UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

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

 

For the quarterly period ended June 30, 2018

 

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

 

Commission file number 000-55203

 

 

eWELLNESS HEALTHCARE CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada		45-1560906
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
11825 Major Street, Culver City, California		90230
(Address of principal executive offices)		(Zip Code)

 

(310) 915-9700

(Registrant’s telephone number, including area code)

 

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

Yes [X] No [  ]

 

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

Yes [X] No [  ]

 

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

 

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

 

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

Yes [  ] No [X]

 

The number of shares of Common Stock, $0.001 per share par value, outstanding on August 13, 2018 was 174,114,818 shares.

 

 

 

TABLE OF CONTENTS

 

		Page
PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4	Controls and Procedures	25
PART II - OTHER INFORMATION
Item 1	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 2	Exhibits	25
Signatures		26

 

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

eWELLNESS HEALTHCARE CORPORATION

CONDENSED BALANCE SHEETS

 

		June 30, 2018				December 31, 2017
		(unaudited)
ASSETS
CURRENT ASSETS
Cash		$	9,083			$	6,882
Prepaid Expenses			171,570				179,827
Total current assets			180,653				186,709
Property & equipment, net			8,439				5,021
Intangible assets, net			12,477				13,954
TOTAL ASSETS		$	201,569			$	205,684
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	316,025			$	345,956
Accounts payable - related party			564,752				351,511
Accrued expenses - related party			218,000				210,828
Accrued compensation			1,120,960				1,071,369
Contingent liability			90,000				90,000
Convertible debt, net of discount			669,650				444,680
Derivative liability			376,951				1,140,578
Short term note and liabilities			-				180,051
Total current liabilities			3,356,338				3,834,973
Total Liabilities			3,356,338				3,834,973
COMMITMENTS AND CONTINGENCIES			-				-
STOCKHOLDERS’ DEFICIT
Preferred stock, authorized, 20,000,000 shares, $.001 par value, 0 shares issued and outstanding			-				-
Common stock, authorized 400,000,000 shares, $.001 par value, 165,856,760 and 142,352,406 issued and outstanding			165,857				142,352
Shares to be issued			14,800				-
Additional paid in capital			15,221,625				13,178,131
Accumulated deficit			(18,557,051	)			(16,949,772	)
Total Stockholders’ Deficit			(3,154,769	)			(3,629,289	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	201,569			$	205,684

 

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

 

 

eWELLNESS HEALTHCARE CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
OPERATING EXPENSES
Executive compensation			102,000				102,000				204,000				204,000
General and administrative			290,748				234,841				487,438				418,178
Professional fees			440,326				612,721				952,851				1,316,732
Total Operating Expenses			833,074				949,562				1,644,289				1,938,910
Loss from Operations			(833,074	)			(949,562	)			(1,644,289	)			(1,938,910	)
OTHER INCOME (EXPENSE)
Foreign exchange rate			692				24,691				8,091				37,404
Gain (loss) on derivative liability			(116,275	)			(843,038	)			393,477				4,399,596
Gain (loss) on extinguishment of debt			(43,131	)			-				(43,131	)			-
Interest expense			(139,891	)			(120,567	)			(319,800	)			(223,920	)
Net Income (Loss) before Income Taxes			(1,131,679	)			(1,888,476	)			(1,605,652	)			2,274,170
Income tax expense			(1,627	)			-				(1,627	)			(800	)
Net Income (Loss)		$	(1,133,306	)		$	(1,888,476	)		$	(1,607,279	)		$	2,273,370
Earnings (loss) per common share
Basic		$	(0.01	)		$	(0.02	)		$	(0.01	)		$	0.03
Diluted		$	(0.01	)		$	(0.02	)		$	(0.01	)		$	0.03
Weighted average shares outstanding
Basic			156,216,150				105,459,623				151,077,846				82,876,801
Diluted			156,216,150				105,459,623				151,077,846				85,564,942

 

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

 

 

eWELLNESS HEALTHCARE CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

 

		For Six Months Ended
		June 30, 2018				June 30, 2017
Cash flows from operating activies
Net income (loss)		$	(1,607,279	)		$	2,273,370
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			2,996				2,512
Contributed services			111,000				109,500
Shares issued for consulting services			250,700				94,150
Shares issued for contribution			70,000				-
Options expense			217,188				217,188
Amortization of debt discount to interest expense			239,710				176,296
Amortization of prepaids			126,992				789,994
Foreign currency exchange			8,091				-
Gain on derivative liability			(393,477	)			(4,399,596	)
Loss on extinguishment of debt			43,131				-
Changes in operating assets and liabilities
Prepaid expense			90,265				(43,752	)
Accounts payable and accrued expenses			38,572				22,583
Accounts payable - related party			213,241				17,169
Accrued expenses - related party			7,172				77,441
Accrued compensation			49,591				47,666
Net cash used in operating activities			(532,107	)			(615,479	)
Cash flows from investing activities
Purchase of equipment			(4,937	)			(2,910	)
Net cash used in investing activities			(4,937	)			(2,910	)
Cash flows from financing activities
Issuance of convertible debt			594,800				776,500
Payment on debt			(1,005	)			-
Debt issuance costs			(54,550	)			(110,550	)
Net cash provided by financing activities			539,245				665,950
Net increase in cash			2,201				47,561
Cash, beginning of period			6,882				13,995
Cash, end of period		$	9,083			$	61,556
Supplemental Information:
Cash paid for:
Taxes		$	1,267			$	800
Interest Expense		$	-			$	-
Non cash items:
Warrants issued with debt		$	-			$	86,730
Derivative liability and debt discount issued with new notes		$	219,526			$	155,885
Shares issued for debt conversion		$	569,999			$	3,220,392
Exercise of warrants		$	-			$	109,978
Shares issued for extinguishment of accounts payable		$	-			$	309,000
Shares issued for prepaids		$	209,000			$	278,500

 

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

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

Note 1. The Company

 

The Company and Nature of Business

 

eWellness Healthcare Corporation (the “eWellness”, “Company”, “we”, “us”, “our”) was incorporated in the State of Nevada on April 7, 2011. The Company has generated no revenues to date.

