ITEM
1. FINANCIAL STATEMENTS
eWELLNESS
HEALTHCARE CORPORATION
CONSOLIDATED
CONDENSED BALANCE SHEETS
(unaudited)
The
accompanying notes are an integral part of these consolidated condensed financial statements
eWELLNESS
HEALTHCARE CORPORATION
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
For
the Three Months ended March 31, 2022 and 2021
(unaudited)
The
accompanying notes are an integral part of these consolidated condensed financial statements
eWELLNESS
HEALTHCARE CORPORATION
RECONCILIATION
OF STOCKHOLDERS’ DEFICIT
(unaudited)
THREE
MONTHS ENDED MARCH 31, 2022 AND 2021
The
accompanying notes are an integral part of these consolidated condensed financial statements
eWELLNESS
HEALTHCARE CORPORATION
CONSOLIDATED
CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
The
accompanying notes are an integral part of these consolidated condensed financial statements
eWellness
Healthcare Corporation
Notes
to Consolidated Condensed Financial Statements
March
31, 2022
(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 minimal revenues to date.
eWellness
Healthcare Corporation is the first physical therapy telehealth company to offer real-time distance monitored assessments and treatments.
On September 15, 2020, the Company and Bistromatics signed an agreement that transferred all worldwide marketing and Intellectual Property
Rights or claims to the Company’s Phzio, Phzio TeleRehab and MSK 360 platforms to Bistromatics in return for a 15% ownership in
Bistromatics. This agreement eliminated all past due professional fees of $748,832. The transfer of rights was completed on December
31, 2020.
During
the first quarter of 2021, the Company’s Board of Directors and management determined that while it would continue its efforts
and resources involving physical therapy and telemedicine, it would also pursue other health-related business opportunities. With the
Company’s announced plan to diversify its health-related business beyond its telemedicine operations, which telemedicine operations
will continue, the Company has engaged in negotiations with a recently formed private Nevada company controlled by a third party, American
Health Protection, Inc.(“AMHP”), for a potential business combination. In connection with such negotiations, the Company’s
Board of Directors on March 8, 2021, approved the organization of EWLL Acquisition Corp. under the laws of Nevada as a new wholly owned
subsidiary of the Company (“EWLL Acquisition”). The purpose of the formation of EWLL Acquisition was in contemplation of
its merger with and into AMHP which would be the surviving entity and become a wholly owned subsidiary of the Company.
Pursuant
to the Company’s intentions referenced above, the Company on May 18, 2021, entered into an Agreement and Plan of Merger by and
between the Company, EWLL Acquisition and AMHP pursuant to which AMHP merged with EWLL Acquisition, with AMHP being the surviving entity
and becoming a wholly owned subsidiary of the Company, subject to filing of Articles of Merger with the State of Nevada. On July 14,
2021, the Company filed the requisite Articles of Merger with the State of Nevada and, as a result, AMHP became a wholly owned subsidiary
of the Company and EWLL Acquisition ceased to exist.
On
April 19, 2021, the Company filed a DEF 14C to disclose to the stockholders the ratification and approval by Joint Written Consent, based
upon the unanimous approval by our Board of Directors and the consent of the Majority Consenting Stockholders, of the corporate actions
to file an amendment to its Amended and Restated Articles of Incorporation to: (i) change the name of the Company from eWellness Healthcare
Corporation to American Health Protection Corp. (“Name Change”); (ii) change the par value of the Company’s common
stock and preferred stock from $0.001 per share to $0.0001 per share (“Par Value Change”); and (iii) implement the 1:2,000
reverse split of our Common Stock and the shares underlying conversion of the Company’s securities convertible into Common Stock
together with the shares reserved for such conversions, on a one for two thousand (1:2,000) basis (“Reverse Split”). The
Name Change, Par Value Change and Reverse Split are sometimes referred to as the “Corporate Actions”, which Corporate Actions
must be approved by FINRA. Following the filing of this Form 10Q, the application to FINRA will be filed for approval of these actions.
eWellness
Healthcare Corporation
Notes
to Consolidated Condensed Financial Statements
March
31, 2022
(unaudited)
Note
2. Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited consolidated 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, 2021. 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 three months ended March 31, 2022 are not necessarily indicative of the results that
can be expected for the fiscal year ending December 31, 2022. The unaudited consolidated 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, 2021.
