset to be impaired if the forecast of undiscounted future operating cash flows is less than the carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying value of the asset exceeds its fair value. There was no impairment of long-lived assets pertaining to the three- and nine-month periods ended September 30, 2023 and 2022. However, there can be no assurances that future impairment tests will not result in a charge to operations.
Intellectual Property
The intellectual property (“Intellectual Property”) is an intangible asset arising from the Company’s right to use the proprietary technology and programs of the 24hr Virtual Clinic. The Intellectual Property was initially measured at fair value and will be amortized on a straight line basis over its estimated useful life as the economic benefits are consumed or otherwise realized. Management has determined the estimated useful life to be seven years.
| 8 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies (continued)
Website and Development Costs
Internal and external costs incurred to develop the internal-use computer software during the application and development stage shall be capitalized subsequent to the preliminary project stage and when it is probable that the project will be completed. As of September 30, 2023 and December 31, 2022, the Company has met the capitalization requirements and then began to amortize the assets. Amortization is calculated using the straight line method over the estimated useful life of the assets, which management determined to be five years.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
NOTE 4 - Intellectual Property
Intellectual Property consists of the following:
| Balances, September 30, 2023 | ||||
| Gross | $ | |||
| Accumulated amortization | ( | ) | ||
| Net carrying amount | $ | |||
Estimated amortization expense for the intellectual property for each of the future years ending December 31 is as follows:
| 2023 (three months) | |||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| Thereafter | |||||
| Total | $ | ||||
NOTE 5 – Preferred Stock
The outstanding Series A preferred shares are convertible into common shares based on a conversion factor of 1:94. The preferred shares do not pay dividends. The number of votes for the preferred shares shall be the same as the number of shares of common shares that would be issued upon conversion.
On June 24, 2020, the Company filed with the Secretary of State of the State of Nevada (the “Secretary of State”) a certificate of designation (the “Certificate of Designation”) of Series B Convertible Preferred Stock, par value $ per share (the “Series B Preferred Stock”). The Certificate of Designation was effective upon filing with the Secretary of State and designated a new series of preferred stock of the Company as Series B Convertible Preferred Stock with shares authorized for issuance.
Upon the occurrence of the events as set forth in paragraph (a) or (b) below, each share of Series B Preferred Stock shall be converted into four (the “Conversion Ratio”) fully paid and non-assessable shares of common stock or any shares of capital stock or other securities of the Company into which such common stock shall hereafter be changed or reclassified (the “Conversion Shares”) as set forth in the Certificate of Designation.
| 9 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 5 – Preferred Stock (continued)
| (a) | Automatic Conversion |
Immediately upon the listing of the common stock for trading on the New York Stock Exchange or the Nasdaq Stock Market, all of the issued and outstanding shares of Series B Preferred Stock shall automatically be converted into Conversion Shares without any further action of any holder of Series B Preferred Stock (each, a “Series B Holder” and collectively, “Series B Holders”).
| (b) | Optional Conversion |
A Series B Holder shall have the right at any time during the period beginning on the date which is six months following the date that the Series B Preferred Stock is initially issued and prior to any automatic conversion as provided in the Certificate of Designation, to convert all or any part of the outstanding Series B Preferred Stock held by such Series B Holder into Conversion Shares at the Conversion Ratio as provided in the Certificate of Designation, subject to limitations set forth in the Certificate of Designation.
Dividends
Series B Holders
will be entitled to receive a quarterly dividend, until the conversion of the Series B Preferred Stock, at the rate of
Voting Rights
Each share of Series B Preferred Stock shall have a number of votes on any matter submitted to the holders of the Company’s common stock, or any class thereof, for a vote, equal to the number of Conversion Shares into which the Series B Preferred Stock is then convertible, and shall vote together with the common stock, or any class thereof, as applicable, as one class on such matter for as long as the share of Series B Preferred Stock is issued and outstanding.
NOTE 6 – Related Party Transactions
During the three and nine months ended September 30, 2023, there were no related party transactions.
NOTE 7 – Senior Convertible Debentures and Warrants
As of September 30, 2023, the Company’s common stock underlying the convertible debentures and warrants is subject to a registration rights agreement. The Company is required to use its reasonable best efforts to comply with the provisions of the registration rights agreement.
At September 30, 2023,
the Company issued warrants to acquire up to an aggregate
| 10 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 7 – Senior Convertible Debentures and Warrants (continued)
The fair value of each warrant issued during the nine months ended September 30, 2023 was estimated on the date of issuance using the Black-Scholes option pricing model with the following assumptions:
| Stock price | $ | - | |||
| Exercise price | $ | ||||
| Risk-free interest rate | - | % | |||
| Expected dividend yield | % | ||||
| Expected stock volatility | - | % | |||
| Expected life in years |
The expected life was based on the average life of the warrants. Expected volatility is based on historical volatility of Company's common stock. The risk-free rate for periods within the contractual life of the warrants is based on the U.S. Treasury yield curve in effect at the time of issuance. The dividend yield assumption is based on the Company's expectation of dividend payments.
The relative fair value
of the warrants was $
The following summarized the senior convertible debentures during the nine-month period ended September 30, 2023:
| Senior Convertible Debentures at December 31, 2022 | $ | |||
| Debentures Issued | ||||
| Relative fair value of warrants issued as discount | ( |
) | ||
| Accretion of warrants issued as discount | ||||
| Senior Convertible Debentures at September 30, 2023 | $ |
NOTE 8 – Subsequent Events
The Company has evaluated all subsequent events through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the unaudited condensed consolidated financial statements as of September 30, 2023, and events which occurred subsequently but were not recognized in the unaudited condensed consolidated financial statements.
