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, 2021 and 2020 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, 2020.
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.
On May 22, 2020, the Company received and accepted the resignations of Brandon
Rowberry and Rochelle Pleskow as independent directors. Their letters of
resignation dated May 22, 2020, state that the reason for their resignations
were to permit them to pursue other business opportunities and further stated
that they have had no disagreements with the operations, policies or practices
of the Company. Also, on May 22, 2020, the Company received a letter of
resignation from Darwin Fogt, resigning as CEO, President and director of the
Registrant and a separate letter of resignation from Curtis Hollister, resigning
as CTO and director of the Company. Messrs. Fogt and Hollister are executive
officers and principals of Bistromatics Inc., organized under the laws of Canada
("Bistromatics").
On November 12, 2016, the Company entered into a Services Agreement with
Bistromatics (the "Bistromatics Agreement") pursuant to which Bistromatics
agreed to provide operational services to the Company for its PHZIO System
including development, content editing and training, support and maintenance,
billing, hosting and oversight, among other services. Reference is made to the
Registrant's Form 8-K filed on November 21, 2016, which Form 8-K was signed by
Darwin Fogt as CEO on behalf of the Registrant, regarding the disclosure of the
Bistromatics Agreement. The Services Agreement included a provision granting
Bistromatics the right to appoint 40% of the Registrant's Board of Directors,
resulting in the appointment of Messrs. Fogt and Hollister as members of the
Company's Board. Although both Companies continue to abide by the Services
Agreement the Company is in arrears in fees to Bistromatics . The Service
Agreement expired during the first quarter of 2020 and the parties signed a new
agreement on September 15, 2020 which is discussed below.
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Pursuant to communications between the Company and Darwin Fogt and Curtis
Hollister regarding their resignations as executive officers and directors of
the Registrant, which resignations were accepted by the Company's Board on June
1, 2020, Messrs. Fogt and Hollister represented to the Company that Bistromatics
and its management will continue to provide support services to the Company's
PHZIO System, In addition, both Darwin Fogt and Curtis Hollister confirmed that
they have had no disagreements with the operations, policies or practices of the
Company.
In connection with the resignation of Darwin Fogt as CEO, the Registrant's Board
of Directors has appointed Douglas MacLellan, who has served as the Company's
Chairman since May 2013, as Chief Executive Officer in addition to continuing to
serve as the Chairman of the Board of Directors.
Plan of Operations
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 last quarter of 2020 and 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 and six months ended June 30,
2021 vs. 2020
REVENUES: Total revenues for the six months ended June 30, 2021 and 2020 were $0
and $138,155. respectively.
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OPERATING EXPENSES: Total operating expenses decreased to $1,251,658 for the six
months ended June 30, 2021 from $1,659,824 for the six months ended June 20,
2020 reflecting a decrease of $408,166. The decrease resulted from a reduction
in number of shares of common stock issued to consultants, reduction in accrued
executive compensation, reduction in financing fees and reduction of
professional fees. Total operating expenses increased to $1,214,671 for the
three months ended June 30, 2021 from $658,716 for the three months ended June
30, 2020 reflecting an increase of $555,955. The increase is a result of an
increase in the number of shares of preferred shares issued to officers,
directors and consultants offset by a reduction in financing fees.
NET INCOME (LOSS): The Company had a net income of $1,111,226 for the six months
ended June 30, 2021 compared with a net loss of $6,489,526 for the six months
ended June 30, 2020 which reflects an increase of $7,600,752. The increase from
loss to income is from an increase from loss to gain from derivative liability
on convertible debt of $6,691,282, a decrease in interest expense of $558,960
and decrease in operating expenses of $408,166 (as outlined above). The Company
had a loss of $635,594 for the three months ended June 30, 2021, compared with a
net loss of $2,960,927 for the three months ended June 30, 2020, which reflects
a decrease of net loss of $2,395,541. The decrease is from an increase from loss
to gain from derivative liability on convertible debt of $2,930,967, a decrease
in interest expense of $140,443 offset by an increase in operating expenses of
$555,955 (as outlined above).
Liquidity and Capital Resources
As of June 30, 2021, we had negative working capital of $4,172,832 compared to
negative working capital of $6,660,570 as of December 31, 2020. The negative
working capital decrease is because of a decrease in derivative liability offset
by an increase in accounts payable and accrued expenses. Cash used in operations
was $253,844 and $281,647 for the six months ended June 30, 2021 and 2020,
respectively. The decrease in cash used in operations is a result of income
versus loss. Cash flows provided by financing activities were $255,025 and
$45,000 for the six months ended June 30, 2021 and 2020, respectively. The
increase resulted from the issuance of Preferred Series E stock for cash. The
cash balance as of June 30, 2021 was $2,290.
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 June 30, 2021 and December 31, 2020, 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, 2020, 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.
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EWELLNESS HEALTHCARE CORPORATION 