 

eWellness is the first physical therapy telehealth company to offer insurance reimbursable real-time distance monitored treatments. Our business model is to license our PHZIO (“PHZIO”) platform to any physical therapy (“PT”) clinic in the U.S. and or have large-scale employers use our PHZIO platform as a fully PT monitored corporate wellness program. The Company’s PHZIO home physical therapy exercise platform has been designed to disrupt the $30 billion physical therapy and the $8 billion corporate wellness industries. PHZIO re-defines the way physical therapy can be delivered. PHZIO is the first real-time remote monitored 1-to-many physical therapy platform for home use. Due to the real-time patient monitoring feature, the PHZIO platform is insurance reimbursable by payers such as: Anthem Blue Cross and Blue Shield.

 

Note 2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense notes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2018. The unaudited condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

Use of Estimates

 

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

 

Going Concern

 

For the six months ended June 30, 2018, the Company had no revenues. The Company has an accumulated loss of $18,557,051. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue operations is dependent upon the Company’s ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations, of which there can be no guarantee. The Company intends to finance its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

Fair Value of Financial Instruments

 

As of June 30, 2018, the Company had the following assets and liabilities measured at fair value on a recurring basis.

 

		Total				Level 1				Level 2				Level 3
Derivative Liability		$	376,951			$	-			$	-			$	376,951
Total Liabilities measured at fair value		$	376,951			$	-			$	-			$	376,951

 

As of December 31, 2017, the Company had the following assets and liabilities measured at fair value on a recurring basis.

 

		Total				Level 1				Level 2				Level 3
Derivative Liability		$	1,140,578			$	-			$	-			$	1,140,578
Total Liabilities measured at fair value		$	1,140,578			$	-			$	-			$	1,140,578

 

Note 3. Related Party Transactions

 

During the six months ended June 30, 2018, a company for which the Company’s former Secretary-Treasurer and CFO is also serving as CFO, invoiced the Company $10,430 for accounting services. The amount outstanding as of June 30, 2018 and December 31, 2017 was $1,920 and $700, respectively.

 

In April 2015, the Company entered into an operating agreement with a physical therapy company (“EPT”) which is owned by the Company’s President and Chief Executive Officer. Through the agreement, the Company agrees to provide operating capital advances for EPT to offer the Company’s PHIZIO platform to physical therapy patients. For accounting and tax purposes, the net profits or losses generated by EPT shall be allocated monthly. The Company will receive 75% of the net patient insurance reimbursements associated with the operation of the PHIZIO platform.

 

In November 2016, the Company signed an agreement with a programming company (“PC”) within which one of the Company’s directors and Chief Technical Officer is the Chief Marketing Officer. The agreement is for additional features to be programmed for the launch of the PHIZIO platform. The Company is to pay a monthly base fee of $100,000 for the development and compensation for the Company’s CEO and CTO. Following payment of the initial $100,000, the Company is obligated to only pay $50,000 monthly until the PC has successfully signed and collected the first monthly service fee for 100 physical therapy clinics to use the PHIZIO platform. The agreement establishes that the Company is indebted to the PC for $225,000 for past programming services. For this amount, the Company issued 25,280,899 common shares at a value of $0.0089 per share on April 1, 2017. The PC will also have the right to appoint 40% of the directors. At the end of June 30, 2018, the Company had a payable of $562,832 due to this company.

 

The Company rents its Culver City, CA office space from a company owned by our CEO. The imputed rent expense of $500 per month is recorded in the Statement of Operations and Additional Paid in Capital in the Balance Sheet.

 

Throughout the period ended June 30, 2018, the officers and directors of the Company incurred business expenses on behalf of the Company. The amounts payable to the officers as of June 30, 2018 and December 31, 2017 were $0 and $5,828, respectively. There were no expenses due to the board members, but the Company has accrued directors’ fees of $218,000 and $205,000 at June 30, 2018 and December 31, 2017, respectively. Because the Company is not yet profitable the officers have agreed to defer compensation. The Company had accrued executive compensation of $1,120,960 and $1,071,369 at June 30, 2018 and December 31, 2017 respectively.

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

Note 4. Non-Convertible Notes Payable

 

In February 2017, the Company was served by a complaint filed by the holder of a note payable. The action was removed from Louisiana state court to the United States Federal District Court in Baton Rouge, LA. The lawsuit alleges that the Company is indebted to the note holder a promissory note stemming from four loans to the Company during the 20 months prior to February 2017 amounting to $75,500 in total original principal bearing interest at 12% per annum, of which $45,202 has been repaid. Further, the note holder claims that, because of alleged defaults and extensions of the notes, the Company is now indebted in the amount of $253,877 inclusive of interest and penalties at an effective rate exceeding 70% per annum, far more than the maximum rate allowable in California or Louisiana. The Company and its counsel have determined that: (i) the note holder is not a licensed lender in the State of California, where the loan was made and the $75,500 was deposited and therefore was not permitted under California law to make loans in the State; and (ii) the interest rate the note holder is seeking to collect is usurious and therefore interest claimed in the lawsuit is neither collectible nor enforceable. In October 2017 the complainant and his counsel motioned to dismiss the unlicensed lender assertion. In January 2018 the U.S. District Court, Louisiana ruled that the unlicensed lender assertion was to proceed. The Company and counsel believe that the suit is wholly without merit and the company will prevail.

