This Form 10-Q contains forward-looking statements rather than historical facts
that involve risks and uncertainties. You can identify these statements by the
use of forward- looking words such as "may," "will," "expect," "anticipate,"
"estimate," "continue" or other similar words. Such forward-looking statements
discuss our current expectations of future results of operations or financial
condition. However, there may be events in the future that we are unable to
accurately predict or control and there may be risks, uncertainties and events
that may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements, which could have a material adverse
effect on our business, operating results and financial condition. The
forward-looking statements included herein are only made as of the date of the
filing of this Form 10-Q, and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
BASIS OF PRESENTATION
The unaudited condensed financial statements of Life on Earth, Inc. should be
read in conjunction with the notes thereto. In the opinion of management, the
unaudited condensed financial statements presented herein reflect all
adjustments (consisting only of normal recurring adjustments) necessary for fair
presentation. Interim results are not necessarily indicative of results to be
expected for the entire year.
We prepare our financial statements in accordance with accounting principles
generally accepted in the United States of America, which require that
management make estimates and assumptions that affect reported amounts. Actual
results could differ from these estimates.
COMPANY OVERVIEW
Life On Earth, Inc. is a cloud enterprise software developer/ provider that
enables rapid innovation to keep enterprise operations safe, compliant and
manageable. The Company's products offered are designed to help organizations
innovate and modernize legacy systems while minimizing cost and risk of business
disruptions and ensure regulatory compliance. Through its recent acquisition of
SmartAxiom, Inc., the Company now has the capabilities of offering software that
manages and secures the Internet-of-Things (IoT) through patented, lite
blockchain technology running among those devices at the edge of the Internet
and enabling them to defend themselves. Our peer-to-peer distributed ledgers
improve security, latency, reliability and manageability. We have uniquely
created, through our SmartAxiom subsidiary, the endpoint-to-cloud blockchain
solution, while our IoT Smart Contracts allow for process intelligence and
management of the process. The SmartAxiom technology is proving value in
verticals such as smart buildings, manufacturing lines and shipment tracking. It
interoperates with enterprise systems such as IBM Blockchain and Microsoft Azure
and is proven on many ARM and Intel based microcontrollers such as those from
Intel, NXP, Renesas, Marvell, and Broadcom.
The Company previously was a brand accelerator and incubator Company that was
focused on building and scaling concepts in the natural consumer products
category ("CPG"). During the year ended May 31, 2021, the Company discontinued
the wholesale beverage distribution operations, and the Company announced its
intention divest away from its business as a Consumer-Packaged Goods ("CPG")
Company. Accordingly, the Company's results of operations for the year ended May
31, 2021, reflect a charge in the aggregate amount of $786,436,
On December 17, 2021, we entered into a Stock Purchase Agreement ("SPA") with
CareClix Holdings, Inc., a Florida corporation ("SOLI") to acquire four
operating subsidiaries of SOLI. On December 31, 2031, under the terms of a
Management Operating Agreement, we agreed to a partial closing of the
transaction set forth in the SPA with the final closing to occur on the
effectiveness of a registration statement for the shares to be issued as part of
the consideration. Although we acquired control of the CareClix
In the partial closing, we now own 100% ownership of the operating subsidiaries
of SOLI, which include CareClix, Inc., a Virginia corporation, CareClix
Services, Inc., a Florida corporation, MyCareClix, Inc., a Florida corporation,
and CareClix RPM, Inc., a Florida corporation (collectively, the "CareClix
Group"). In exchange for ownership of the CareClix Group, we will issue the
following securities to the common shareholders of SOLI:
1. 50,000,000 shares of our common stock;
2. 2,100,000 shares of a new class of preferred stock to be designated as Series
E Preferred Stock. The shares of Series E Preferred stock to be designated
and issued to the shareholders of CareClix have a convertibility ratio, under
the current share structure, of 100 to 1 into our shares of common stock with
conversion occurring automatically when our Articles of Incorporation have
been amended to authorize sufficient common shares for the conversion. The
net effect of these two share issuance will be that shares of SOLI held
before the transaction will be exchanged for our common shares on a 1 for 1
basis.
