MEDIXALL GROUP, INC. FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as "anticipate," "believe," "estimate," "intend," "could," "should," "would," "may," "seek," "plan," "might," "will," "expect," "predict," "project," "forecast," "potential," "continue" negatives thereof or similar expressions. Forward-looking statements contained in this report speak only as of the date of this report, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Such forward-looking statements include statements regarding, among other things, matters associated with:
· our ability to continue as a going concern,
· our history of losses which we expect to continue,
· the significant amount of liabilities due to related parties,
· our ability to raise sufficient capital to fund our company,
· our ability to integrate acquisitions and the operations of acquired
companies,
· the limited experience of our management in the operations of a public
company,
· potential weaknesses in our internal control over financial reporting,
· increased costs associated with reporting obligations as a public
company,
· a limited market for our common stock and limitations resulting from our
common stock being designated as a penny stock,
· the ability of our board of directors to issue preferred stock without
the consent of our stockholders,
· our management controls the voting of our outstanding securities,
· the conversion of shares of Series A and B preferred stock will be very
dilutive to our existing common stockholders,
· risks associated with and unique to health care,
· risks associated with stability of the internet, data security, exposure
to data breach, and
· risks associated with COVID-19
You should read thoroughly this report and the documents that we refer to herein
with the understanding that our actual future results may be materially
different from and/or worse than what we expect. We qualify all of our
forward-looking statements by these cautionary statements, including those made
in this report, in Part I. Item 1A. Risk Factors appearing in our Annual Report
on Form 10-K for the year ended
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OTHER PERTINENT INFORMATION
Unless specifically set forth to the contrary, when used in this report the
terms "
GENERAL
The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand the Company's results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q.
The MD&A is based on our unaudited condensed consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in
OVERVIEW
The Company expanded its
Thus far,
Going Concern
We have incurred net losses of approximately
14 Results of Operations
Three Month Period Ended
Revenue
We had revenue of
Operating Expenses A summary of our operating expense for the three month periods endedSeptember 30, 2021 and 2020 follows: Three Months Ended September 30, Increase / 2021 2020 (Decrease) Operating expense Professional fees$ 323,316 $ 241,454 $ 81,862 Professional fees - related party 40,000 104,050 (64,050) Management fee - related party 240,000 120,000 120,000 Personnel related expenses 533,130 428,633 104,497
Other selling, general, and administrative 258,498 72,494 186,004 Total operating expense
$ 1,394,944 $ 966,631 $ 428,313
Operating expenses increased
(1) A increase in professional fees of$81,862 due to increased activity in the Company's operations. (2) Professional fees - related party decreased by$64,050 or 160%, due to a decrease in R3 service fees during the three month period endedSeptember 30, 2021 compared to the same period in 2020. (3) The increase in management fees - related party of$120,000 is due to an additional contract entered into with TBG to provide management services to our wholly-owned subsidiary, Health karma, Inc. There was no such contract during the three month period endedSeptember 30, 2020 . (4) The increase in personnel related expenses of$104,497 is due to payroll related expenses in excess of issued shares of restricted common stock for employee services during the three month period endedSeptember 30, 2020 . There were no such share issuances during the three month period endedSeptember 30, 2021 . (5) Other selling, general, and administrative increased by$186,004 or 257% due to an increase in business development and marketing expenses during the three month period endedSeptember 30, 2021 .
We expect expenses to increase as we move forward with further enhancing the platform.
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Nine Month Period Ended
Revenue
We had revenue of
Operating Expenses A summary of our operating expense for the nine month periods endedSeptember 30, 2021 and 2020 follows: Nine Months Ended September 30, Increase / 2021 2020 (Decrease) Operating expense Professional fees$ 1,004,976 $ 1,145,895 $ (140,919) Professional fees - related party 451,038 245,050 205,988 Management fee - related party 600,000 360,000 240,000 Personnel related expenses 1,817,042 1,998,460 (181,418)
Other selling, general, and administrative 683,318 214,321 468,997 Total operating expense
$ 4,556,374 $ 3,963,726 $ 592,648
Operating expenses increased
(1) A decrease in professional fees of$140,919 which primarily resulted from fewer shares of stock issued for services for the nine months endedSeptember 30, 2020 compared to the nine months endedSeptember 30, 2021 . (2) Professional fees - related party increased by$205,988 or 84%, due to marketing and consulting expenses to two companies which are owned by the president of Turnkey, a related party, during the nine month period endedSeptember 30, 2021 . There was no such expense during the nine month period endedSeptember 30, 2020 . This increase was slightly offset by a decrease in R3 service fees during the nine month period endedSeptember 30, 2021 compared to the same period in 2020. (3) The increase in management fees - related party of$240,000 is due to an additional contract entered into with TBG to provide management services to our wholly-owned subsidiary,Health Karma, Inc. There was no such contract during the nine month period endedSeptember 30, 2020 . (4) The decrease in personnel related expenses of$181,418 is due to issuing shares of its restricted common stock for employee services during the nine month period endedSeptember 30, 2020 in excess of that issued in the same period of 2021. (5) Other selling, general, and administrative increased by$468,997 or 219% due to an increase in business development and marketing expenses during the nine month period endedSeptember 30, 2021 .
We expect expenses to increase as we move forward with further enhancing the platform.
Liquidity and capital resources
Liquidity is the ability of a company to generate sufficient cash to satisfy its
needs. At
For the nine month period ended
16
Net cash used in operating activities for nine month period ended
Our primary source of capital to develop and implement our business plan has been from sales of common and preferred stock.
Other Contractual Obligations
None.
Off-Balance Sheet Arrangements
We do not have any 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 are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Critical Accounting Policies Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.
A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of website and development cost. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustment is reflected in current operations.
Risks and Uncertainties
The Company's operations are subject to significant risks and uncertainties including financial, operational and regulatory risks, including the potential risk of business failure. Additionally, the Company faces risk and uncertainty related to the COVID-19 pandemic.
Share Based Payment Arrangements
The Company applies the fair value method in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company fair values the stock-based compensation at the market price for the Company's stock as of the date of issuance.
Recoverability of Long-Lived Assets
The Company assesses the recoverability of long-lived assets annually or
whenever events or changes in circumstances indicate that expected future
undiscounted cash flows might not be sufficient to support the carrying amount
of an asset. The Company deems an asset to be impaired if a forecast of
undiscounted future operating cash flows is less than the carrying amount. If an
asset is determined to be impaired, the loss is measured as the amount by which
the carrying value of the asset exceeds its fair value. There was no impairment
of long-lived assets pertaining to the nine month periods ended
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Website and Development Costs
Internal and external costs incurred to develop the internal-use computer
software during the application and development stage shall be capitalized
subsequent to the preliminary project stage and when it is probable that the
project will be completed. As of
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