Subsequent to September 30, 2023, the Company
has signed a new
Pursuant to the terms of the lease agreement, the Company agreed to
pay $
| 11 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 8 – Subsequent Events (continued)
Subsequent to September
30, 2023, and as of the date of this filing, the Company issued $
(a) All the
Convertible Debentures listed below have these identical terms: The Convertible Debentures bear interest at a rate of
(b)
On October 6, 2023, the Company entered into a securities purchase agreement with Winston
Marshall in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $
(c)
On October 19, 2023, the Company entered into a securities purchase agreement with Kevin
Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $
(d)
On November 7, 2023, the Company entered into a securities purchase agreement with Susan
Poniatowksi Revocable Trust in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(e) On November
8, 2023, the Company entered into a securities purchase agreement with Kevin
Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $
(f)
On November 10, 2023, the Company entered into a securities purchase agreement with Scott Powell in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(g)
On November 14, 2023, the Company entered into a securities purchase
agreement with Brad Britton in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(h)
On December 7, 2023, the Company entered into a securities purchase agreement with Christopher Fish in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(i)
On December 7, 2023, the Company entered into a securities purchase agreement with Jeffrey Bryant in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(j)
On December 7, 2023, the Company entered into a securities purchase agreement with Leslie McCloud in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(k)
On December 13, 2023, the Company entered into a securities purchase agreement with Susan Poniatowksi Revocable Trust in connection with
the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $
(l)
On December 15, 2023, the Company entered into a securities purchase agreement with Antrim Properties in connection with the issuance
and sale by the Company of convertible debentures in an aggregate principal amount of $
(m) On December 20, 2023, the Company entered into a securities purchase
agreement with James Paschall in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
| 12 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 8 – Subsequent Events (continued)
(n)
On January 5, 2024, the Company entered into a securities purchase agreement with Sydney & Suelan Brown in connection with the issuance
and sale by the Company of convertible debentures in an aggregate principal amount of $
(o)
On January 8, 2024, the Company entered into a securities purchase agreement with Ransom Leppink in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(p) On January 8, 2024, the Company entered into a securities purchase
agreement with Kenneth Best in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(q)
On January 10, 2024, the Company entered into a securities purchase agreement with Kirk & Sandy Farris in connection with the issuance
and sale by the Company of convertible debentures in an aggregate principal amount of $
(r) On January
10, 2024, the Company entered into a securities purchase agreement with Scott Powell in connection with the issuance and sale by the
Company of convertible debentures in an aggregate principal amount of $
(s)
On January 10, 2024, the Company entered into a securities purchase agreement with John Keller in connection with the issuance and sale
by the Company of convertible debentures in an aggregate principal amount of $
(t)
On January 12, 2024, the Company entered into a securities purchase agreement with Michael Shedlock Roth IRA in connection with the issuance
and sale by the Company of convertible debentures in an aggregate principal amount of $
(u)
On January 23, 2024, the Company entered into a securities purchase agreement with Jeffrey Bryant in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(v)
On February 5, 2024, the Company entered into a securities purchase agreement with Terry Fangrad in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(w)
On February 5, 2024, the Company entered into a securities purchase agreement with Oksana Batig in connection with the issuance and sale
by the Company of convertible debentures in an aggregate principal amount of $
(x) On February 5, 2024, the Company entered into a securities purchase
agreement with Megan Stewart in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(y)
On February 5, 2024, the Company entered into a securities purchase agreement with Stan Weiland in connection with the issuance and sale
by the Company of convertible debentures in an aggregate principal amount of $
(z)
On February 13, 2024, the Company entered into a securities purchase agreement with In Trust of Maria Conti Barth in connection with
the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $
| 13 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 8 – Subsequent Events (continued)
(aa) On February 22, 2024, the Company entered into a securities purchase
agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(bb)
On February 28, 2024, the Company entered into a securities purchase agreement with William J. Knapp in connection with the issuance
and sale by the Company of convertible debentures in an aggregate principal amount of $
(cc) On February 29, 2024, the Company entered into a securities purchase
agreement with Antrim Properties in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(dd)
On March 5, 2024, the Company entered into a securities purchase agreement with Joseph Barth Jr. in connection with the issuance and
sale by the Company of convertible debentures in an aggregate principal amount of $
(ee)
On March 13, 2024, the Company entered into a securities purchase agreement with Provident Trust Group LLC FBO Ransom Leppink Roth in
connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $
(ff) On March 14, 2024, the Company entered into a securities purchase
agreement with Winston Marshall in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(gg) On March 27, 2024, the Company entered into a securities purchase
agreement with Kirk & Sandy Farris in connection with the issuance and sale by the Company of convertible debentures in an aggregate
principal amount of $
(hh) On April 8, 2024, the Company entered into a securities purchase
agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(ii) On April 18, 2024, the Company entered into a securities purchase
agreement with Byron Cook in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal
amount of $
(jj)
On April 23, 2024, the Company entered into a securities purchase agreement with Kevin Maloney in connection with the issuance and sale
by the Company of convertible debentures in an aggregate principal amount of $
(kk)
On May 9, 2024, Company entered into a securities purchase agreement with Susan Poniatowski Revocable Trust in connection with the issuance
and sale by the Company of convertible debentures in an aggregate principal amount of $
(ll)
On May 10, 2024, the Company entered into a securities purchase agreement with Scott Powell in connection with the issuance and sale
by the Company of convertible debentures in an aggregate principal amount of $
(mm)
On May 24, 2024, the Company entered into a securities purchase agreement with James Paschall in connection with the issuance and sale
by the Company of convertible debentures in an aggregate principal amount of $
(nn)
On May 31, 2024, the Company entered into a securities purchase agreement with Brad Britton in connection with the issuance and sale
by the Company of convertible debentures in an aggregate principal amount of $
(oo) On
June 10, 2024, the Company entered into a securities purchase agreement with Chris Yegen in connection with the issuance and sale by
the Company of convertible debentures in an aggregate principal amount of $
(pp) On
June 11, 2024, the Company entered into a securities purchase agreement Purchase Agreement with Kevin Maloney in connection with the
issuance and sale by the Company of convertible debentures in an aggregate principal amount of $
| 14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements contained in this report speak only as of the date of this report, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance, or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Such forward-looking statements include statements regarding, among other things, matters associated with:
| · | our ability to continue as a going concern, |
| · | our history of losses which we expect to continue, |
| · | the significant amount of liabilities due to related parties, |
| · | our ability to raise sufficient capital to fund our company, |
| · | our ability to integrate acquisitions and the operations of acquired companies, |
| · | the limited experience of our management in the operations of a public company, |
| · | potential weaknesses in our internal control over financial reporting, |
| · | increased costs associated with reporting obligations as a public company, |
| · | a limited market for our common stock and limitations resulting from our common stock being designated as a penny stock, |
| · | the ability of our board of directors to issue preferred stock without the consent of our stockholders, |
| · | our management controls the voting of our outstanding securities, |
| · | the conversion of shares of Series A and B preferred stock will be very dilutive to our existing common stockholders, |
| · | risks associated with and unique to health care, |
| · | risks associated with stability of the internet, data security, exposure to data breach, and |
| · | risk associated with using third-party providers for the deliverables of our products and services. |
You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements, including those made in this report, in Part I. Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2022, as the same may be amended from time to time, and our other filings with the Securities and Exchange Commission. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
OTHER PERTINENT INFORMATION
Unless specifically set forth to the contrary, when used in this report the terms “MediXall Group”, the “Company,” “we”, “us”, “our” and similar terms refer to MediXall Group, Inc., a Nevada corporation, and its wholly owned subsidiaries.
GENERAL
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the Company’s results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q.
| 15 |
The MD&A is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
OVERVIEW
The Company’s business model is purposefully designed and structured around delivering practical, value-based, customized solutions to individual members, employers, and organizations which will enhance their overall physical health, mental health, and well-being, to help control the cost of care of the individual, the employer, or membership-based organization as well as to increase productivity. Our unique, customized, proactive solutions are available anytime, anywhere, through an AI-driven engagement platform delivering timely, quality care to individuals, employees, and members. Our operating subsidiary is Health Karma Inc. Our name merges “health” with “karma” as our mission is to enhance the physical and mental health and well-being of our clients and members.
At the heart of our branding strategy lies the revolutionary concept of 1st Moment™ Solutions (“1st Moment”). We understand that the pivotal 'first moment' in any scenario significantly shapes its overall outcome and cost implications. Acknowledging the paramount importance of an immediate and effective response at this critical juncture, we are pioneering top-of-the-funnel upstream solutions in healthcare. By optimizing the initial response, we are not only enhancing mental, physical, and social well-being but also setting the stage for downstream improvements and cost efficiencies. Our 1st Moment™ brand emphasizes the fact that the majority of our solutions deliver immediate in-the-moment access to our provider network of medical doctors, master’s level behavioral health clinicians, registered triage nurses and even veterinarians.