3. 4,000,000 shares of our Series A Preferred Stock, over a period of time, to
Mr. Charles Scott, the Chairman and majority shareholder of SOLI, with
2,500,000 shares issued at the December 31, 2021 partial closing, 600,000
shares to be issued 45 days after closing, and 900,000 shares to be issued 90
days after closing. The second installment of Series A shares are to be issued
by February 14, 2022 but have not yet been issued and the finsl installment is
due to be issued by March 31`, 2022.. Shares of our Series A Preferred Stock,
which are not convertible and do not receive dividends, are entitled to cast
50 votes per share on all matters submitted to the vote or consent of our
shareholders.
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Upon the final closing of the Transaction, the former shareholders of SOLI will
hold approximately seventy-frive percent of our issued and outstanding common
equity on a fully diluted basis and will hold more than eighty-five percent of
our total shareholder voting power.
The final closing of the Transaction is subject to the effectiveness of a
registration statement on Form S-4 to be filed registering the issuance of our
shares of common stock and shares of Series E Preferred Stock to the common
shareholders of CareClix. We are undertaking to file the S-4 registration
statement, which will be filed as soon as a pending audit of the financial
statements of the acquired CareClix companies is completed.
Pending the final Closing, SOLI and LFER completed the operational changes under
the Management Operating Agreement effective December 31, 2021, so that the
CareClix Group and LFER began acting as a unit pending the effective date of the
S-4 registration statement and our issuance of the remainder of the agreed
consideration. The financial result of the CareClix subsidiaries will not be
consolidated with our financial results until the final closing but are reported
on a pro forma basis in the Notes to the Financial Statements. See, Note 5.
CareClix Plan of Operations
We now own the CareClix Group of Companies which specifically are: CareClix,
Inc, CareClix Services, Inc, MyCareClix, Inc, and CareClix RPM, Inc.
CareClix, Inc:
CareClix, Inc is a digital healthcare development company centered around the
CareClix® virtual care management platform. The CareClix platform was originally
created in 2012 by physicians for physicians and, throughout its 10-year
history, development has been led by licensed and practicing physicians and the
input of our patients. This differentiates CareClix® from its competitors.
Currently the CareClix® virtual telehealth platform is recognized worldwide as
one of the most complete telehealth platforms for medical service providers.
CareClix software CareClix' suite of services is trusted by some of the best
names in healthcare with approximately 20 million individuals in the U.S. and 35
other countries currently having access to CareClix' telehealth platform or
services.
CareClix Services Inc:
CareClix Services Inc combines the CareClix software and its multinational
multispecialty medical network to offer virtual healthcare services across
multiple specialties to networks of patients both domestically and
internationally. We offer a wide variety of health care services to: insurers,
employers, affinity groups, healthcare systems, provider groups and independent
physicians. The combination of our software and services empowers providers to
interact with an increasing number of patients with better data in less time.
CareClix Services, Inc is a leader in custom multinational telemedicine. Our
customers mix and match, add or delete, a wide range of technologies, medical
services, and integrations. CareClix® also matches the transparency to our
customers or partner's comfort level allowing them to seamlessly (and sometimes
invisibly) grow their practice, their brand, and their revenue.
MyCareClix, Inc:
MyCareClix is a direct-to-consumer family and household health and wellness
company. MyCareClix intends to offer the entire suite of CareClix services
directly to consumers. For a small monthly subscription fee, both individual and
family consumers in the US will have access to the CareClix Network of primary
care and specialty doctors, as well as access to testing, prescriptions, and
ship-to-home medical products. My CareClix intends to launch a small-business
program targeting small and mid-sized businesses in the US and key other
countries.
CareClix RPM, Inc:
CareClix RPM will distribute and monitor FDA approved healthcare devices for
remote patient monitoring and chronic care management utilizing the CareClix
platform to track and report monitored patient data. CareClix RPM, Inc will
create turnkey solutions for providers seeking to start or expand their remote
patient monitoring, data integration, remote therapeutic monitoring, or chronic
care management programs. Anticipated by the end of 2022, CareClix RPM will
procure and distribute devices and offer a multi-lingual patient engagement team
with qualified medical oversight and thorough reporting for billing and care
plan administration.
