AMERICAN INTERNATIONAL HOLDINGS CORP. - Quarter Report: 2019 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                    

Commission file number: 0-50912

AMERICAN INTERNATIONAL HOLDINGS CORP.

(Exact Name Of Registrant As Specified In Its Charter)

Registrant’s Telephone Number, Including Area Code: (281) 496-9971

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

The number of shares outstanding of each of the issuer’s classes of equity as of August 21, 2019 is 24,468,355 shares of common stock.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Financial Statements

AMERICAN INTERNATIONAL HOLDINGS CORP.

Consolidated Balance Sheets

June 30, 2019 and December 31, 2018

(Unaudited)

See accompanying notes to the unaudited consolidated financial statements.

AMERICAN INTERNATIONAL HOLDINGS CORP.
Consolidated Statements of Operations
(Unaudited)

See accompanying notes to the unaudited consolidated financial statements.

AMERICAN INTERNATIONAL HOLDINGS CORP.
Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

AMERICAN INTERNATIONAL HOLDINGS CORP.
Consolidated Statements of Cash Flows
(Unaudited)

See accompanying notes to the unaudited consolidated financial statements.

AMERICAN INTERNATIONAL HOLDINGS CORP.

Notes to Consolidated Financial Statements

June 30, 2019

(Unaudited)

Note 1 - Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements of American International Holdings Corp. (“AMIH”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in AMIH’s latest Annual Report filed with the SEC on Form 10-K for the year ended December 31, 2018. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted.

Organization, Ownership and Business

Prior to May 31, 2018, American International Holdings Corp. (“AMIH”) was a 93.2% owned subsidiary of American International Industries, Inc. (“American”, “AMIN”) (OTCBB: AMIN). Effective May 31, 2018, the Company issued 10,100,000 shares of restricted common stock. As a result of the issuance of the common shares, a change in control occurred. American International Industries, Inc. ownership decreased from 93.2% to 6.4%. No one individual or entity owns at least 50% of the outstanding shares of the Company. Effective April 12, 2019, the Company changed its business focus to the services of medical spas.

On April 12, 2019, The Company entered into a Share Exchange Agreement (the “Agreement”) with Novopelle Diamond, LLC (“Novopelle”) and all three members of Novopelle. See Note 2 for the detail of the transaction. The acquisition was treated as a reverse acquisition for accounting purposes, with the Company remaining the parent company and Novopelle becoming a wholly-owned subsidiary of the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of AMIH and its wholly-owned subsidiary: Novopelle Diamond, LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented.

Cash Equivalents

Highly liquid investments with original maturities of three months or less are considered cash equivalents. There are no cash equivalents at June 30, 2019 and December 31, 2018.

Fair Value of Financial Instruments

FASB ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At June 30, 2019 and December 31, 2018, the carrying value of certain financial instruments (cash and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments or interest rates, which are comparable with current rates.

Net Loss Per Common Share

We compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

Property, Plant, Equipment, Depreciation, Amortization and Long-Lived Assets

Long-lived assets include:

Property, Plant and Equipment – Assets acquired in the normal course of business are recorded at original cost and may be adjusted for any additional significant improvements after purchase. We depreciate the cost evenly over the assets’ estimated useful lives. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss being recognized as a component of other income or expense.

Identifiable intangible assets – These assets are recorded at acquisition cost. Intangible assets with finite lives are amortized evenly over their estimated useful lives.

At least annually, we review all long-lived assets for impairment. When necessary, we record changes for impairments of long-lived assets for the amount by which the present value of future cash flows, or some other fair value measure, is less than the carrying value of these assets.

If the carrying amount of a reporting unit exceeds its fair value, we measure the possible goodwill impairment based upon an allocation of the estimate of fair value of the reporting unit to all of the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets (Step Two Analysis). The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities (“carrying amount”) is the implied fair value of goodwill.

Management’s Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

Revenue Recognition

The Company recognizes revenue in according with Accounting Standards Codification (ASC) Topic 606. The underlying principle is that the Company recognize revenue to depict the transfer of promised goods and services to customers in an amount that they expect to be entitled to in the exchange for goods and services provided. A five-step process has been designed for the individual or pools of contracts to keep financial statements focused on this principle.

Note 2 - Acquisition

Effective April 12, 2019, American International Holdings Corp. (“AMIH”) issued 18,000,000 shares of the Company common stock to the members (three individuals) of Novopelle Diamond, LLC (“Novopelle”), a Texas limited company, to acquire 100% of the membership interests of Novopelle. The issuance of these shares represent a change in control of AMIH. Concurrent with the issuance, Jacob Cohen, Esteban Alexander and Alan Hernandez, representing the three former members of Novopelle, were elected to the board of directors and to the office of Chief Executive Officer, Chief Operating Officer and Chief Marketing officer of the AMIH, respectively. Everett Bassie and Charles Zeller resigned as board members of AMIH. This transaction was accounted for as a reverse acquisition. At closing, in accordance with the share exchange agreement, AMIH will remain as the parent company with Novopelle being a wholly owned subsidiary of AMIH.

Note 3 – Property and Equipment

Property and equipment is as follows at June 30, 2019 and December 31, 2018:

Depreciation and amortization expense for the six months ended June 30, 2019 was $7,286.

The Company incurred long-debt in the amount of $34,027 during the six months ended June 30, 2019 to purchase equipment used in its operations. The total purchase price was $37,027, with the Company making a down payment in the amount of $3,000.

