WELLNESS CENTER USA, INC. Forward Looking Statements
Except for historical information, the following discussion contains
forward-looking statements based upon current expectations that involve certain
risks and uncertainties. Such forward-looking statements include statements
regarding, among other things, (a) our projected sales and profitability, (b)
our growth strategies, (c) anticipated trends in our industry, (d) our future
financing plans, (e) our anticipated needs for working capital, (f) our lack of
operational experience and (g) the benefits related to ownership of our common
stock. Forward-looking statements, which involve assumptions and describe our
future plans, strategies, and expectations, are generally identifiable by use of
the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend," or "project" or the negative of these words or other
variations on these words or comparable terminology. This information may
involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, performance, or achievements to be materially different from
the future results, performance, or achievements expressed or implied by any
forward-looking statements. These statements may be found under "Description of
Business," and "Analysis of Financial Condition and Results of Operations", as
well as in this Report generally. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including, without limitation, the risks outlined under "Risk Factors"
in our Annual Report on Form 10-K and in other Reports we have filed with the
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Description of Business
Background.
The Company currently operates in two business segments: (i) distribution of targeted Ultra Violet ("UV") phototherapy devices for dermatology and sanitation purposes; and (ii) authentication and encryption products and services. The segments are conducted through our wholly-owned subsidiaries, PSI and SCI.
PSI
PSI was incorporated under the laws of the state of
Joint Ventures
In
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Effective
As of
Protec
In
Psoria-Light
PSI designs, develops and markets a targeted ultraviolet ("UV") phototherapy device called the Psoria-Light. The Psoria-Light is designated for use in targeted PUVA photochemistry and UVB phototherapy and is designed to treat certain skin conditions including psoriasis, vitiligo, atopic dermatitis (eczema), seborrheic dermatitis, and leukoderma.
Psoriasis, eczema, and vitiligo, are common skin conditions that can be challenging to treat, and often cause the client significant psychosocial stress. Clients may undergo a variety of treatments to address these skin conditions, including routine consumption of systemic and biologic drug therapies which are highly toxic, reduce systemic immune system function, and come with a host of chemotherapy-like side effects. Ultraviolet (UV) phototherapy is a clinically validated alternate treatment modality for these disorders.
Traditionally, "non-targeted" UV phototherapy was administered by lamps that emitted either UVA or UVB light to both diseased and healthy skin. While sunblocks or other UV barriers may be used to protect healthy skin, the UV administered in this manner must be low dosage to avoid excessive exposure of healthy tissue. Today, "targeted" UV phototherapy devices administer much higher dosages of light only to affected tissue, resulting in "clearance" in the case of psoriasis and eczema, and "repigmentation" in the case of vitiligo, at much faster rates than non-targeted (low dosage) UV treatments.
Targeted UV treatments are typically administered to smaller total body surface areas, and are therefore used to treat the most intense parts of a client's disease. Non-targeted UV treatment is typically used as a follow-up and for maintenance, capable of treating large surfaces of the body. Excimer laser devices (UVB at 308nm) are expensive and consume dangerous chemicals (Xenon and Chlorine). Mercury lamp devices (UVB and/or UVA) require expensive lamp replacements regularly and require special disposal (due to mercury content). Additionally, mercury lamp devices typically deliver wavelengths of light below 300nm. While within the UVB spectrum, it has been shown that wavelengths below 300nm produce significantly more "sunburn" type side effects than do wavelengths between 300 and 320nm without improvement in therapeutic benefit.
The Psoria-Light is a targeted UV phototherapy device that produces UVB light between 300 and 320 nm as well as UVA light between 350 and 395nm. It does not require consumption of dangerous chemicals or require special environmental disposal, and is cost effective for clinicians, which should result in increased patient access to this type of treatment. It has several unique and advanced features that we believe will distinguish it from the non-targeted and targeted UV phototherapy devices that are currently being used by dermatologists and other healthcare providers. These features include the following: the utilization of deep narrow-band UVB ("NB-UVB") LEDs as light sources; the ability to produce both UVA or NB-UVB therapeutic wavelengths; an integrated high resolution digital camera and client record integration capabilities; the ability to export to an external USB memory device a PDF file of treatment information including a patent pending graph that includes digital images plotted against user tracked metrics which can be submitted to improve medical reimbursements; an accessory port and ability to update software; ease of placement and portability; advanced treatment site detection safety sensor; international language support; a warranty which includes the UV lamp(s); and a non-changeable treatment log (that does not include HIPPA information).