CareClix Group of Companies
The CareClix Group of Companies are positioned in the anticipation of the global
growth of virtual healthcare delivery. The company is well positioned to deliver
this service with the technological and operational infrastructure we have
created over the last decade. Having endured the initial growing pains essential
to the foundation of any telemedicine company-namely, the careful interplay of
interoperability, data transmission and organic workflow integration. Over the
past decade CareClix created roots throughout the healthcare industry necessary
to produce the type of quality health care delivery within a continuation of
services that patients require as they navigate their healthcare and wellness
needs. CareClix is a full spectrum virtual healthcare product for individuals
addressing their diverse healthcare needs and not a niche product that only
addresses episodic issues which may ignore comorbidities and co-conditional
needs. Since our inception we have planned and implemented an offering that is
more comprehensive. As a result, CareClix has gained momentum internationally
through its salesforce and strategic relationships. CareClix has a unique global
sales force. CareClix utilizes internal sales team, independent sales team and
distribution channels such as system integrators, healthcare providers, IT
companies, and benefits administrators to reach a growing number of countries
and all 50 states. Adding to the growth of the platform, CareClix has undertaken
a major reorganization which has produced significant internal cost
efficiencies. CareClix has the internal staff and systems to meet the diverse
needs of by healthcare providers without the inefficiencies common in our
competitors. Combined with our robust sales program, we intend to expand our
domestic and international footprint and be operationally profitable by year
end.
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We anticipate our new subsidiaries being major players in the telemedicine
space. We believe we can capture market share in the United States and across
the globe. There are many new telemedicine companies who will not be able to
weather the storm and meet the complex needs of the medical provider community
which we believe is the most essential element of providing good medical
services. As we continue towards our ultimate goal of empowering good healthcare
through technology and support, we plan to engage outside parties to help scale
the CareClix businesses, both organically and possibly through further M&A.
We acquired the CareClix Group in order to expand into the Telemedicine and
Medical Software Services industry. The group of companies under the CareClix
Group will operate as our wholly owned subsidiaries and include a telemedicine
medical services company, a direct-to-consumer company, a software-as-a-platform
company, and an RPM (remote patient monitoring) company.
Our principal executive offices currently are located at 1345 6th Ave. 2nd
Floor, New York NY 10022 and our telephone number (646) 844-9897.
Coronavirus Risks
In December 2019, a novel strain of coronavirus was reported to have surfaced in
Wuhan, China, which has and is continuing to spread throughout China and other
parts of the world, including the United States. On January 30, 2020, the World
Health Organization declared the outbreak of the coronavirus disease (COVID-19)
a "Public Health Emergency of International Concern." On January 31, 2020, U.S.
Health and Human Services Secretary Alex M. Azar II declared a public health
emergency for the United States to aid the U.S. healthcare community in
responding to COVID-19, and on March 11, 2020 the World Health Organization
characterized the outbreak as a "pandemic".
The ultimate extent of the impact of any epidemic, pandemic or other health
crisis on our business, financial condition and results of operations will
depend on future developments, which are highly uncertain and cannot be
predicted, including new information that may emerge concerning the severity of
such epidemic, pandemic or other health crisis and actions taken to contain or
prevent their further spread, among others. The significant outbreak of COVID-19
has resulted in a widespread health crisis that has adversely affected the
economies and financial markets worldwide, and may continue to do so, which
could adversely affect our business, results of operations and financial
condition.
Sales and Distribution
During the quarter ended February 28, 2022, we had no sales activity and no
revenue, although our new subsidiaries acquired in the partial closing at
December 31, 2022 had operating revenues. See Note 5.
Production and Distribution
The Company strategy is to develop and expand the telemedicine activities of our
CareClix subsidiaries both domestically and worldwide.
Employees
The Company currently has no full-time employees and services as needed have
been provided by. our original members of the Board of Directors, who also serve
as officers or in executive functions.