 

On June 20, 2018, a settlement agreement was signed between the Company and holder of the note payable with the following terms for the cancellation of the note payable, accrued interest and warrants:

 

	1.	The Company will issue 2,709,444 shares of commons stock that is immediately tradeable under Securities and Exchange Commission Rule 144, but subject to a daily trading limit of 25,000 shares per day;
	2.	The Company will issue 1,290,556 shares of common stock that shall be subject to a 180-day holding period and are also subject to a daily trading limit of 25,000 shares per day;
	3.	The holder of the note payable shall bear all fees and expenses, including attorneys’ fees, associated with the transfer and trading of the Company’s shares;
	4.	Beyond issuing the shares noted above, the Company shall not take any additional action that would cause the note holder to incur tax consequence from the transfer or would affect the note holder’s tax consequences in any way.

 

The Company issued the 4,000,000 shares of common stock on June 20, 3018. At June 30, 2018, the Company had no indebtedness to this holder of the note payable principal or accrued interest. During the six months ended June 30, 2018 and 2017, the Company accrued interest expense totaling $15,183 and $16,071, respectively.

 

Note 5. Convertible Notes Payable

 

In January 2018, the Company executed an 8% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. The note, which is due on October 12, 2018 has an original issue discount of $10,000. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) $0.20 or (ii) 65% of the lowest per share trading price for the fifteen (15) trading days prior to the conversion date. Conversion into shares of common stock can commend immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $4,099.

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

In January 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $91,300. The note, which is due on October 30, 2018, has an original issue discount of $8,300. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days prior to the conversion date. Conversion into shares of common stock can commence immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $5,073.

 

In February 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $63,800. The note, which is due on November 30, 2018, has an original issue discount of $5,800. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days prior to the conversion date. Conversion into shares of common stock can commence immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $2,853.

 

In March 2018, the Company executed an 8% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. The note, which is due on December 5, 2018, has an original issue discount of $7,000. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the average of the three daily VWAPs for the trading price for the twenty (20) trading days before the 181^st calendar date of the note or the ten (10) trading days if after the 181^st calendar day of the note. During the six months ended June 30, 2018, the Company recognized interest expense of $1,975. As of June 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500.

 

In March 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $72,450. The note, which is due on December 30, 2018, has an original issue discount of $9,450. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days prior to the conversion date. Conversion into shares of common stock immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $2,453.

 

In May 2018, the Company executed an 8% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $125,000. The note, which is due on May 10, 2019, has an original issue discount of $3,750. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock at a price equal to 72% of the lowest VWAP for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common stock can commence following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $1,370.

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

In May 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $51,750. The note, which is due on March 1, 2019, has an original issue discount of $6,750. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common stock can commence following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $612.

 

Note 6. Equity Transactions

 

Common Stock

 

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

 

During the six months ended June 30, 2018, the Company agreed to issue a total of 200,000 shares of common stock for consulting services at a value of $14,800. At the end of June 30, 2018, these shares had not yet been issued and are recorded in Shares to be Issued.

 

During the six months ended June 30, 2018, the Company issued a total of 13,654,354 shares of common stock per debt conversion of convertible notes dated April, July, September and December 2017. The total of the debt conversion was $569,998 which includes $19,776 of accrued interest.

 

During the six months ended June 30, 2018, the Company issued 2,550,000 shares of common stock for marketing and consulting services valued at $235,900.

 

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

 

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

 

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

 

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

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

Stock Options

 

The following is a summary of the status of all Company’s stock options as of June 30, 2018 and changes during the six months ended on that date:

 

						Weighted
		Number of Stock				Average Exercise				Remaining				Intrinsic
		Options				Price				Life (yrs)				Value
Outstanding at December 31, 2017			20,000,000			$	0.26				1.9			$	-
Granted			-				-
Exercised			-				-
Cancelled			-				-
Outstanding at June 30, 2018			20,000,000				0.26				1.8			$	-
Options exercisable at June 30, 2018			16,398,958			$	0.28				1.8			$	-

 

The Company recognized stock option expense of $217,188 and $217,288 for the six months ended June 30, 2018 and 2017.

 

Warrants

 

In March 2018, the Board of Directors, at the request and with the approval of the investors, determined that it was in the best interests of the Company and the Investors, based upon market price and relatively limited liquidity of the shares of common stock that the Company revised the expiration date and exercise price for 417,429 unexercised warrants granted on April 9, 2015. The original expiration date of April 9, 2018 is extended to April 9, 2019. The original exercise price of $.35 is reduced to $.05.

 

In February 2017, the Company authorized the issuance of 68,750 warrants that were issued as part of a convertible note. At June 30, 2018 the fair value of the warrants is $5,932.

 

In April 2017, the Company authorized the issuance of 1,232,000 warrants that were issued as part of a convertible note. At June 30, 2018 the fair value of the warrants is $106,732.

 

The following is a summary of the status of the Company’s warrants as of June 30, 2018 and changes during the six months ended on that date:

 

						Weighted
		Number of				Average Exercise				Remaining				Intrinsic
		Warrants				Price				Life (yrs.)				Value
Outstanding at December 31, 2017			8,753,179			$	0.21				2.4			$	0.038
Granted			417,429			$	0.05				1.0				-
Exercised			-				-				-				-
Cancelled			3,217,429			$	0.05				1.0				-
Outstanding at June 30, 2018			5,953,179			$	0.31				2.4			$	0.038
Warrants exercisable at June 30, 2018			5,953,179			$	0.31				2.4			$	0.038

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

For purpose of determining the fair market value of the warrants and options outstanding at June 30, 2018, we used the Black Scholes option valuation model. These valuations were done throughout the period at the date of issuance and not necessarily as of the reporting date. The assumptions used in the Black Scholes valuation of the date of issuance are as follows:

 

Stock price on the valuation date		$	.0673-.089
Exercise price of warrants		$	.004 and .25
Dividend yield			0.00	%
Years to maturity			3-4
Risk free rate			2.33%-2.68	%
Expected volatility			245.23%-257.73	%

 

Note 7. Commitments, Contingencies

 

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

 

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

 

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

 

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

 

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

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

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

 

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

 

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

 

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

 

Note 8. Derivative Valuation

 

The Company evaluated the convertible debentures and associated warrants in accordance with ASC Topic 815, “Derivatives and Hedging,” and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to their variable conversion rates. The notes have no explicit limit on the number of shares issuable, so they did not meet the conditions set forth in current accounting standards for equity classification. In addition, the warrants have a Most Favored Nations clause resulting in the exercise price of the warrants also not being fixed. Therefore, these have been characterized as derivative instruments. We elected to recognize the notes under ASU paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. We elected to initially and subsequently measure the notes and warrants in their entirety at fair value, with changes in fair value recognized in earnings.