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 three months ended March 31, 2022, the Company had no revenue. The Company has an accumulated loss of $41,764,768 and a working capital
deficit of $6,053,150. 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.
Fair
Value of Financial Instruments
As
of March 31, 2022, the Company had the following assets and liabilities measured at fair value on a recurring basis.
Summary
of Assets and Liabilities Fair Value on Recurring Basis
| | |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| Derivative Liability | |
$ | 2,978,091 | | |
$ | - | | |
$ | - | | |
$ | 2,978,091 | |
| Total Liabilities measured at fair value | |
$ | 2,978,091 | | |
$ | - | | |
$ | - | | |
$ | 2,978,091 | |
eWellness
Healthcare Corporation
Notes
to Consolidated Condensed Financial Statements
March
31, 2022
(unaudited)
As
of December 31, 2021, 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 | |
$ | 1,447,008 | | |
$ | - | | |
$ | - | | |
$ | 1,447,008 | |
| Total Liabilities measured at fair value | |
$ | 1,447,008 | | |
$ | - | | |
$ | - | | |
$ | 1,447,008 | |
Note
3. Related Party Transactions
Throughout
the three months ended March 31, 2022, the officers and directors of the Company incurred business expenses on behalf of the Company.
The amounts payable to the officers as of March 31, 2022 and December 31, 2021 were $23,701 and $33,701, respectively. There were no
expenses due to the board members, but the Company has accrued directors’ fees of $221,107 and $221,107 as of March 31, 2022 and
December 31, 2021, respectively. Because the Company is not yet profitable the officers have agreed to defer compensation. The Company
had accrued executive compensation of $200,000 and $200,000 as of March 31, 2022 and December 31, 2021, respectively.
Note
4. Convertible Notes Payable
During
the three months ended March 31, 2022, there were no new convertible notes executed. During the three months ended March 31, 2022, the
Company accrued interest payable of $63,808 on previously executed convertible notes payable.
Year
Ended December 31, 2021
During
the year ended December 31, 2021, there were no new convertible notes executed. During the year ended December 31, 2021, the Company
accrued interest payable of $258,778 on previously executed convertible notes payable.
Note
5. Equity Transactions
Preferred
Stock
The
total number of shares of Series A Preferred Stock which the Company shall have authority to issue is 20,000,000 shares with a par value
of $0.001 per share.
In
April 2021, the Board of Directors issued a Certificate of Designations, Preferences, Rights and Limitations of Series C Convertible
Preferred Stock. The Board authorized that the Company shall have the authority to issue 1,000,000 shares with a par value of $.0001
per share to be issued to persons designated by the Board. The Series C Preferred Stock has no stated maturity and will not be subject
to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Holder decides to convert the shares
of Series C Preferred Stock.
In
April 2021, the Board of Directors issued a Certificate of Designations, Preferences and Rights Limitations of Series D Preferred Stock.
The Board authorized that the Company shall have the authority to issue 200,000 shares with a par value of $.0001 per share to be issued
to persons designated by the Board. The Series D Preferred Stock has no stated maturity and will not be subject to any sinking fund or
mandatory redemption and will remain outstanding indefinitely unless the Holder decides to convert the shares of Series D Preferred Stock.
eWellness
Healthcare Corporation
Notes
to Consolidated Condensed Financial Statements
March
31, 2022
(unaudited)
In
April 2021, the Board of Directors issued a Certificate of Designations, Preferences and Rights of Series E Convertible Preferred Stock.
The Board authorized that the Company shall have authority to issue 2,500,000 shares with a par value of $.0001 per share. The Board
of Directors may determine to : (i) issue a number of Series Preferred in a private placement at an offering price of $1.00 per share;
(ii) issue the Series E Preferred in consideration for the cancellation of shares of the Company’s Series A Preferred held by the
Corporation’s officers, directors and key personnel based on terms and conditions that the Board of Directors may determine; and
(iii) issue the shares of Series E Preferred for such other purposes as the Board of Directors may determine.