GOING CONCERN QUALIFICATION
Several conditions and events cast substantial doubt about the Company's ability
to continue as a going concern. We incurred net losses from inception of
approximately $22,600,000, have limited revenues, and require additional
financing in order to finance its business activities on an ongoing basis. Our
future capital requirements will depend on numerous factors including, but not
limited to, the anticipated success of the CareClix subsidiaries and whether we
successfully acquire other revenue generating companies or assume other new
businesses that generate material revenues.
At February 28, 2022, we had cash on hand of approximately $17,700 and an
accumulated deficit of approximately $22,600,000. See "Liquidity and Capital
Resources."
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
("GAAP") requires management to make judgments, assumptions and estimates that
affect the amounts reported in our financial statements and accompanying notes.
The discussion and analysis of our financial condition and results of operations
is based upon our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, we evaluate our estimates based on historical experience and on
various other assumptions that we believe to be reasonable under the
circumstances, the results of which form our basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions, or if management made different judgments or utilized
different estimates. Many of our estimates or judgments are based on anticipated
future events or performance, and as such are forward-looking in nature, and are
subject to many risks and uncertainties, including those discussed below and
elsewhere in this Report. We do not undertake any obligation to update or revise
this discussion to reflect any future events or circumstances. There are certain
critical accounting estimates that we believe require significant judgment in
the preparation of our financial statements. We have identified below our
accounting policies that we use in arriving at key estimates that we consider
critical to our business operations and the understanding of our results of
operations. This is not a complete list of all of our accounting policies, and
there may be other accounting policies that are significant to us. For a
detailed discussion on the application of these and our other accounting
policies, see Note 1 to Financial Statements of this Report.
Revenue Recognition
The Company recognizes revenue under ASU No. 2014-09, "Revenue from Contracts
with Customers (Topic 606)," ("ASC 606"). The core principle of the revenue
standard is that a company should recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the
consideration to which the company expects to be entitled in exchange for those
goods or services. The Company only applies the five-step model (as described in
Note 1 to the Financial Statements of this Report) to contracts when it is
probable that the Company will collect the consideration it is entitled to in
exchange for the goods and services transferred to the customer.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price of acquired businesses over
the estimated fair value of the identifiable net assets acquired. Goodwill and
other intangibles are reviewed for impairment annually or more frequently when
events or circumstances indicates that the carrying value of a reporting unit
more likely than not exceeds its fair value. The goodwill impairment test is
applied by performing a qualitative assessment before calculating the fair value
of the asset. If, on the basis of qualitative factors, it is considered more
likely than not that the fair value of the asset is greater than the carrying
amount, further testing of goodwill for impairment is not required. If the
carrying amount of the asset exceeds the asset's fair value, an impairment loss
is recognized in an amount equal to that excess, limited to the total amount of
goodwill allocated to that asset. Identifiable intangible assets acquired in
business combinations are recorded at the estimated acquisition date fair value.
Finite lived intangible assets are amortized over the shorter of the contractual
life or their estimated useful life using the straight-line method, which is
determined by identifying the period over which the cash flows from the asset
are expected to be generated.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.
Inflation
The amounts presented in the financial statements do not provide for the effect
of inflation on our operations or financial position. The net operating losses
shown would be greater than reported if the effects of inflation were reflected
either by charging operations with amounts that represent replacement costs or
by using other inflation adjustments.
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RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2022 AND FEBRUARY 28, 2021:
Sales
Sales for the three months ended February 28, 2022 were approximately $0
compared to $0 for the three months ended February 28, 2021.
Operating Expenses
Operating expenses totaled approximately $1,408,000 for the three months ended
February 28, 2022. as compared to approximately $64,000 for the three months
ended February 28, 2021. The increase in operating expenses of $ 1,344,000 was
primarily due to increased officers' compensation of $1,319,000 and increased
professional fees of $46,000.
Other Expense
During the three months ended February 28, 2022, the Company recorded interest
and financing costs of approximately $74,000 as compared to approximately
$70,000 during the three months ended February 28, 2021. Interest and financing
costs primarily result from the amortization of deferred financing balances that
were incurred by the Company to finance operations. During the three months
ended February 28, 2021, the Company recorded a charge for the change in the
fair value of contingent consideration related to the acquisition of Just Chill
and a gain for the change in the fair value of a derivative liability related to
an underlying note that has been converted to 2,138,775 shares of the Company's
common stock and the Company no longer has an obligation for the derivative
liability.