 

The debt discount is amortized over the life of the note and recognized as interest expense. For the six months ended June 30, 2018 and 2017, the Company amortized the debt discount of $239,710 and $82,443, respectively. The derivative liability is adjusted periodically according to stock price fluctuations and other inputs and was $376,951 and $1,140,578 at June 30, 2018 and December 31, 2017, respectively.

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

During the six months ended June 30, 2018, the Company had the following activity in the derivative liability account:

 

		Total
Derivative liability at December 31, 2017		$	1,140,578
Addition of new conversion option derivatives			91,283
Extinguishment due to note conversions			(258,823	)
Extinguishment due to note cancellations			(202,610	)
Changes in fair value			(393,477	)
Derivative liability at June 30, 2018		$	376,951

 

For purposes of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:

 

Stock price at valuation date		$	.0725-.089
Exercise price of warrants		$	.004 - .25
Conversion rate of convertible debt		$	.0495 – 0.2000
Risk free interest rate			1.93%-2.68	%
Stock volatility factor			110.9%-257.73	%
Years to Maturity			.08 – 4
Expected dividend yield			None

 

Note 9. Subsequent Events

 

In July 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $56,500. The note, which is due on April 17, 2019 has an original issue discount of $6,500. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) $0.21 or (ii) 75% of the lowest per share trading price for the thirty (30) trading days before the issued date of this note.

 

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

 

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

 

 

eWellness Healthcare Corporation

Notes to Condensed Financial Statements

June 30, 2018

(unaudited)

 

In July 2018, the Company entered into a consulting services agreement with a consultant for one year for a monthly fee of $5,000.

 

In July 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $56,500. The note, which is due on April 30, 2019 has an original issue discount of $6,500. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) $.20 or (ii) variable conversion price which is 75% of the average VWAP for the ten(10) trading day period ending on the latest compete trading day prior to the conversion date. The Company issued 100,000 shares of common stock valued at $8,000 upon execution of this note.

 

During the month of July to the filling of this report, the Company has issued 700,000 shares of common stock for consulting services valued at $52,775.

 

During the month of July to the filing of this report, the Company issued 7,408,058 shares of common stock for conversion of convertible debt valued at $369,843 which includes $138,983 of accrued interest and default fees.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements. These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including but not limited to: variability of our future revenues and financial performance; risks associated with product development and technological changes; the acceptance of our products in the marketplace by potential future customers; general economic conditions. You should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.

 

The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the financial statements of eWellness Healthcare Corporation for the six months ended June 30, 2018 and 2017 and should be read in conjunction with such financial statements and related notes included in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

 

THE COMPANY

 

Overview

 

eWellness is the first physical therapy telehealth company to offer insurance reimbursable real-time distance monitored treatments. eWellness plans to generate revenue from Third Party Healthcare Administrators (“TPA”) employees, PTs and corporate wellness licensees on a contractually recurring PHZIO session fee basis. Our PHZIO platform is anticipated to transform the access, cost and quality dynamics of physical therapy (“PT”) delivery for the market participants. eWellness further believes any patient, employer, health plan or healthcare professional interested in a better approach to PT is a potential PHZIO platform user.

 

Our PHZIO platform completely disrupts the current in-clinic business model of the $30 billion PT industry. Innovators in other industries have solved access, cost and quality inefficiencies through the implementation of technology platforms and business models that deliver products and services on-demand and create new economies by connecting and empowering both consumers and businesses. We have taken the same approach to solving the pervasive access, cost and quality challenges facing the current access to PT clinics. eWellness’ underlying technology platform is complex, deeply integrated and purpose-built over the past four years for the evolving PT marketplace. eWellness’ PHZIO platform is highly scalable and can support substantial growth of third party licensees. eWellness’ PHZIO platform provides for broad interconnectivity between PT practitioners and their patients, uniquely positioning the Company as a focal point in the rapidly evolving PT industry to introduce innovative, technology-based solutions, such as remote patient monitoring, post-discharge treatment plan adherence and in-home care.

 

The Company’s PHZIO home PT exercise platform has been designed to disrupt the $30 billion PT and the $8 billion corporate wellness industries. PHZIO re-defines the way PT can be delivered. PHZIO is the first real-time remote monitored one-to-many PT platform for home use. Due to the real-time patient monitoring feature, the PHZIO platform is insurance reimbursable by payers such as Anthem Blue Cross and Blue Shield.

 

 

Los Angeles Sales & Marketing Office: The Company opened its first sales and marketing office in Playa Vista, California in May 2017 to accelerate the adoption of PHZIO and the other new digital telehealth tools to patients, physicians and PT’s in California. The company will also be hiring sales and marketing professionals to manage the new silos of business.

 

eWellness will initially rollout these new telehealth solutions within California, New York and Virginia, with plans to expand nationally over the next 6 months. With these new telehealth tools, eWellness will engage with the “At-Home” Physical Therapy treatment market. This market involves physical therapy practitioners treating patients in their home instead of a clinic. The “At-Home” market model when combined with PHZIO offers patients and practitioners a means to receive and deliver PT services without having to leave work during normal business hours. Patients will be able to receive physical therapy services at almost any hour of the day. A model that is not currently employed within traditional clinical settings.