Our 1st Moment solutions extend their transformative reach, delivering profound benefits to a wide spectrum of stakeholders that includes corporations, resellers, first responders, public safety agencies, healthcare providers, educational institutions (comprising students, faculty, and staff), as well as various associations and organizations. Through our strategic offerings, we aim to revolutionize outcomes and bring unparalleled value to these diverse groups. Drawing on our expertise, wealth of experience, expansive provider network, and cutting-edge methodologies, we empower individuals and entities to establish a robust framework for mental, physical, and social well-being. This empowerment enables our clients to proactively manage risks, enhance productivity, and cultivate healthier environments. As we persist in our journey of evolution and innovation, we maintain an unwavering dedication to refining the 'first moment' response, ensuring sustained improvements in overall outcomes and enduring advantages for our esteemed clientele.
Client examples are: third party administrators such as Free Market Administrators and Invicta Benefits Group which have embedded our solutions into their product offerings to their partners which include some of the top-rated carriers, benefits providers, and insurance agencies in the country; individual organizations such as Michigan Chamber of Commerce, Provident Insurance Solutions, Cosmo Cabinets, Goddard Schools, The Museum of Contemporary Art Cleveland, Tri-County Jobs for Ohio’s Graduates, Commissary Express; as well as benefit providers/resellers who have bundled our unique solutions into their product offerings: Aloha Elements, National Consumer Benefits Association, Foundation Mental Wellness, and Pinnacle Training Systems.
During 2023, the Company underwent a nearly complete change in the Board of Directors and management resulting in a substantial transformation of the Company’s focus, product offerings, and channel emphasis. This shift has led to significant financial growth, with revenue in the third quarter of 2023 of $65,535 surpassing $20,766 for the same period in 2022 by nearly 3 times. Additionally, the nine-month revenue for 2023 was $214,925 versus $39,025 for the same period in 2022; an increase of 5.5 times.
Moreover, the Company successfully reduced its net loss in the first nine months of 2023 by over $1.9 million to $3,108,940 in 2023 versus $5,047,974 for the same period in 2022. This is the result of the new management taking decisive steps to reduce costs by moving its corporate office, continuing the remote work strategy started under pandemic conditions, dramatically reducing the number of employees by procuring out-sourced marketing expertise, its AI-driven User Experience/User Interface (UX/UI) platform, as well as its IT development and maintenance.
Going Concern
We have incurred net losses of approximately $35.7 million since inception through September 30, 2023. The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2022 contains an explanatory paragraph regarding our ability to continue as a going concern based upon the fact that we are dependent upon our ability to increase revenues along with raising additional external capital as needed. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
| 16 |
Results of Operations
Three-Month Period Ended September 30, 2023 Compared to the Three-Month Period Ended September 30, 2022
Revenue
Revenue for the three months ended September 30, 2023 was $65,535 surpassing that of the same period in 2022 of $20,766 by over 3 times.
Moreover, the Company successfully reduced its Net Loss in the three months ended September 30, 2023 by $175,811 from the same period in 2022. The Net Loss for the three months ended September 30, 2023 was $908,067 versus $1,083,878 for the same period in 2022.
Operating Expenses
A summary of our operating expense for the three-month periods ended September 30, 2023 and 2022 follows:
Three Months Ended September 30, | Increase / | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| Operating expense | ||||||||||||
| Professional fees | $ | 519,787 | $ | 227,914 | $ | 291,873 | ||||||
| Professional fees – related party | — | 50,100 | (50,100 | ) | ||||||||
| Management fee – related party | — | 240,000 | (240,000 | ) | ||||||||
| Personnel related expenses | 162,345 | 273,120 | (110,775 | ) | ||||||||
| Other selling, general, and administrative | 191,358 | 313,510 | (122,152 | ) | ||||||||
| Interest expense | 37,002 | — | 37,002 | |||||||||
| Total operating expense | 910,492 | 1,104,644 | (194,152 | ) | ||||||||
Operating expenses decreased $194,152 or 17.6%, to $910,492 during the three months ended September 30, 2023 compared to $1,104,644 during the same period in 2022. The decrease in total operating expenses is primarily due to:
| 1. |
The decrease in personnel related expenses of $110,775, primarily resulting from the termination of employees during the three-month period ended September 30, 2023 compared to the three-month period ended September 30, 2022.
| |
| 2. | The decrease in related party fees of a combined $290,100, due to the elimination of related party transactions and relationships during the three-month period ended September 30, 2023 compared to the three-month period ended September 30, 2022. |
| 17 |
Nine-Month Period Ended September 30, 2023 Compared to the Nine-Month Period Ended September 30, 2022
Revenue
Revenue for the nine-month period ended September 30, 2023 was $214,925 as compared to $39,025 for the same period in 2022 representing an increase of 5.5 times compared to 2022.
Moreover, the Company successfully reduced its Net Loss in the nine months ended September 30, 2023 by $1,939,034 from the same period in 2022. The Net Loss for the nine months ended September 30, 2023 was $3,108,940 versus $5,047,974 for the same period in 2022.
Operating Expenses
A summary of our operating expense for the nine-month periods ended September 30, 2023 and 2022 follows:
Nine Months Ended September 30, | Increase / | |||||||||||
| 2023 | 2022 | (Decrease) | ||||||||||
| Operating expense | ||||||||||||
| Professional fees | $ | 1,630,894 | $ | 824,527 | $ | 806,367 | ||||||
| Professional fees – related party | — | 227,600 | (227,600 | ) | ||||||||
| Management fee – related party | — | 720,000 | (720,000 | ) | ||||||||
| Personnel related expenses | 649,593 | 2,587,035 | (1,937,442 | ) | ||||||||
| Other selling, general, and administrative | 683,445 | 727,837 | (44,392 | ) | ||||||||
| Interest expense | 171,837 | — | 171,837 | |||||||||
| Total operating expense | 3,135,769 | 5,086,999 | (1,951,230 | ) | ||||||||
Operating expenses decreased $1,951,230, or 38.4%, to $3,135,769 during the nine months ended September 30, 2023 compared to $5,086,999 during the same period in 2022. The decrease in total operating expenses is primarily due to:
| 1. | The decrease in personnel related expenses of $1,937,442 is primarily resulted from the termination of employees during the nine-month period ended September 30, 2023 compared to the nine-month period ended September 30, 2022. |
| 2. | The decrease in related party fees of a combined $947,600 is due to the elimination of related party transactions and relationships during the nine-month period ended September 30, 2023 compared to the nine-month period ended September 30, 2022. |
We expect expenses to decrease as we move forward as the Company continues its remote work strategy started under pandemic conditions, and dramatically reduced the number of employees by procuring out-sourced marketing expertise along with its AI-driven User Experience/User Interface (UX/UI) platform as well as its IT development and maintenance.
| 18 |
Liquidity and capital resources
Liquidity is the ability of a company to generate sufficient cash to satisfy its needs. At September 30, 2023, we had $9,667 in cash and a net working capital deficit of $5,691,205.
For the nine-month period ended September 30, 2023, we raised $1,853 and $1,032,498 from sales of our restricted common stock and issuance of convertible debt, respectively.
Net cash used in operating activities for the nine-month period ended September 30, 2023 was $1,028,100, as compared to $2,962,802 for the same nine-month period in 2022. This change primarily results from our lower net loss, offset by fluctuations in accounts payable and accrued expenses, reduction in operating lease liability and an elimination in any transactions between related entities.
Our primary source of capital and liquidity to develop and implement our business plan has been from sales of preferred stock and proceeds from convertible debentures.