Net Loss
For the three months ended February 28, 2022, we incurred a net loss of
$2,874,000, compared to a net loss of $170,000 for the three months ended
February 28, 2021. The increase in the net loss of S2,704,000 resulted from a
number of factors. In addition to those listed above, the Company recorded a
loss from the sale of the SA subsidiary of $1,135,000 and a loss from
discontinued operations of its SA subsidiary of $283,000. These charges were
partially offset by an aggregate gain on the disposal of its VK and JCG
subsidiaries of $26,000.
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2022 AND FEBRUARY 28, 2021:
Sales
Sales for the nine months ended February 28, 2022, were approximately $0
compared to $0 for the nine months ended February 28, 2021.
Operating Expenses
Operating expenses totaled approximately $1,917,000 for the nine months ended
February 28, 2022, as compared to approximately $311,000 for the nine months
ended February 28, 2021. The increase in operating expenses of $1,606,000 was
primarily related to increased officers' compensation of $1,551,000 and
increased professional fees of $105,000.
Other Expense
During the nine months ended February 28, 2022, the Company recorded interest
and financing costs of approximately $400,000 as compared to approximately
$423,000 during the nine months ended February 28, 2021. Interest and financing
costs primarily result from the amortization of deferred financing balances that
were incurred by the Company to finance operations. During the nine months ended
February 28, 2022, the Company recorded a gain for the change in the fair value
of its contingent consideration of $352,000 as compared to charge of $163,000
during the three months ended February 28, 2021, related to the acquisition of
Just Chill, which had arisen from the measurement of LFER stock on the 12-month
anniversary of the acquisition and subsequent Balance Sheet reporting dates. The
contingency shares were issued to the JCG Group during the nine months ended
February 28, 2022. During the nine months ended February 28, 2022, the Company
recorded a gain for the change in the fair value of its derivative liability of
$111,000 as compared to a similar gain of $10,000 during the nine months ended
February 28, 2021. During the nine months ended February 28, 2022, the
underlying note of the derivative liability has been converted to 2,138,775
shares of the Company's common stock and the Company no longer has an obligation
for the derivative liability.
Net Loss
For the nine months ended February 28, 2022, we incurred a net loss of
$3,934,000, as compared to a net loss of $887,000 for the nine months ended
February 28, 2021. The increase in the net loss of S3,047,000 resulted from
several factors. In addition to those listed above, the Company recorded a loss
from the sale of the SA subsidiary of $1,135,000 and a loss from discontinued
operations of its SA subsidiary of $971,000. These charges were partially offset
by an aggregate gain on the disposal of its VK and JCG subsidiaries of $26,000.
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LIQUIDITY AND CAPITAL RESOURCES
As of February 28, 2022, we held current assets in the amount of $17,700
consisting of cash and cash equivalents and other current assets of $3,689. Our
current liabilities as of February 28, 2022, totaled $1,591,000, and consisted
of accounts payable and accrued expenses in the amount of $704,000, notes
payable of $214,000, convertible notes of payable of $665,000, and lines of
credit in the amount of $7,000. Our working capital deficit as of February 28,
2022, was $1,570,000. Our recent financings have consisted primarily of private
issuances of convertible notes and preferred stock.
During the nine months ended February 28, 2022, the Company received $158,500
from the sale of 158,500 shares of Series C Preferred Stock and received $88,000
from the issuance of a notes payable to related parties, $61,000 from the sale
of Series C Preferred Stock to a related party, and, $65,000 from the issuance
of a convertible note payable.
For the nine months ended February 28, 2022, our operating activities used
$79,734 in cash, compared to $135,156 during the nine months ended February 28,
2021. For the nine months ended February 28, 2022, financing activities provided
a net $182,797 in cash, compared to a net $134,304 in cash for the nine months
ended February 28, 2021. Investing activities used $95,323 in cash during the
nine months ended February 28, 2022, compared to $0 for the nine months ended
February 28, 2021. Our cash and cash equivalents increased by a net $17,000
during the nine months ended February 28, 2022.
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