 

Plan of Operations

 

Our business model is to license our PHZIO (“PHZIO”) platform to any physical therapy (“PT”) clinic in the U.S. and or have large-scale employers use our PHZIO platform as a fully PT monitored corporate wellness program.

 

The Company’s 5-Year Agreement with Endeavor Plus. In October 2017 eWellness executed a 5-year Comprehensive Physical Therapy Services Agreement with Endeavor Plus Services, Inc. (“EPS”), a fast-growing healthcare plan administrator. EPS projects having approximately 100,000 healthcare members in 2018. This level of sales will allow the Company to gain cash flow positive operations during the second half of 2018. Additionally, if EPS can continue their projected growth rate over the next 12-18 months an additional 500,000 new members would be added. Endeavor Plus, Inc. (“EPI”), the parent company of EPS, has taken the lead in a movement to assist small group employers to leave fully insured health plans and use partially self-funded ERISA qualified health insurance plans that are new and innovative and embrace a new era of Consumer-Driven Health Care Planning (CDHC). EPI’s mission is to bring about innovative changes using existing law and regulations to change the traditional health insurance models to drive down healthcare costs while offering significantly better benefits to both small and midsize group employers and their employees. This is accomplished further by having these employers and their employees to participate in the Endeavor Plus Plan, a CDHC program with technology-driven health care programs that are affordable, manageable and responsive to the demand for higher quality care with cost transparency, integrated health information and better provider access and communication and better outcomes.

 

EPS/PHZIO Marketing Plans. eWellness and EPS intend to immediately commence system, sales and marketing integration, to position eWellness to begin onboarding and treating EPS members in the second quarter of 2018. EPS is a third-party administrator (TPA), which is an organization that processes insurance claims or certain aspects of employee benefit plans for small and medium sized companies. EPS is projecting to grow rapidly in the small group health insurance market which has annual premiums of over $384 billion. Approximately 84% of this market is traditional full insurance. EPS is expected to grow rapidly by offering these small employers the ability to self- insure through excellent plan design and reinsurance. The Company is excited to be chosen as their PT gatekeeper as well as wellness program supplier. Our comprehensive PT & wellness programs and consulting services are anticipated to provide EPS with new products that will: (1) build new sales channels that increase their current health insurance business, and (2) create new revenue sources through the introduction of such products.

 

The Company Partnership with LifeWallet (“LW”) In February 2018 the Company signed a Partnership Agreement to co-market the Company’s PHZIO platform with LW (https://www.lifewallet.com) which provides employers, communities and healthcare professionals with a simple, consumer centric, integrated platform to assess the health of their population and monitor their progress towards better health. LifeWallet™ is transforming the delivery of care and revolutionizing the health care to wellness process with a consumer centric health platform and modern digital assistants that promote better outcomes. LW’s employees are dedicated to making the best products on earth. LWt™ is creating a one of a kind technology region in the south and has brought in developers from leading technology companies including Apple.

 

 

Concierge PT Medical Service. The Company will be provisioning to EPS and/or LW insureds a new and highly unique patient treatment protocol that includes “white glove” concierge in-home or in-office PT assessments and digital care treatments to enhance the medical treatment and help improve patient treatment outcomes. The Company will become the exclusive provider of “white glove” concierge in-home or in-office PT assessments, digital physical therapy and a wellness program to the individuals covered by EPS and or LW. The Company has been selected to be the gatekeeper for all EPS and or LW PT treatments. As the PT treatment gatekeeper, the Company will conduct an online consultation with each patient to assess the complexity involved with the patient presentation. From the online consultation, an in-home or in-office evaluation of the patient may be prescribed. Through this initial evaluation, a plan of care will be designed for each patient that in most cases is anticipated to include digital therapy sessions.

 

PreHabPT. Any individuals covered by EPS and/or LW, who are seeking non-emergency orthopedic surgery shall first receive a concierge online consultation, in-home or in-office PT therapy evaluation and will be prescribed a four to eight-week prehabpt.com exercise program prior to any surgery. Another in-home or in-office PT evaluation will be made following surgery and a treatment plan will be initiated. PreHabPT is up to an eight-week physician to patient pre-surgical (Prehab) digital therapeutic exercise treatment system for patients that anticipate having total join replacement (knee, hip and or shoulder) or back surgeries.

 

PurePT. PurePT is a patient and independent PT digital treatment platform for connecting new patients to PT’s that are seeking to be treated with our PHZIO treatment system. Patient program assessments can be made in the privacy of a patient’s home or office. PurePT connects new patients to PT’s, particularly in states that have direct access rules where patient’s insurance will reimburse for treatment without requiring a physician’s prescription. PurePT puts the patient first.

 

PHZIO Comprehensive Wellness Program Any EPS and/or LW insureds may, after an in-home or in-office PT assessment, enroll in a 6-month comprehensive wellness program. The top line wellness goals of our PHZIO wellness exercise program is to graduate at least 60% of inducted patients through our 6-month program. Patients should expect to experience an average of a 20% reduction in BMI, a two-inch reduction in waist size, weight loss of at least 10 pounds, significant overall improvement in balance, coordination, flexibility, strength and lumbopelvic stability. Patients also should score better on Functional Outcomes Scales (Oswestry and LEFS) which indicates improved functional activity levels due to reduced low back, knee and hip pain.

 

The Company’s PHZIO home physical therapy exercise platform has been designed to disrupt the $30 billion physical therapy and the $8 billion corporate wellness industries. PHZIO re-defines the way physical therapy can be delivered. PHZIO is the first real-time remote monitored 1-to-many physical therapy platform for home use. Due to the real-time patient monitoring feature, the PHZIO platform is insurance reimbursable by payers such as: Anthem Blue Cross, AETNA and Blue Shield.