Other Contractual Obligations
None.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Critical Accounting Policies
Use of Estimates
The preparation of the condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.
A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of website and development cost and intellectual property. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustment is reflected in current operations.
Risks and Uncertainties
The Company's operations are subject to significant risks and uncertainties including financial, operational, and regulatory risks, including the potential risk of business failure. For information regarding such risks and uncertainties, see Item 1A, Risk Factors, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as the same may be amended or updated from time to time.
| 19 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We carried out an evaluation as required by paragraph (b) of Rule 13a-15 and 15d-15 of the Exchange Act, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2023.
A material weakness can be defined as an insufficiency of internal controls that may result in a more than remote likelihood that a material misstatement will not be prevented, detected, or corrected in a company’s condensed consolidated financial statements.
Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that as of September 30, 2023, our disclosure controls and procedures were not effective, based on the following deficiencies:
| · | Weaknesses in accounting and finance personnel: We have outsourced our accounting function, and we do not have the robust employee resources and expertise needed to meet complex and intricate GAAP and SEC reporting requirements of a U.S. public company. Additionally, numerous adjustments and proposed adjustments have been noted by our auditors. This is deemed by management to be a material weakness in preparing condensed consolidated financial statements. |
| · | We have written accounting policies and control procedures, but we do not have sufficient staff to implement the related controls. Management had determined that this lack of the implantation of segregation of duties, as required by our written procedures, represents a material weakness in our internal controls. |
| · | Internal control has as its core a basic tenant of segregation of duties. Due to our limited size and economic constraints, the Company is not able to segregate for control purposes various asset control and recording duties and functions to different employees. This lack of segregation of duties had been evaluated by management and has been deemed to be a material control deficiency. |
The Company has determined that the above internal control weaknesses and deficiencies could result in a reasonable possibility for the condensed consolidated financial statements that a material misstatement will not be prevented or detected on a timely basis by the Company’s internal controls.
Management is currently evaluating what steps can be taken in order to address these material weaknesses. As a growing small business, the Company continuously devotes resources to the improvement of our internal control over financial reporting. Due to budget constraints, the staffing size, proficiency, and specific expertise is below requirements for the operation. The Company is anticipating correcting deficiencies as funds become available.
Changes in Internal Control Over Financial Reporting
There were no changes during our last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 20 |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Except as set forth herein, as of the date of this Quarterly Report on Form 10-Q, there are no material pending legal proceedings to which we are a party or which our property is the subject. In addition, none of our officers, directors, affiliates or 5% stockholders (or any associates thereof) is a party adverse to us, or has a material interest adverse to us, in any material proceeding.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None during the three-month period ended September 30, 2023
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable to our Company.
ITEM 5. OTHER INFORMATION.
During the quarter
ended September 30, 2023, no director or officer of the Company
| 21 |
ITEM 6. EXHIBITS.
| Exhibit No. | Description | |
| 31.1 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer * | |
| 31.2 | Rule 13a-14(a)/ 15d-14(a) Certification of Principal Financial Officer* | |
| 32.1 | Section 1350 Certification of Chief Executive Officer ** | |
| 32.2 | Section 1350 Certification of Principal Financial Officer ** | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) * | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document * | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document * | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document * | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document * | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document * | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
———————
* Filed herewith.
**Furnished herewith.
| 22 |
SIGNATURES
Pursuant to the requirements 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.
MediXall Group, Inc.
| Dated: June 20, 2024 | By: | /s/ Shane Glavin |
| Shane Glavin | ||
| Principal Financial Officer | ||
|
Dated: June 20, 2024 |
By: |
/s/ Travis Jackson |
| Travis Jackson | ||
| Chief Executive Officer (Principal Executive Officer) |
| 23 |
Exhibit 31.1
CERTIFICATION
I, Travis Jackson, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2023 of MediXall Group, Inc.; |
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: June 20, 2024 | By: | /s/ Travis Jackson |
|
Travis Jackson (principal executive officer) | ||
Exhibit 31.2
CERTIFICATION
I, Shane Glavin, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2023 of MediXall Group, Inc.; |
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: June 20, 2024 | By: | /s/Shane Glavin |
|
Shane Glavin Principal Financial Officer | ||
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of MediXall Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Travis Jackson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: June 20, 2024 | By: | /s/ Travis Jackson |
|
Travis Jackson (principal executive officer) | ||
Exhibit 32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of MediXall Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shane Glavin, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: June 20, 2024 | By: | /s/Shane Glavin |
|
Shane Glavin Principal Financial Officer | ||
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Senior convertible debentures, net of discount | $ 106,443 | $ 166,167 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 750,000,000 | 750,000,000 |
| Common stock, shares issued | 130,487,491 | 122,187,491 |
| Common stock, shares outstanding | 130,487,491 | 122,187,491 |
| Series A Preferred Stock [Member] | ||
| Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
| Convertible preferred stock, shares authorized | 1,000,000 | 1,000,000 |
| Convertible preferred stock, shares issued | 176,596 | 264,894 |
| Convertible preferred stock, shares outstanding | 176,596 | 264,894 |
| Series B Preferred Stock [Member] | ||
| Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
| Convertible preferred stock, shares authorized | 4,000,000 | 4,000,000 |
| Convertible preferred stock, shares issued | 3,909,360 | 3,909,360 |
| Convertible preferred stock, shares outstanding | 3,909,360 | 3,909,360 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Revenue | $ 65,535 | $ 20,766 | $ 214,925 | $ 39,025 |
| Cost of Services | 63,110 | 0 | 188,096 | 0 |
| Gross Margin | 2,425 | 20,766 | 26,829 | 39,025 |
| Operating Expenses | ||||
| Professional fees | 519,787 | 227,914 | 1,630,894 | 824,527 |
| Professional fees - related party | 0 | 50,100 | 0 | 227,600 |
| Management fees - related party | 0 | 240,000 | 0 | 720,000 |
| Personnel related expenses | 162,345 | 273,120 | 649,593 | 2,587,035 |
| Other selling, general and administrative | 191,358 | 313,510 | 683,445 | 727,837 |
| Interest Expense | 37,002 | 0 | 171,837 | 0 |
| Total Operating Expenses | 910,492 | 1,104,644 | 3,135,769 | 5,086,999 |
| Loss before income taxes | (908,067) | (1,083,878) | (3,108,940) | (5,047,974) |
| Income taxes | 0 | 0 | 0 | 0 |
| Net Loss | (908,067) | (1,083,878) | (3,108,940) | (5,047,974) |
| Less preferred stock dividends | 78,996 | 78,995 | 234,410 | 234,410 |
| Net Loss to common stockholders | $ (987,063) | $ (1,162,873) | $ (3,343,350) | $ (5,282,384) |
| Net loss per common stock | ||||
| Basic | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.05) |
| Diluted | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.05) |
| Weighted average number of common shares outstanding during the periods | ||||
| Basic | 130,487,491 | 116,886,659 | 126,048,154 | 115,896,191 |
| Diluted | 130,487,491 | 116,886,659 | 126,048,154 | 115,896,191 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Parenthetical) - USD ($) |
3 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Mar. 31, 2022 |
|
| Common Stock [Member] | ||
| Offering costs | $ 0 | $ 0 |
Pay vs Performance Disclosure - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Pay vs Performance Disclosure [Table] | ||||||||
| Net Income (Loss) Attributable to Parent | $ (908,067) | $ (979,378) | $ (1,221,495) | $ (1,083,878) | $ (1,553,994) | $ (2,410,102) | $ (3,108,940) | $ (5,047,974) |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Insider Trading Arrangements [Line Items] | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Organization and Nature of Operation |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and Nature of Operation | NOTE 1 - Organization and Nature of Operation MediXall Group, Inc. (the "Company “or “MediXall”) was incorporated on December 21, 1998 under the laws of the State of Nevada under the name of IP Gate, Inc. The Company had various name changes since, to reflect changes in the Company’s operating strategies.