The
Series C, Series D and Series E Preferred Stock will rank, with respect to rights to the payment of dividends and the distribution of
assets in the event of any liquidation, dissolution or winding up of the Corporation, (i) senior to all classes or series of the Corporation’s
Common Stock, par value $0.001 per share (“Common Stock”), and to all other equity securities issued by the Corporation ;
and (ii) effectively junior to all existing and future indebtedness (including indebtedness convertible into our Common Stock or Preferred
Stock) of the Corporation and to any indebtedness and other liabilities of (as well as any preferred equity interest held by others)
existing subsidiaries of the Corporation. The term “equity securities” shall not include convertible debt securities. The
Holders of the Series D Preferred Stock have the right, on all matters subject to the vote of the capital stock of the Corporation, to
have the collective vote equal to 70% of the total of all voting capital stock of the Corporation, notwithstanding the number of shares
of voting capital stock, including shares of common stock, that may be outstanding from time to time.
At
the three months ended March 31, 2022, there were 696,667 shares of Preferred Series A stock outstanding; 920,000 shares of Preferred
Series C stock outstanding; 200,000 shares of Preferred Series D stock outstanding and 1,465,680 shares of Preferred Series E Convertible
stock outstanding.
Common
Stock
Three
Months Ended March 31, 2022
During
the three months ended March 31, 2022, the Company issued no additional shares of common stock.
Three
Months Ended March 31, 2021
During
the three months ended March 31, 2021, the Company issued 1,701,666 shares of common stock for consultant services valued at $601.
Note
6. Commitments, Contingencies
The
Company may be subject to lawsuits, administrative proceedings, regulatory reviews or investigations associated with its business and
other matters arising in the normal conduct of its business. On August 12, 2020, a former consultant filed suit in the Superior Court
of the State of California for Breach of Contract and non-payment of fees per said contract. At the time of the suit, the Company owed
to the vendor for contractual fees the total of $24,339. On March 14, 2022, the Company accepted a Stipulation and Proposed Order for
the payment of $38,000 to the former consultant with the first payment of $5,000 being due immediately and additional $5,000 payments
to be paid every 60 days thereafter until the total of $38,000 is paid.
eWellness
Healthcare Corporation
Notes
to Consolidated Condensed Financial Statements
March
31, 2022
(unaudited)
Note
7. Derivative Valuation
The
Company evaluated the convertible debentures and associated warrants in accordance with ASC Topic 815, “Derivatives and Hedging,”
and determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible
instruments due to their variable conversion rates. The notes have no explicit limit on the number of shares issuable, so they did not
meet the conditions set forth in current accounting standards for equity classification. Therefore, these have been characterized as
derivative instruments. The Company records the notes under ASU paragraph 815-15-25-4, whereby there would be a separation into a host
contract and derivative instrument. The Company records the notes and warrants in their entirety at fair value, with changes in fair
value recognized in earnings.
During
the three months ended March 31, 2022, the Company had the following activity in the derivative liability account:
Schedule
of Derivative Liability
| | |
Notes | |
| Derivative liability at December 31, 2021 | |
$ | 1,447,008 | |
| Change in fair value | |
| 1,531,083 | |
| Derivative liability at March 31, 2022 | |
$ | 2,978,091 | |
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:
Schedule
of Assumptions Used Black Scholes Valuation of Derivative
| Stock price at valuation date | |
$ | .0003 | |
| Risk free interest rate | |
| .17 | % |
| Stock volatility factor | |
| 414.04 | % |
| Years to Maturity | |
| .08 | |
| Expected dividend yield | |
| None | |
8.
Subsequent Events
The
Company has evaluated events through the issuance date of the financial statements and concluded there were no other events or transactions
during this period that required recognition or disclosure in its financial statements.
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 three months ended March 31, 2022 and 2021 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, 2021.
THE
COMPANY
Overview
The
Company believes that it was the first physical therapy telehealth company to offer real-time distance monitored assessments and treatments.
Our business model was to have large-scale employers use our PHZIO platform as a fully PT monitored corporate musculoskeletal treatment
(“MSK”) wellness program. The Company’s PHZIO home physical therapy assessment and exercise platform was designed to
achieve a market presence in the $30 billion physical therapy market, the $4 billion MSK market and the $8 billion corporate wellness
industry. PHZIO is the first real-time remote monitored 1-to-many MSK physical therapy platforms for home use.