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The Psoria-Light consists of three components: a base console, a color display
with touchscreen control, and a hand-held delivery device with a conduit (or
tether) between the handheld device and the base console. PSI requires clearance
by the
To obtain FDA clearance and permission to affix the CE mark, PSI was required to
conduct
PSI has established an ISO 13485 compliant quality system for the Psoria-Light,
which was first audited in the third quarter of 2011. This system is intended to
ensure PSI devices will be manufactured in a controlled and reliable environment
and that its resources follow similar practices and is required for sales in
countries requiring a CE mark. PSI has also received Certified Space Technology
designation from the
PSI began Psoria-Light Beta deployment in
SCI
SCI was incorporated under the laws of the state of
Intelligent Microparticles
SCI provides clients premiere authentication technology for the protection of a variety of products and brands from illicit counterfeiting and diversion activities. Its technology is applicable to a wide range of industries affected by counterfeiting, diversion and theft including, but not limited to, pharmaceuticals, defense/aerospace, automotive, electronics, technology, consumer and personal care goods, designer products, beverage/spirits, and many others.
SCI delivers the client a complete, simple to use, easy to implement, and cost effective turnkey system that is extremely difficult to compromise. SCI's technology includes a combination of proprietary software and intelligent microparticle marks that are unduplicatable and undetectable to the human eye. These taggants are created with proprietary materials that create unique numerical codes that are assigned meaning by the client and are machine readable without the use of rare earth or chemical tracers. They have been used in covert and overt operations with easy to implement technology and do-it-yourself in-the-field forensic caliber verification.
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In
ActiveDuty™
SCI's ActiveDuty™ data intelligence services offer unique, unprecedented, actionable technology for industries, companies, and agencies on a global scale. Comprised of a suite of powerful analytical tools, including artificial intelligence and social-psychology, the service provides timely and actionable intelligence to clients. ActiveDuty™ is adaptable to a broad spectrum of illicit activities within both private and public sectors such as, but not limited to, counterfeiting, sex and human trafficking, money laundering, and a variety of other markets.
The proprietary algorithmic architecture of ActiveDuty™ creates the first systemic reporting mechanism to deliver strategic and tactical results supported by an intense worldwide analysis of patterns of human behavior. The ActiveDuty™ global framework is heuristic in nature, capable of comprehending big data across the digital spectrum and speaks all the major languages. Up until now, there has not existed a unified system that could actively measure this lifecycle that is a collection of discreet and seemingly random behaviors of criminals anywhere within the digital domain. Criminals change their identities but not their basic behaviors.
SCI was managed initially by
Analysis of Financial Condition and Results of Operations
Results of Operations for the three months ended
Revenue and Cost of Goods Sold
Revenue for the three months ended
Operating Expenses
Operating expenses for the three months ended
Other Income (Expenses)
Other expenses during the three months ended
20 Net Loss
Our net loss for the three months ended
Results of Operations for the six months ended
Revenue and Cost of Goods Sold
Revenue for the six months ended
Operating Expenses
Operating expenses for the six months ended
Other Income (Expenses)
Other expenses during the six months ended
Net Loss
Our net loss for the six months ended
Results of Operations by Segment
The Company currently maintains two business segments:
(i) Medical Devices: which it provided through PSI, its subsidiary acquired on
August 24, 2012 , a developer, manufacturer, marketer and distributer of
targeted Ultra Violet ("UV") phototherapy devices for the treatment of skin
diseases; and
(ii) Authentication and Encryption Products and Services: which it provided
through SCI, its wholly-owned subsidiary that on April 4, 2014 acquired
certain assets of SMI Holdings, Inc. d/b/a Stealth Mark, Inc. , including
Stealth Mark tradenames and marks, and related encryption and
authentication solutions offering advanced product security technologies
within the security and supply chain management vertical sectors.