MediXall Group, Inc. (OTCQB: MDXL) is an innovation-driven healthcare solutions company exemplifying robust and purpose-driven solutions. Our company is meticulously crafted to deliver practical, value-based healthcare solutions tailored to enhance the physical health, mental well-being, and overall productivity of individuals, employers, and organizations. By providing customized, forward-thinking services, we empower our clients to control costs while prioritizing comprehensive care. Through an AI-driven engagement platform, our unique solutions are readily accessible, ensuring timely and high-quality care for individuals, employees, and members alike. Health Karma Inc., our operational subsidiary, embodies our mission of combining 'health' and 'karma' to elevate the well-being of our valued clients and members.
The Company saw minimal revenue for the nine months ended September 30, 2022 due to the developmental stage of its online healthcare platform along with a restructuring of its product offerings and targeted markets. During 2023, the Company has undergone a substantial transformation in both the Board of Directors and management. This shift has led to significant financial growth, with revenue of $65,535 in the third quarter of 2023 surpassing that of the same period in 2022 of $20,766 by over 3 times. Additionally, the nine-month revenue for 2023 was $214,925 as compared to $39,025 for the same period in 2022 representing an increase of 5 .5 times.
Moreover, the Company successfully reduced its net loss in the first nine months of 2023 by over $1.9 million from the same period in 2022. The net loss for the nine months ended September 30, 2023 was $3,108,940 versus $5,047,974 for the same period in 2022. For a comprehensive overview of our operations, mission, and strategic initiatives, please refer to the Management’s Discussion and Analysis section in this report.
The Company has the following wholly-owned subsidiaries: (1) Health Karma, Inc. which was established in 2020 to carry out the operations of MediXall Group Inc., (2) Medixaid, Inc., (3) MediXall.com, Inc., (4) IHL of Florida, Inc., which is dormant, and (5) Medixall Financial Group, which is dormant.
|
Going Concern |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Going Concern | NOTE 2 – Going Concern The Company had an accumulated deficit of $35,721,745 at September 30, 2023, and does not have sufficient operating cash flows. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.
Since the Company has generated minimal revenues from its planned operations, its ability to continue as a going concern is wholly dependent upon its ability to obtain additional financing. Since inception, the Company has funded operations through short-term borrowings, and the proceeds from equity sales in order to meet its strategic objectives. The Company's future operations are dependent upon its ability to generate revenues along with additional external funding as needed. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business plan. Subsequent to September 30, 2023, the Company issued $716,500 of convertible debentures.
In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These condensed consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | NOTE 3 - Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of September 30, 2023 and the condensed consolidated results of operations and cash flows for the periods presented. The condensed consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on August 9, 2023.
Principles of Consolidation These unaudited condensed consolidated financial statements presented are those of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Use of Estimates The preparation of the unaudited condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.
A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of website and development cost and intellectual property. The Company uses various assumptions it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustments are reflected in current operations.
Risks and Uncertainties The Company's operations are subject to significant risks and uncertainties including financial, operational, and regulatory risks, including the potential risk of business failure.
Income Taxes The Company accounts for income taxes using the liability method prescribed by the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 740, "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely- than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the year that includes the enactment date.
Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more- likely-than-not threshold to determine the amount of benefit to be recognized in the consolidated financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than -not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de- recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de- recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.
The Company assessed its earnings history, trends, and estimates of future earnings, and determined that the deferred tax asset could not be realized as of September 30, 2023. Accordingly, a valuation allowance was recorded against the net deferred tax asset.
Revenue Recognition In accordance with GAAP, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.
For the nine months ended September 30, 2023 and 2022, the Company generated revenues from selling bundle healthcare and well-being services to individuals, employer groups, organizations, associations, resellers, and third-party administrators. Our product offerings operate on a monthly subscription model with agreements and contracts typically spanning a 12-month commitment. We derive significant revenue stability and visibility from this structure. Under our per-membership-per-month (“PMPM”) subscription model, our client customers pay a monthly fee based on the total number of active memberships for that month times the contracted PMPM fee. This revenue generation model enables strong revenue stability as we establish long-term commitments with our clients, fostering a mutually beneficial partnership. The predictable monthly fee structure and the long-term nature of the contracts contribute to increased revenue visibility and forecasting accuracy. It also allows us to align our resources efficiently to meet the needs of our clients, ensuring high-quality service delivery throughout the contracted period. We recognize revenue monthly as the services are rendered and performance obligations are satisfied.
Senior Convertible Debentures and Warrants At issuance, the senior convertible debentures (Convertible Debt) are recorded at its fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant establishing the cost basis.
Warrants issued with the Convertible Debt are accounted for under the fair value and relative fair value method. The warrants are first analyzed per its terms as to whether it has derivative features or not. The warrants were determined to not have derivative features and were recorded into equity at their fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of their fair value to the total fair value including the fair value of the Convertible Debt. The warrants relative fair values are recorded as a discount to the Convertible Debt and as additional paid-in-capital. Discount on the Convertible Debt is amortized to interest expense over the life of the debt.
The Company applies the fair value method in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values the stock-based compensation at the market price for the Company's stock as of the date of issuance.
The computation of basic loss per share (“LPS”) is based on the weighted average number of shares that were outstanding during the periods, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted LPS is based on the number of basic weighted-average shares outstanding. The computation of diluted LPS does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on LPS. Therefore, when calculating LPS, there is no inclusion of dilutive securities as their inclusion in the LPS calculation is antidilutive due to net loss for the periods. Following is the computation of basic and diluted loss per share for the three and nine-months periods ended September 30, 2023 and 2022:
Potentially dilutive securities not included in the calculation of diluted LPS attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):
Recoverability of Long-Lived Assets The Company assesses the recoverability of long-lived assets annually or whenever events or changes in circumstances indicate that expected future undiscounted cash flows might not be sufficient to support the carrying amount of an asset. The Company deems an asset to be impaired if the forecast of undiscounted future operating cash flows is less than the carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying value of the asset exceeds its fair value. There was no impairment of long-lived assets pertaining to the three- and nine-month periods ended September 30, 2023 and 2022. However, there can be no assurances that future impairment tests will not result in a charge to operations.
Intellectual Property The intellectual property (“Intellectual Property”) is an intangible asset arising from the Company’s right to use the proprietary technology and programs of the 24hr Virtual Clinic. The Intellectual Property was initially measured at fair value and will be amortized on a straight line basis over its estimated useful life as the economic benefits are consumed or otherwise realized. Management has determined the estimated useful life to be seven years.
Website and Development Costs Internal and external costs incurred to develop the internal-use computer software during the application and development stage shall be capitalized subsequent to the preliminary project stage and when it is probable that the project will be completed. As of September 30, 2023 and December 31, 2022, the Company has met the capitalization requirements and then began to amortize the assets. Amortization is calculated using the straight line method over the estimated useful life of the assets, which management determined to be five years.