 

The PHZIO Solution: A New Physical Therapy Delivery System

 

●	SaaS technology platform solution for providers bundling rehabilitation services and employer wellness programs;
●	First real-time remote monitored 1-to-many physical therapy treatment platform for home use;
●	Ability for physical therapists to observe multiple patients simultaneously in real-time;
●	Solves what has been a structural problem and limitation in post-acute care practice growth.
●	PT practices can experience 20% higher adherence & compliance rates versus industry standards; and
●	Tracking to 30% increase in net income for a PT practice.

 

 

Our initial PHZIO platform enables employees or patients to engage with live or on-demand video based physical therapy telemedicine treatments from their home or office. Following a physician’s exam and prescription for physical therapy to treat back, knee or hip pain, a patient can be examined by a physical therapist and if found appropriate inducted in the Company’s PHZIO program that includes a progressive 6-month telemedicine exercise program (including monthly in-clinic checkups). All PHZIO treatments are monitored by a licensed therapist that sees everything the patient is doing while providing their professional guidance and feedback in real-time. This ensures treatment compliance by the patient, maintains the safety and integrity of the prescribed exercises, tracks patient metrics and captures pre-and post-treatment evaluation data. PHZIO unlocks a host of potential for revolutionizing patient treatment models and directly links back to the established brick and mortar physical therapy clinic. This unique model enables any physical therapy practice to be able to execute more patient care while utilizing their same resources and creates more value than was ever before possible.

 

Our PHZIO platform, including: design, testing, exercise intervention, follow-up, and exercise demonstration, has been developed by accomplished Los Angeles based physical therapist Darwin Fogt. Mr. Fogt has extensive experience and education working with diverse populations from professional athletes to morbidly obese. He understands the most beneficial exercise prescription to achieve optimal results and has had enormous success in motivating all patient types to stay consistent in working toward their goals. Additionally, his methods have proven effective and safe as he demonstrates exercises with attention to proper form to avoid injury. Mr. Fogt has established himself as a national leader in his field and has successfully implemented progressive solutions to delivering physical therapy: he has consulted with and been published by numerous national publications including Runner’s World, Men’s Health, Men’s Journal, and various Physical Therapy specific magazines; his 13 plus years of experience include rehabilitating the general population, as well as professional athletes, Olympic gold medalists, and celebrities. He has bridged the gap between physical therapy and fitness by opening Evolution Fitness, which uses licensed physical therapists to teach high intensity circuit training fitness classes. He also founded one of the first exclusive prenatal and postnatal physical therapy clinic in the country. Mr. Fogt is a leader in advancing the profession to incorporate research-based methods and focus on, not only rehabilitation but also wellness, functional fitness, performance, and prevention. He can recognize that the national healthcare structure (federal and private insurance) is moving toward a model of prevention and that the physical therapy profession will take a larger role in providing wellness services to patients.

 

Innovators in other industries have solved access, cost and quality inefficiencies through the implementation of technology platforms and business models that deliver products and services on-demand and create new economies by connecting and empowering both consumers and businesses. We have taken the same approach to solving the pervasive access, cost and quality challenges facing the current access to physical therapy clinics.

 

Our underlying technology platform is complex, deeply integrated and purpose-built over the three years for the evolving physical therapy marketplace. Our PHZIO platform is highly scalable and can support substantial growth of third party licensees. Our PHZIO platform provides for broad interconnectivity between PT practitioners and their patients and, we believe, uniquely positions us as a focal point in the rapidly evolving PT industry to introduce innovative, technology-based solutions, such as remote patient monitoring, post-discharge treatment plan adherence and in-home care.

 

We plan to generate revenue from third-party PT and corporate wellness licensees on a contractually recurring per PHZIO session fee basis. Our PHZIO platform is anticipated to transform the access, cost and quality dynamics of physical therapy delivery for all the market participants. We further believe any patient, employer, health plan or healthcare professional interested in a better approach to physical therapy is a potential PHZIO platform user.

 

Before even launching, we have received a high indication of interest in our service. We think the demand is warranted but recognize that in the preliminary stages of our services, we may experience bottlenecks in our ability to meet the demand for same. Under this type of environment, it is critical to maintain awareness of the Company’s operational budget goals and how they are being met in our attempts to address demand. Regardless of our growth pace, it is critical to shareholder value that we are mindful of our operational spending.

 

 

Investment Agreement with Tangiers Global, LLC

 

In February 2017, the Company entered into an Investment Agreement with Tangiers. Pursuant to the terms of the Investment Agreement, Tangiers committed to purchase up to $5,000,000 of the Company’s common stock over a period of up to 36 months. From time to time during the 36-month period commencing from the effectiveness of the registration statement, we may deliver a put notice to Tangiers which states the dollar amount that we intend to sell to Tangiers on a date specified in the put notice. The maximum investment amount per notice must be no more than 200% of the average daily trading dollar volume of our Common stock for the ten (10) consecutive trading days immediately prior to date of the applicable put notice and such amount must not exceed an accumulative amount of $250,000. The minimum put amount is $5,000. The purchase price per share to be paid by Tangiers will be the 80% of the of lowest trading prices of the Common stock during the 5 trading days including and immediately following the date on which put notice is delivered to Tangiers.

 

In connection with the Investment Agreement with Tangiers, we also entered into a registration rights agreement with Tangiers.