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The detailed segment information of the Company is as follows:
Operations by Segment for the Three Months Ended March 31, 2022 and 2021
For the Three Months Ended
March 31, 2022
Medical Authentication
Corporate Devices and Encryption Total
Trade Sales $ - $ 99,990 $ - $ 99,990
Cost of goods sold - 10,400 - 10,400
Gross profit - 89,590 - 89,590
Operating expenses 63,132 244,380 3,190 310,702
Loss from operations $ (63,132 ) $ (154,790 ) $ (3,190 ) $ (221,112 )
For the Three Months Ended
March 31, 2021
WCUI PSI Stealthco
Medical Authentication
Corporate Devices and Encryption Total
Trade Sales $ - $ 51,650 $ - $ 51,650
Cost of goods sold - 58,950 - 58,950
Gross profit - (7,300 ) - (7,300 )
Operating expenses 46,661 308,543 7,014 362,218
Loss from operations $ (46,661 ) $ (315,843 ) $ (7,014 ) $ (369,518 ) Revenue for the Medical Devices segment for the three months ended
There was no revenue or cost of goods sold for the Authentication and Encryption
segment for the three months ended
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The Corporate segment primarily provides executive management services for the
Company. Operating expenses for the three months ended
Operations by Segment for the Six Months Ended March 31, 2022 and 2021
For the Six Months Ended
March 31, 2022
Medical Authentication
Corporate Devices and Encryption Total
Trade Sales $ - $ 264,542 $ - $ 264,542
Cost of goods sold - 36,400 - 36,400
Gross profit - 228,142 - 228,142
Operating expenses 103,122 489,344 5,985 598,451
Loss from operations $ (103,122 ) $ (261,202 ) $ (5,985 ) $ (370,309 )
For the Six Months Ended
March 31, 2021
WCUI PSI Stealthco
Medical Authentication
Corporate Devices and Encryption Total
Trade Sales $ - $ 142,149 $ - $ 142,149
Cost of goods sold - 139,050 - 139,050
Gross profit - 3,099 - 3,099
Operating expenses 95,770 565,014 9,975 670,759
Loss from operations $ (95,770 ) $ (561,915 ) $ (9,975 ) $ (667,660 ) Revenue for the Medical Devices segment for the six months ended
There was no revenue or cost of goods sold for the Authentication and Encryption
segment for the six months ended
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The Corporate segment primarily provides executive management services for the
Company. Operating expenses for the six months ended
Liquidity and Capital Resources
Going Concern
The accompanying condensed consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business. As
reflected in the accompanying condensed consolidated financial statements, the
Company has not yet generated significant revenues and has incurred recurring
net losses. During the six months ended
At
No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity financing.
Comparison of six months ended
As of
As of
Cash flows used in operating activities
During the six months ended
Cash flows used in investing activities
During the six months ended
Cash flows provided by financing activities
During the six months ended
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Off-Balance Sheet Arrangements
We have no 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.
Summary of Critical Accounting Policies.
The Company has identified critical accounting policies that, as a result of the
judgments, uncertainties, uniqueness and complexities of the underlying
accounting standards and operations involved could result in material changes to
its financial condition or results of operations under different conditions or
using different assumptions. The Company's most critical accounting policies
include, but are not limited to, those related to fair value of financial
instruments, revenue recognition, stock-based compensation for obtaining
employee services, and equity instruments issued to parties other than employees
for acquiring goods or services. Details regarding the Company's use of these
policies and the related estimates are described in the Company's Annual Report
on Form 10-K for the fiscal year ended
Recently Issued Accounting Pronouncements
See Management's discussion of recent accounting policies included in footnote 2 to the condensed consolidated financial statements.
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