Recent Accounting Pronouncements Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
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Intellectual Property |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intellectual Property | NOTE 4 - Intellectual Property Intellectual Property consists of the following:
Estimated amortization expense for the intellectual property for each of the future years ending December 31 is as follows:
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Preferred Stock |
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Sep. 30, 2023 | |||||||
| Equity [Abstract] | |||||||
| Preferred Stock | NOTE 5 – Preferred Stock
The outstanding Series A preferred shares are convertible into common shares based on a conversion factor of 1:94. The preferred shares do not pay dividends. The number of votes for the preferred shares shall be the same as the number of shares of common shares that would be issued upon conversion.
On June 24, 2020, the Company filed with the Secretary of State of the State of Nevada (the “Secretary of State”) a certificate of designation (the “Certificate of Designation”) of Series B Convertible Preferred Stock, par value $ per share (the “Series B Preferred Stock”). The Certificate of Designation was effective upon filing with the Secretary of State and designated a new series of preferred stock of the Company as Series B Convertible Preferred Stock with shares authorized for issuance.
Upon the occurrence of the events as set forth in paragraph (a) or (b) below, each share of Series B Preferred Stock shall be converted into four (the “Conversion Ratio”) fully paid and non-assessable shares of common stock or any shares of capital stock or other securities of the Company into which such common stock shall hereafter be changed or reclassified (the “Conversion Shares”) as set forth in the Certificate of Designation.
Immediately upon the listing of the common stock for trading on the New York Stock Exchange or the Nasdaq Stock Market, all of the issued and outstanding shares of Series B Preferred Stock shall automatically be converted into Conversion Shares without any further action of any holder of Series B Preferred Stock (each, a “Series B Holder” and collectively, “Series B Holders”).
A Series B Holder shall have the right at any time during the period beginning on the date which is six months following the date that the Series B Preferred Stock is initially issued and prior to any automatic conversion as provided in the Certificate of Designation, to convert all or any part of the outstanding Series B Preferred Stock held by such Series B Holder into Conversion Shares at the Conversion Ratio as provided in the Certificate of Designation, subject to limitations set forth in the Certificate of Designation. Dividends Series B Holders will be entitled to receive a quarterly dividend, until the conversion of the Series B Preferred Stock, at the rate of 8% per annum (the “Series B Dividend”). The Series B Dividend will be cumulative, shall accrue quarterly, and be paid via the issuance of a number of shares of common stock of the Company equal to (1) the dollar amount of the Series B Dividend being paid, divided by (2) $0.25 (the “Stock Dividend”). The Stock Dividend shall be paid via the issuance to the applicable Series B Holder of the applicable shares of common stock via book entry in the books and records of the Company. common stock has been issued as of September 30, 2023 in satisfaction of the Series B preferred stock dividend. At September 30, 2023 undeclared cumulative Series B preferred stock dividends were $.
Voting Rights Each share of Series B Preferred Stock shall have a number of votes on any matter submitted to the holders of the Company’s common stock, or any class thereof, for a vote, equal to the number of Conversion Shares into which the Series B Preferred Stock is then convertible, and shall vote together with the common stock, or any class thereof, as applicable, as one class on such matter for as long as the share of Series B Preferred Stock is issued and outstanding.
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2023 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | NOTE 6 – Related Party Transactions During the three and nine months ended September 30, 2023, there were no related party transactions.
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Senior Convertible Debentures and Warrants |
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| Senior Convertible Debentures And Warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Convertible Debentures and Warrants | NOTE 7 – Senior Convertible Debentures and Warrants In March 2022, the Company entered into a securities purchase agreement in which the Company maximum offering amount is $5,000,000. For every $1,000 invested in the offering, the Investors will receive a Debenture with a face amount of $1,000 and Warrants to purchase 350 Common Shares at an exercise price that ranges from $0.75 to $1.50 per share expiring on April 30, 2027. Pursuant to this agreement, the Company has received proceeds from convertible debentures totaling $3,641,958. The interest rate is 8% and the maturity date is September 30, 2023. Interest is due quarterly on January 1, April 1, July 1, and October 1 of each year during which the debentures are outstanding. Interest was payable in shares of the Company’s common stock until December 1, 2022. Thereafter, the interest will be paid 50% in cash and 50% in the Company’s common stock. The outstanding debentures are convertible into shares of common stock at a price range from $1.00 to $2.00 per share. The debentures may be converted at any time after the issuance date until the debentures are paid off.
As of September 30, 2023, the Company’s common stock underlying the convertible debentures and warrants is subject to a registration rights agreement. The Company is required to use its reasonable best efforts to comply with the provisions of the registration rights agreement.
At September 30, 2023, the Company issued warrants to acquire up to an aggregate 1,274,687 shares of the Company’s common stock at an exercise price ranging from $0.75 to $1.50 per share. Each Warrant is exercisable by the Investor beginning on the effective date through the fifth-year anniversary thereof.
The fair value of each warrant issued during the nine months ended September 30, 2023 was estimated on the date of issuance using the Black-Scholes option pricing model with the following assumptions:
The expected life was based on the average life of the warrants. Expected volatility is based on historical volatility of Company's common stock. The risk-free rate for periods within the contractual life of the warrants is based on the U.S. Treasury yield curve in effect at the time of issuance. The dividend yield assumption is based on the Company's expectation of dividend payments.
The relative fair value of the warrants was $123,653 and was recorded as debt discount. During the three and nine months ended September 30, 2023, the Company amortized $64,172 and $183,377, respectively, of the debt discount to interest expense.