 

Advisory Agreement with Fintech Global Consultants

 

In March 2018, the Company signed an Advisory Agreement with Fintech Global Consultants [“FGC” http://f-g-c.com] to assist the Company in completing blockchain adaptation across the $30 billion physical therapy and $8 billion wellness markets with new advanced health tech tools. We believe that out implementation of the new blockchain technology for the Company’s PHZIO digital treatment platform and our other new health tech tools may have a beneficial impact on patient care beginning in the third quarter of 2018. The Company has hired a leading international blockchain advisory firm to further our state of the art PHZIO digital telehealth platform. We believe that by being blockchain enabled, our patients will have more convenient access to wellness services, seamless storage and access to HIPPA compliant medical records and simplified insurance reimbursement. In addition, FGC will assist the Company in its planned Initial Coin Offering of up to a $10 million non-dilutive funding that we believe will help in the implementation and acceleration of PHZIO’s expansion on a national basis during the next twelve months.

 

Results of Operations for the three and six months ended June 30, 2018 and 2017

 

REVENUE: We had no revenues from operations during the six months ended June 30, 2018 and 2017. We expect to generate revenues during the fourth quarter of 2018.

 

OPERATING EXPENSES: Total operating expenses decreased to $1,644,289 for the six months ended June 30, 2018 from $1,938,910 for the six months ended June 30, 2017. The decrease resulted from a reduction in consultant expense. Total operating expenses decreased to $833,074 for the three months ended June 20, 2018 from $949,562 for the three months ended June 30, 2017. The decrease resulted from a reduction in consultant expense.

 

NET LOSS: The Company incurred a net loss of $1,607,279 for the six months ended June 30, 2018, compared with a net income of $2,273,370 for the six months ended June 30, 2018. The significant decrease from income to loss was the result of a decrease in the revaluation of the derivative liabilities for the convertible debt and warrants totaling $4,006,119 and an increase in interest expense. For the three months ended June 30, 2018, the Company incurred a loss 1,133,306 compared with a loss of $1,888,476 for the three months ended June 30, 2017. The decrease in the loss was the result of a decrease in the revaluation of the derivative liabilities for the convertible debt and warrants totaling $726,763 offset by an increase in interest expense.

 

Liquidity and Capital Resources

 

As of June 30, 2018, we had negative working capital of $3,175,685 compared to negative working capital of $3,648,264 as of December 31, 2017. The decrease resulted from a decrease in the derivative liability and reduction of short term note payable offset by an increase in convertible debt. Cash used in operations was $532,107 and $615,479 for the six months ended June 30, 2018 and 2017, respectively. The decrease in cash used in operations was because of the relative changes in the assets and liabilities. Cash used in investing activities was $4,937 and $2,910 for the six months ended June 30, 2018 and 2017, respectively. Cash flows provided by financing activities were $539,245 and $665,950 for the six months ended June 30, 2018 and June 30, 2017, respectively. The decrease in cash flows from financing activities was a reduction in the issuance of convertible debt for cash. The cash balance as of June 30, 2018 was $9,083.

 

 

We believe that anticipated cash flows from operations will be insufficient to satisfy our ongoing capital requirements. We are seeking financing in the form of equity capital to provide the necessary working capital. Our ability to meet our obligations and continue to operate as a going concern is highly dependent on our ability to obtain additional financing. We cannot predict whether this additional financing will be in the form of equity or debt or be in another form. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, we may be unable to implement our current plans which circumstances would have a material adverse effect on our business, prospects, financial conditions and results of operations.

 

Contingencies

 

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

 

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

 

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

 

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

 

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

 

 

As disclosed in the prior amendments to the Initial Form 8-K, we have filed the prior amendments in response to comments from the SEC regarding the Form 8-K and many of those comments pertain to the Company’s potential violation of Rule 419. Although the Company has continued to provide the SEC with information and analysis as to why it believes it did not violate Rule 419, based upon latest communications with the persons reviewing the Form 8-K, they do not agree with the assessments the Company presented to them. Comments and communications indicate that Rule 419 requires a physical return of funds if a 419 offering cannot be completed because a business combination was not consummated within the required time frame; constructive return is not permitted.

 

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

 

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

 

Capital Expenditure Plan

 

During the three months ended June 30, 2018, we raised $414,550, less $46,550 for debt issuance costs, in equity and debt capital and we may require up to an additional $1.6 million in capital during the next 12 months to fully implement our business plan and fund our operations. Our plan is to utilize the equity capital that we raise, together with anticipated cash flow from operations, to fund a very significant investment in sales and marketing, concentration principally on advertising and incentivizing existing customers for the introduction of new customers, among other strategies. However, there can be no assurance that: (i) we will continue to be successful in raising equity capital in sufficient amounts and/or at terms and conditions satisfactory to the Company; or (ii) we will generate sufficient revenues from operations, to fulfill our plan of operations. Our revenues are expected to come from our PHZIO platform services. As a result, we will continue to incur operating losses unless and until we are able to generate sufficient cash flow to meet our operating expenses and fund our planned sales and market efforts. There can be no assurance that the market will adopt our portal or that we will generate sufficient cash flow to fund our enhanced sales and marketing plan. In the event that we are not able to successfully: (i) raise equity capital and/or debt financing; or (ii) market and significantly increase the number of portal users and revenues from such users, our financial condition and results of operations will be materially and adversely affected and we will either have to delay or curtail our plan for funding our sales and marketing efforts.”

 

Off-Balance Sheet Arrangements

 

As of June 30, 2018 and December 31, 2017, respectively, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

 

 

Contractual Obligations and Commitments

 

In February 2017, the Company was served by a complaint filed by a holder of a note payable. The action was removed from Louisiana state court to the United States Federal District Court in Baton Rouge, LA. The lawsuit alleges that the Company is indebted to Schoemann under a promissory note stemming from four loans to the Company during the 20 months prior to February 2017 amounting to $75,500 in total original principal bearing interest at 12% per annum, of which $45,202 has been repaid. Further the note holder claims that, because of alleged defaults and extensions of the notes, the Company is now indebted in the amount of $253,677 inclusive of interest and penalties at an effective rate exceeding 70% per annum, far in excess of the maximum rate allowable in California or Louisiana. The Company and its counsel have determined that: (i) note holder is not a licensed lender in the State of California, where the loan was made and the $75,500 was deposited and therefore was not permitted under California law to make loans in the State; (ii) the interest rate the note holder is seeking to collect is usurious and therefore interest claimed in the lawsuit is neither collectible nor enforceable. In October 2017 the complainant and his counsel motioned to dismiss the unlicensed lender assertion. In January 2018 the U.S. District Court, Louisiana ruled in favor of the Company that the unlicensed lender assertion made by the Company and counsel was to proceed in a matter brought before the court by note holder Rodney Schoeman on January 24, 2017. The Company and counsel believe that the Schoemann suit is wholly without merit and the Company will prevail.