Plan
of Operations
During
the first quarter of 2021, the Company’s Board of Directors and Management determined that while it would continue its efforts
and resources involving physical therapy and telemedicine, it would also pursue other health-related business opportunities. With the
Company’s announced plan to diversify its health-related business beyond its telemedicine operations, which telemedicine operations
will continue, the Company has engaged in negotiations with a recently formed private Nevada company controlled by a third party, American
Health Protection, Inc.(“AMHP”), for a potential business combination. In connection with such negotiations, the Company’s
Board of Directors on March 8, 2021, approved the organization of EWLL Acquisition Corp. under the laws of Nevada as a new wholly owned
subsidiary of the Company (“EWLL Acquisition”). The purpose of the formation of EWLL Acquisition was in contemplation of
its merger with and into AMHP which would be the surviving entity and become a wholly owned subsidiary of the Company.
On
April 19, 2021, the Company filed a DEF 14C to disclose to the stockholders the ratification and approval by Joint Written Consent, based
upon the unanimous approval by our Board of Directors and the consent of the Majority Consenting Stockholders, of the corporate actions
to file an amendment to its Amended and Restated Articles of Incorporation to: (i) change the name of the Company from eWellness Healthcare
Corporation to American Health Protection Corp. (“Name Change”); (ii) change the par value of the Company’s common
stock and preferred stock from $0.001 per share to $0.0001 per share (“Par Value Change”); and (iii) implement the 1:2,000
reverse split of our Common Stock and the shares underlying conversion of the Company’s securities convertible into Common Stock
together with the shares reserved for such conversions, on a one for two thousand (1:2,000) basis (“Reverse Split”). The
Name Change, Par Value Change and Reverse Split are sometimes referred to as the “Corporate Actions”, which Corporate Actions
must be approved by FINRA. Following the filing of this Form 10Q, the Company will file the FINRA application for approval of these actions.
Pursuant
to the Company’s intentions referenced above, the Company on May 18, 2021, entered into an Agreement and Plan of Merger by and
between the Company, EWLL Acquisition and AMHP pursuant to which AMHP merged with EWLL Acquisition, with AMHP being the surviving entity
and becoming a wholly owned subsidiary of the Company, subject to filing of Articles of Merger with the State of Nevada. On July 14,
2021, the Company filed the requisite Articles of Merger with the State of Nevada and, as a result, AMHP became a wholly owned subsidiary
of the Company and EWLL Acquisition ceased to exist.
Results
of Operations of eWellness for the three months ended March 31, 2022 vs. 2021
REVENUES:
There were no revenues for the three months ended March 31, 2022 and 2021.
OPERATING
EXPENSES: Total operating expenses increased to $98,993 for the three months ended March 31, 2022 from $36,987 for the three months
ended March 31, 2021 reflecting an increase of $62,006. The increase resulted from an increase of professional fees for legal and accounting/auditing
offset by decreases in travel and meal expenses.
NET
INCOME (LOSS): The Company had a net loss of $1,694,971 for the three months ended March 31, 2022 compared with a net income of $1,676,612
for the three months ended March 31, 2021 which reflects an increase in loss of $3,371,583. The increase in loss is a result of a change
from gain to loss of the derivative liability on convertible debt of $3,308,491 and an increase in operating expenses of $62,006 (as
outlined above).
Liquidity
and Capital Resources
As
of March 31, 2022, we had negative working capital of $6,053,150 compared to negative working capital of $4,360,124 as of December 31,
2021. The negative working capital increase is because of a increase in derivative liability and increase in accounts payable and accrued
expenses. Cash used in operations was $45,310 and $1,109 for the three months ended March 31, 2022 and 2021, respectively. The increase
in cash used in operations is a result of increase in loss and a change from gain to loss of the derivative liability. Cash flows provided
by financing activities were $34,371 and $0 for the three months ended March 31, 2022 and 2021, respectively. The increase resulted from
an increase of loan payable. The cash balance as of March 31, 2022 was $238.
We
do not have sufficient cash on hand to operate. 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.
Off-Balance
Sheet Arrangements
As
of March 31, 2022 and December 31, 2021, 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
From
time to time the Company may become a party to litigation matters involving claims against the Company. 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, 2021, 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.