The following summarized the senior convertible debentures during the nine-month period ended September 30, 2023:
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | NOTE 8 – Subsequent Events The Company has evaluated all subsequent events through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the unaudited condensed consolidated financial statements as of September 30, 2023, and events which occurred subsequently but were not recognized in the unaudited condensed consolidated financial statements. Subsequent to September 30, 2023, the Company has signed a new 2-year lease agreement as of March 1, 2024. Pursuant to the terms of the lease agreement, the Company agreed to pay $1,112.97 per month to TGRJR, LLC for use of the commercial space. Subsequent to September 30, 2023, and as of the date of this filing, the Company issued $716,500 of convertible debentures. (a) All the Convertible Debentures listed below have these identical terms: The Convertible Debentures bear interest at a rate of 8.0% per annum compounded quarterly, of which 4.0% is in kind and 4.0% is in monies, and will mature on March 31, 2024, unless earlier converted or redeemed. The Convertible Debentures are issued at a discounted rate of $0.32 per share. (b) On October 6, 2023, the Company entered into a securities purchase agreement with Winston Marshall in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $50,000. (c) On October 19, 2023, the Company entered into a securities purchase agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $40,000 . (d) On November 7, 2023, the Company entered into a securities purchase agreement with Susan Poniatowksi Revocable Trust in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $12,500. (e) On November 8, 2023, the Company entered into a securities purchase agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000. (f) On November 10, 2023, the Company entered into a securities purchase agreement with Scott Powell in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000. (g) On November 14, 2023, the Company entered into a securities purchase agreement with Brad Britton in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $10,000. (h) On December 7, 2023, the Company entered into a securities purchase agreement with Christopher Fish in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $2,500. (i) On December 7, 2023, the Company entered into a securities purchase agreement with Jeffrey Bryant in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $5,000. (j) On December 7, 2023, the Company entered into a securities purchase agreement with Leslie McCloud in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $5,000. (k) On December 13, 2023, the Company entered into a securities purchase agreement with Susan Poniatowksi Revocable Trust in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $12,500. (l) On December 15, 2023, the Company entered into a securities purchase agreement with Antrim Properties in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $10,000. (m) On December 20, 2023, the Company entered into a securities purchase agreement with James Paschall in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $5,000. (n) On January 5, 2024, the Company entered into a securities purchase agreement with Sydney & Suelan Brown in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $12,500. (o) On January 8, 2024, the Company entered into a securities purchase agreement with Ransom Leppink in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $5,000. (p) On January 8, 2024, the Company entered into a securities purchase agreement with Kenneth Best in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $5,000. (q) On January 10, 2024, the Company entered into a securities purchase agreement with Kirk & Sandy Farris in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $50,000. (r) On January 10, 2024, the Company entered into a securities purchase agreement with Scott Powell in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000. (s) On January 10, 2024, the Company entered into a securities purchase agreement with John Keller in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $2,500. (t) On January 12, 2024, the Company entered into a securities purchase agreement with Michael Shedlock Roth IRA in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $17,500. (u) On January 23, 2024, the Company entered into a securities purchase agreement with Jeffrey Bryant in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $5,000. (v) On February 5, 2024, the Company entered into a securities purchase agreement with Terry Fangrad in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $3,750. (w) On February 5, 2024, the Company entered into a securities purchase agreement with Oksana Batig in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $625. (x) On February 5, 2024, the Company entered into a securities purchase agreement with Megan Stewart in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $625. (y) On February 5, 2024, the Company entered into a securities purchase agreement with Stan Weiland in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $1,250. (z) On February 13, 2024, the Company entered into a securities purchase agreement with In Trust of Maria Conti Barth in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $1,250. (aa) On February 22, 2024, the Company entered into a securities purchase agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $20,500. (bb) On February 28, 2024, the Company entered into a securities purchase agreement with William J. Knapp in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $2,500. (cc) On February 29, 2024, the Company entered into a securities purchase agreement with Antrim Properties in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $5,000. (dd) On March 5, 2024, the Company entered into a securities purchase agreement with Joseph Barth Jr. in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $2,500. (ee) On March 13, 2024, the Company entered into a securities purchase agreement with Provident Trust Group LLC FBO Ransom Leppink Roth in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $6,000. (ff) On March 14, 2024, the Company entered into a securities purchase agreement with Winston Marshall in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $100,000. (gg) On March 27, 2024, the Company entered into a securities purchase agreement with Kirk & Sandy Farris in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $70,000. (hh) On April 8, 2024, the Company entered into a securities purchase agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000. (ii) On April 18, 2024, the Company entered into a securities purchase agreement with Byron Cook in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000 (jj) On April 23, 2024, the Company entered into a securities purchase agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $20,000. (kk) On May 9, 2024, Company entered into a securities purchase agreement with Susan Poniatowski Revocable Trust in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000. (ll) On May 10, 2024, the Company entered into a securities purchase agreement with Scott Powell in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000. (mm) On May 24, 2024, the Company entered into a securities purchase agreement with James Paschall in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $7,500. (nn) On May 31, 2024, the Company entered into a securities purchase agreement with Brad Britton in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $10,000. (oo) On June 10, 2024, the Company entered into a securities purchase agreement with Chris Yegen in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $25,000. (pp) On June 11, 2024, the Company entered into a securities purchase agreement Purchase Agreement with Kevin Maloney in connection with the issuance and sale by the Company of convertible debentures in an aggregate principal amount of $15,000.
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation The accompanying unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of September 30, 2023 and the condensed consolidated results of operations and cash flows for the periods presented. The condensed consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on August 9, 2023.
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| Principles of Consolidation | Principles of Consolidation These unaudited condensed consolidated financial statements presented are those of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
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| Use of Estimates | Use of Estimates The preparation of the unaudited condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.
A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of website and development cost and intellectual property. The Company uses various assumptions it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustments are reflected in current operations.
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| Risks and Uncertainties | Risks and Uncertainties The Company's operations are subject to significant risks and uncertainties including financial, operational, and regulatory risks, including the potential risk of business failure.
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| Income Taxes | Income Taxes The Company accounts for income taxes using the liability method prescribed by the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 740, "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely- than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the year that includes the enactment date.
Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more- likely-than-not threshold to determine the amount of benefit to be recognized in the consolidated financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than -not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de- recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de- recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.
The Company assessed its earnings history, trends, and estimates of future earnings, and determined that the deferred tax asset could not be realized as of September 30, 2023. Accordingly, a valuation allowance was recorded against the net deferred tax asset.
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| Revenue Recognition | Revenue Recognition In accordance with GAAP, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.
For the nine months ended September 30, 2023 and 2022, the Company generated revenues from selling bundle healthcare and well-being services to individuals, employer groups, organizations, associations, resellers, and third-party administrators. Our product offerings operate on a monthly subscription model with agreements and contracts typically spanning a 12-month commitment. We derive significant revenue stability and visibility from this structure. Under our per-membership-per-month (“PMPM”) subscription model, our client customers pay a monthly fee based on the total number of active memberships for that month times the contracted PMPM fee. This revenue generation model enables strong revenue stability as we establish long-term commitments with our clients, fostering a mutually beneficial partnership. The predictable monthly fee structure and the long-term nature of the contracts contribute to increased revenue visibility and forecasting accuracy. It also allows us to align our resources efficiently to meet the needs of our clients, ensuring high-quality service delivery throughout the contracted period. We recognize revenue monthly as the services are rendered and performance obligations are satisfied.
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| Senior Convertible Debentures and Warrants | Senior Convertible Debentures and Warrants At issuance, the senior convertible debentures (Convertible Debt) are recorded at its fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant establishing the cost basis.
Warrants issued with the Convertible Debt are accounted for under the fair value and relative fair value method. The warrants are first analyzed per its terms as to whether it has derivative features or not. The warrants were determined to not have derivative features and were recorded into equity at their fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of their fair value to the total fair value including the fair value of the Convertible Debt. The warrants relative fair values are recorded as a discount to the Convertible Debt and as additional paid-in-capital. Discount on the Convertible Debt is amortized to interest expense over the life of the debt.
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| Share-Based Payment Arrangements |
The Company applies the fair value method in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values the stock-based compensation at the market price for the Company's stock as of the date of issuance.
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| Loss Per Share |
The computation of basic loss per share (“LPS”) is based on the weighted average number of shares that were outstanding during the periods, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted LPS is based on the number of basic weighted-average shares outstanding. The computation of diluted LPS does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on LPS. Therefore, when calculating LPS, there is no inclusion of dilutive securities as their inclusion in the LPS calculation is antidilutive due to net loss for the periods. Following is the computation of basic and diluted loss per share for the three and nine-months periods ended September 30, 2023 and 2022:
Potentially dilutive securities not included in the calculation of diluted LPS attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):
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| Recoverability of Long-Lived Assets | Recoverability of Long-Lived Assets The Company assesses the recoverability of long-lived assets annually or whenever events or changes in circumstances indicate that expected future undiscounted cash flows might not be sufficient to support the carrying amount of an asset. The Company deems an asset to be impaired if the forecast of undiscounted future operating cash flows is less than the carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying value of the asset exceeds its fair value. There was no impairment of long-lived assets pertaining to the three- and nine-month periods ended September 30, 2023 and 2022. However, there can be no assurances that future impairment tests will not result in a charge to operations.