 

On June 20, 2018, a settlement agreement was signed between the Company and holder of the note payable with the following terms for the cancellation of the note payable, accrued interest and warrants:

 

	o	The Company will issue 2,709,444 shares of commons stock that is immediately tradeable under Securities and Exchange Commission Rule 144, but subject to a daily trading limit of 25,000 shares per day;
	o	The Company will issue 1,290,556 shares of common stock that shall be subject to a 180-day holding period and are also subject to a daily trading limit of 25,000 shares per day;
	o	The holder of the note payable shall bear all fees and expenses, including attorneys’ fees, associated with the transfer and trading of the Company’s shares;
	o	Beyond issuing the shares noted above, the Company shall not take any additional action that would cause the note holder to incur tax consequence from the transfer or would affect the note holder’s tax consequences in any way.

 

The Company issued the 4,000,000 shares of common stock on June 20, 3018. At June 30, 2018, the Company had no indebtedness to this holder of the note payable principal or accrued interest.

 

In January 2018, the Company executed an 8% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $110,000. The note, which is due on October 12, 2018 has an original issue discount of $10,000. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) $0.20 or (ii) 65% of the lowest per share trading price for the fifteen (15) trading days immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $4,099.

 

In January 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $91,300. The note, which is due on October 30, 2018 has an original issue discount of $8,300. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of 5,073.

 

In February 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $63,800. The note, which is due on November 30, 2018 has an original issue discount of $5,800. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $2,853.

 

 

In March 2018, the Company executed an 8% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $77,000. The note, which is due on December 5, 2018 has an original issue discount of $7,000. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $.0.06 or (ii) 75% of the average of the three daily VWAPs for the trading price for the twenty (20) trading days before the 181^st calendar date of the note or the ten (10) trading days if after the 181st calendar day of the note. During the six months ended June 30, 2018, the Company recognized interest expense of $1,975. As of June 30, 2018, the institutional investor exercised its MFN provision in Paragraph 4a increasing the OID from the stated in the note from 10% to 15% thus increasing the amount owed to $80,500.

 

In March 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $72,450. The note, which is due on December 30, 2018 has an original issue discount of $9,450. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days immediately following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $2,453.

 

In May 2018, the Company executed an 8% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $125,000. The note, which is due on May 10, 2019, has an original issue discount of $3,750. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock at a price equal to 72% of the lowest VWAP for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common stock can commence following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $1,370.

 

In May 2018, the Company executed an 12% Fixed Convertible Promissory Note payable to an institutional investor in the principal amount of $51,750. The note, which is due on March 1, 2019, has an original issue discount of $6,750. The convertible notes convert into common stock of the Company at conversion price into which any principal amount and interest (including any default interest) under the notes shall be convertible into shares of common stock shall be equal to the lesser of: (i) the fixed conversion price of $0.20 or (ii) 75% of the VWAP for the trading price for the ten (10) trading days prior to and including the conversion date. Conversion into shares of common stock can commence following the 180^th calendar day after the Original Issue Date. During the six months ended June 30, 2018, the Company recognized interest expense of $612.

 

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

 

Critical Accounting Policies

 

Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2017, for disclosures regarding the Company’s critical accounting policies and estimates, as well as any updates further disclosed in our interim financial statements as described in this Form 10-Q.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a “smaller reporting company”, we are not required to provide the information under Item 3.

 

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of disclosure controls and procedures.

 

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2018, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules, regulations and forms, and (ii) that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

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

 

During the six months ended June 30, 2018, the Company issued a total of 13,654,354 shares of common stock per debt conversion of convertible notes dated April, July, September and December 2017. The total of the debt conversion was $569,998 which includes $19,776 of accrued interest.

 

During the six months ended June 30, 2018, the Company issued 2,550,000 shares of common stock for marketing and consulting services valued at $235,900.

 

During the six months ended June 30, 2018, the Company issued 4,000,000 shares of common stock for settlement of a complaint filed in the United States Federal District Count (see Footnote 4). The debt settled totaled $236,869 which includes $56,817 of accrued interest.

 

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

 

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

 

ITEM 2. EXHIBITS.

 

(a)

The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

 

Exhibit No.		Description
31.1		Certification of CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

SIGNATURES

 

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

 

eWellness Healthcare Corporation
(Registrant)
By:	/s/ Darwin Fogt		Date: August 14, 2018
	Darwin Fogt
	President, CEO

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature		Title		Date
/s/ Darwin Fogt		Chief Executive Officer and Director		August 14, 2018
Darin Fogt		(principal executive officer)
/s/ David Markowski		Chief Financial Officer		August 14, 2018
David Markowski		(Principal Financial and Accounting Officer)
/s/ Brandon Rowberry		Director		August 14, 2018
Brandon Rowberry
/s/ Douglas Cole		Director		August 14, 2018
Douglas Cole
/s/ Curtis Hollister		Director		August 14, 2018
Curtis Hollister
/s/ Douglas MacLellan		Director		August 14, 2018
Douglas MacLellan
/s/ Rochelle Pleskow		Director		August 14, 2018
Rochelle Pleskow