Certain statements in this Report constitute "forward-looking statements." Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Factors that might
cause such a difference include, among others, uncertainties relating to general
economic and business conditions; industry trends; changes in demand for our
products and services; uncertainties relating to customer plans and commitments
and the timing of orders received from customers; announcements or changes in
our pricing policies or that of our competitors; unanticipated delays in the
development, market acceptance or installation of our products and services;
changes in government regulations; availability of management and other key
personnel; availability, terms and deployment of capital; relationships with
third-party equipment suppliers; and worldwide political stability and economic
growth. The words "believe," "expect," "anticipate," "intend" and "plan" and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date the statement was made.
Results of Operations
Three Months Ended March 31, 2020, compared with the Three Months Ended March
31, 2019
Three Months Ended
A B B-A
March 31, 2019 March 31, 2020 Change Change %
REVENUE $100,282 $493,140 $392,858 392%
Cost of Sales 45,609 187,335 141,726 311%
Cost of sales % of total sales 45% 38% -7%
Gross Profit 54,673 305,805 251,132 459%
Gross profit % of sales 55% 62% 7%
OPERATING EXPENSES
Professional fees 254,088 279,086 24,998 10%
Depreciation and amortization 140,518 51,635 (88,883) -63%
Wages and salaries 32,634 184,909 152,275 467%
Advertising 33,153 87,088 53,935 163%
General and administrative 332,095 375,862 43,767 13%
Total operating expenses 792,488 978,580 186,092 23%
NET LOSS FROM OPERATIONS (737,815) (672,775) 65,040 -9%
Revenue for the three-month periods ended March 31, 2020 and 2019 was $493,140
and $100,282, respectively. Cost of revenues for the three-month periods ended
March 31, 2020 and 2019 was $187,335 and $45,609, respectively. Gross profit for
the three-month periods ended March 31, 2020 and 2019 was $305,805 and $54,673,
respectively. The fluctuation in these numbers is primarily the result of
significant increases in patient visits due to expanded market coverage and the
generally increasing acceptance of telehealth platforms in the age of the
Covid-19 pandemic.
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Revenues from our PrestoCorp subsidiary grew 392% in the three months ended
March 31, 2020 compared to the three months ended March 31, 2019. This large
increase in revenue is the result of expanded market area, increased advertising
which drove and in increase in patient visits to our online platform, and a
general increase in consumer awareness of the PrestoDoctor brand. The Company
now operates in the states of California, Nevada, New York, Oklahoma, Missouri,
and Pennsylvania. The Company is currently exploring expansion opportunities in
four additional states, including Illinois, Ohio, Virginia, and Massachusetts.
Net operating loss for the three-month period ended March 31, 2020 was $672,775
compared to net loss of $737,815 for the three-month period ended March 31,
2019. The decrease in net operating loss resulted primarily from an increase in
revenue from PrestoCorp and a corresponding 7% improvement in the gross profit
as a percent of sales.
Total operating expenses were $978,580 for the three-month period ended March
31, 2020 and $737,815 for the three-month period ended March 31, 2019. The
increase in total operating costs was largely attributable to increases in
activity brought on by the significant increase in revenue and patient load. The
Company also significantly reduced its depreciation and amortization expense as
a result of impairment of amortizable intangible assets taken in the year ended
December 31, 2019. Management expects that operating costs will continue to
increase as revenues rise, but the increases in operating costs are expected to
rise at a slower rate than revenue due to expected efficiencies of scale.
Liquidity and Capital Resources
Net cash used in operating activities for the three-month period ended March 31,
2020, was $94,609. During the same period, our cash increased by $9,024. The
Company generated $65,500 in the quarter from advances from related parties, and
applied a $50,000 advance balance as partial consideration for the acquisition
of assets by GK Manufacturing and Packaging, Inc., a newly formed contract
manufacturing entity that is owned 51% be the Company. We also reported $592,075
during the period from issuance of common and preferred stock as compensation
for services performed by officers, directors, and contractors. On March 31,
2020, our cash position was approximately $345,000, primarily derived from our
PrestoCorp operations. We have funding obligations totaling approximately
$310,000 for GK Manufacturing in the coming months. Given expected operations in
our second quarter, we expect that additional funds will be required. Management
is currently evaluating several fund-raising alternatives including private
placement of equity securities, a secondary public offering, and various debt
instruments. In addition, key members of management have indicated a willingness
to provide additional operating capital from time to time. Based on all of
these considerations, we believe we will have sufficient capital to operate the
business for the next twelve months.
The accompanying condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. We incurred a net loss of $616,407 and $722,759,
respectively, for the three-month periods ended March 31, 2020, and 2019, and
had an accumulated deficit of $75,471,544 as of March 31, 2020. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The Company may seek to raise money for working capital purposes
through a public offering of its equity capital or through a private placement
of equity capital or convertible debt. It will be important for the Company to
be successful in its efforts to raise capital in this manner if it is going to
be able to further its business plan in an aggressive manner. Raising capital in
this manner will cause dilution to current shareholders.
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COVID-19
In March 2020, COVID-19 was declared a pandemic by the World Health Organization
and the Centers for Disease Control and Prevention. Its rapid spread around the
world and throughout the United States prompted many countries, including the
United States, to institute restrictions on travel, public gatherings and
certain business operations. These restrictions significantly disrupted economic
activity in the United States and Worldwide. To date, the disruption did not
materially impact the Company's financial statements. However, if the severity
of the economic disruptions increase as the duration of the COVID-19 pandemic
continues, the negative financial impact due to reduced demand could be
significantly greater in future periods than in the first quarter.
The effects of the continued outbreak of COVID-19 and related government
responses could also include extended disruptions to supply chains and capital
markets, reduced labor availability and a prolonged reduction in economic
activity. These effects could have a variety of adverse impacts to the Company,
including our ability to operate our facilities. To date, there have been no
material adverse impacts to the Registrants' operations due to COVID-19.
In addition, the economic disruptions caused by COVID-19 could also adversely
impact the impairment risks for certain long-lived assets, equity method
investments and goodwill. Management evaluated these impairment considerations
and determined that no such impairments occurred through the date of this
report.
Off Balance Sheet Arrangements
None
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