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| Intellectual Property | Intellectual Property The intellectual property (“Intellectual Property”) is an intangible asset arising from the Company’s right to use the proprietary technology and programs of the 24hr Virtual Clinic. The Intellectual Property was initially measured at fair value and will be amortized on a straight line basis over its estimated useful life as the economic benefits are consumed or otherwise realized. Management has determined the estimated useful life to be seven years.
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| Website and Development Costs | Website and Development Costs Internal and external costs incurred to develop the internal-use computer software during the application and development stage shall be capitalized subsequent to the preliminary project stage and when it is probable that the project will be completed. As of September 30, 2023 and December 31, 2022, the Company has met the capitalization requirements and then began to amortize the assets. Amortization is calculated using the straight line method over the estimated useful life of the assets, which management determined to be five years.
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of computation of basic and diluted loss per share |
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| Schedule of potentially dilutive securities |
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Intellectual Property (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of intellectual property |
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| Schedule of estimated amortization expense |
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Senior Convertible Debentures and Warrants (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||
| Senior Convertible Debentures And Warrants | ||||||||||||||||||||||||||||||||||||||||
| Schedule of assumptions |
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| Schedule of senior convertible debentures |
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Organization and Nature of Operation (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
| Revenue | $ 65,535 | $ 20,766 | $ 214,925 | $ 39,025 | ||||
| Decrease in net loss | 1,900,000 | 1,900,000 | ||||||
| Net loss | $ 908,067 | $ 979,378 | $ 1,221,495 | $ 1,083,878 | $ 1,553,994 | $ 2,410,102 | $ 3,108,940 | $ 5,047,974 |
Going Concern (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Debt Instrument [Line Items] | |||
| Accumulated deficit | $ 35,721,745 | $ 32,612,805 | |
| Proceeds from issuance of convertible debentures | 1,032,498 | $ 2,214,462 | |
| Convertible Debt [Member] | |||
| Debt Instrument [Line Items] | |||
| Proceeds from issuance of convertible debentures | $ 716,500 | ||
Summary of Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Numerator: | ||||||||
| Net loss | $ (908,067) | $ (979,378) | $ (1,221,495) | $ (1,083,878) | $ (1,553,994) | $ (2,410,102) | $ (3,108,940) | $ (5,047,974) |
| Series B Preferred Stock Dividends | 78,996 | 78,995 | 234,410 | 234,410 | ||||
| Loss available to common stockholders | $ (987,063) | $ (1,162,873) | $ (3,343,350) | $ (5,282,384) | ||||
| Denominator: | ||||||||
| Basic LPS | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.05) | ||||
| Diluted LPS | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.05) | ||||
| Weighted average number of common shares outstanding, Basic | 130,487,491 | 116,886,659 | 126,048,154 | 115,896,191 | ||||
| Weighted average number of common shares outstanding, Diluted | 130,487,491 | 116,886,659 | 126,048,154 | 115,896,191 | ||||
Summary of Significant Accounting Policies (Details 1) - shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Series A Preferred Stock [Member] | ||||
| Anti-dilutive securities | 16,600,000 | 24,900,000 | 16,600,000 | 24,900,000 |
| Series B Preferred Stock [Member] | ||||
| Anti-dilutive securities | 15,637,490 | 15,367,440 | 15,637,490 | 15,637,440 |
| Senior Convertible Debentures And Warrants [Member] | ||||
| Anti-dilutive securities | 4,509,006 | 2,693,425 | 4,509,006 | 2,693,425 |
Intellectual Property (Details) |
Sep. 30, 2023
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Gross | $ 156,000 |
| Accumulated amortization | (19,500) |
| Net carrying amount | $ 136,500 |
Intellectual Property (Details 1) |
Sep. 30, 2023
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| 2023 (three months) | $ 6,500 |
| 2024 | 26,000 |
| 2025 | 26,000 |
| 2026 | 26,000 |
| 2027 | 26,000 |
| Thereafter | 26,000 |
| Total | $ 136,500 |
Preferred Stock (Details Narrative) - $ / shares |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
Jun. 24, 2020 |
|
| Series A Preferred Stock [Member] | |||
| Class of Stock [Line Items] | |||
| Convertible preferred stock, shares outstanding | 176,596 | 264,894 | |
| Convertible common shares | 16,600,000 | ||
| Convertible preferred stock, par value | $ 0.001 | $ 0.001 | |
| Convertible preferred stock, shares authorized | 1,000,000 | 1,000,000 | |
| Series B Preferred Stock [Member] | |||
| Class of Stock [Line Items] | |||
| Convertible preferred stock, shares outstanding | 3,909,360 | 3,909,360 | |
| Convertible preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
| Convertible preferred stock, shares authorized | 4,000,000 | 4,000,000 | 4,000,000 |
| Dividend rate | 8.00% | ||
| Stock dividend | $ 0.25 | ||
| Common stock issued in satisfaction of preferred stock dividend | 0 | ||
| Cumulative undeclared stock dividends | 839,361 |
Senior Convertible Debentures and Warrants (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
| |
| Exercise price | $ 0.75 |
| Expected dividend yield | 0.00% |
| Expected life in years | 5 years |
| Minimum [Member] | |
| Stock price | $ 0.11 |
| Risk-free interest rate | 3.54% |
| Expected stock volatility | 320.03% |
| Maximum [Member] | |
| Stock price | $ 0.68 |
| Risk-free interest rate | 4.55% |
| Expected stock volatility | 333.92% |
Senior Convertible Debentures and Warrants (Details 1) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Senior Convertible Debentures And Warrants | ||
| Senior Convertible Debentures, Beginning | $ 2,555,793 | |
| Debentures Issued | 1,032,498 | $ 2,214,462 |
| Relative fair value of warrants issued as discount | (123,653) | |
| Accretion of warrants issued as discount | 183,377 | |
| Senior Convertible Debentures, Ending | $ 3,648,015 | |
Senior Convertible Debentures and Warrants (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Debt Instrument [Line Items] | |||
| Securities purchase agreement, description | In March 2022, the Company entered into a securities purchase agreement in which the Company maximum offering amount is $5,000,000. For every $1,000 invested in the offering, the Investors will receive a Debenture with a face amount of $1,000 and Warrants to purchase 350 Common Shares at an exercise price that ranges from $0.75 to $1.50 per share expiring on April 30, 2027. | ||
| Proceeds from issuance of convertible debentures | $ 1,032,498 | $ 2,214,462 | |
| Issuance of warrants | 1,274,687 | 1,274,687 | |
| Fair value of warrants | $ 123,653 | $ 123,653 | |
| Amortization of debt discount | $ 64,172 | $ 183,377 | |
| Minimum [Member] | |||
| Debt Instrument [Line Items] | |||
| Price per share upon conversion of debentures | $ 1.00 | $ 1.00 | |
| Exercise price | 0.75 | 0.75 | |
| Maximum [Member] | |||
| Debt Instrument [Line Items] | |||
| Price per share upon conversion of debentures | 2.00 | 2.00 | |
| Exercise price | $ 1.50 | $ 1.50 | |
| Convertible Debentures [Member] | |||
| Debt Instrument [Line Items] | |||
| Proceeds from issuance of convertible debentures | $ 3,641,958 | ||
| Interest rate | 8.00% | 8.00% | |
| Maturity date | Sep. 30, 2023 | ||