Note 4 – Licensing Agreement

On June 27^th, 2019, the Company executed an exclusive license agreement with Novo MedSpa Addison Corp (“Novo Medspa”) providing the Company with the exclusive rights to the Novopelle brand and to establish new Novopelle branded MedSpa locations on a worldwide basis (the “Exclusive License”). In consideration for the Exclusive License, the Company paid Novo MedSpa a one-time cash payment of $40,000 and issued to Novo MedSpa 250,000 shares of the Company’s common stock. The 250,000 shares of the Company’s common stock was valued at $0.10 per share or $25,000.

Note 5 – Operating Right-of-Use Lease Liability

On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-2, Leases (Topic 842), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosure surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.

On January 1, 2019, the Company recognized an operating right-of-use asset in the amount $287,206 and an operating lease liability in the amount of $294,774. The lease term is eighty-four (84) months and expires in November 2025.

The following is a schedule, by year, of maturities of lease liabilities as of June 30, 2019:

Total rental expense for the six months ended June 30, 2019 was $27,740.

The operating lease right-of-use asset net balance at June 30, 2019 was $260,431.

Note 6 – Accrued Compensation for Related Parties

At June 30, 2019, accrued compensation represent compensation for the Company’s executive officers from April 12, 2019 to June 30, 2019.

Note 7 – Short-Term Note Payable

On May 17^th, 2019, the Company issued a promissory note with a principal amount of $30,000 to a non-related third party in exchange for three tranches of $10,000 in cash. The promissory note is unsecured, has a maturity date of April 30, 2020 and accrues interest at the rate of 5% per annum until paid in full by the Company. The Company has only received two of the tranches for a total of $20,000 as of June 30, 2019.

Note 8 – Loans to Related Parties

During the six month period ended June 30, 2019, two of the Company officers and board members, loaned the Company $18,808, including $3,170 of accrued interest on the loan. During the six months ended June 30, 2019, the Company repaid $31,633 of loans to the two officers/board members. The Company incurred $2,026 on imputed interest expense on related party borrowing during the three months ended June 30, 2019. Outstanding loan balances to these related parties was $113,918 at June 30, 2019.

On June 21^st, 2019, the Company issued a promissory note with a principal amount of $40,000 to a related party in exchange for $40,000 in cash. The promissory note is unsecured, has a maturity date of June 21, 2020 and accrues interest at the rate of 8% per annum until paid in full by the Company. Furthermore, the Company issued 50,000 shares of the Company’s common stock to the related party investor as further consideration to enter into the loan with the Company. The Company issued 50,000 shares of common stock valued at $.10 per share or $5,000, which was accounted for a discount on the note.

As of June 30, 2019, AMIH had a short-term note payable in the amount of $13,473 to Kemah Development Texas, LP, a company owned by Dror Family Trust, a related party.

Note 9 – Long-Term Debt to Related Parties

On April 12, 2019 the Company entered into individual share exchange agreements and promissory notes with each of Daniel Dror, Winfred Fields and former Directors Everett Bassie and Charles Zeller (the “AMIH Shareholders”), whereby the AMIH Shareholders agreed to cancel and exchange a total of 5,900,000 shares of their AMIH common stock. The Company issued individual promissory notes with an aggregate principal amount of $350,000 (the “Promissory Notes”) for cancellation of the 5,900,000 shares of common stock. The Promissory Notes have a term of two years and accrue interest at the rate of 10% per annum until paid in full by the Company. The Company accrued $7,575 of interest on these notes during the six months ended June 30, 2019.

Note 10 – Long-Term Debt

The Company incurred long-debt in the amount of $34,027 during the six months ended June 30, 2019 to purchase equipment used in its operations. The total purchase price was $37,027, with the Company making a down payment in the amount of $3,000. The note is due in monthly payments of $1,258.50, including interest at 8%, due in September 2021.

The maturities of long-term debt is as follows:

Note 11 – Capital Stock

The Company is authorized to issue up to 5,000,000 shares of preferred stock, $ 0.0001 par value, of which 0 shares are issued and outstanding at June 30, 2019 and December 31, 2018.

The Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, of which 23,433,355 shares are issued and outstanding (outstanding shares includes 410 treasury shares) at June 30, 2019 and 10,933,355 at December 31, 2018.

On May 31, 2018, the Company issued 3,800,000 shares of common stock to Robert Holden for future services as the Company CEO and Director to pursue a digital marketing business under the name of Digital Marketing Interactive. As a result of the resignation of Mr. Holden on August 19, 2018, the Company no longer anticipates operating under the d/b/a Digital Marketing Interactive and/or maintaining a business focus in digital marketing moving forward. The Company plans to pursue legal actions to recover the 3,800,000 shares of stock issued to Mr. Holden.

On April 12, 2019, the Company issued 18,000,000 shares of common stock for the acquisition Novopelle.

On April 12, 2019, the Company entered into four exchange agreements with current shareholders to cancel 5,900,000 shares of common stock in exchange for four long-term notes totaling $350,000.

On May 3^rd, 2019, the Company issued 100,000 shares of the Company’s common stock to a non-related third-party investor in exchange for $10,000 in cash.

On June 21, 2019, the Company issued 50,000 shares of common stock as part consideration of a loan agreement. The shares were valued at $0.10 per share or $5,000.

On June 24^th, 2019, the issued 250,000 shares of the Company’s common stock as part consideration of an exclusive licensing agreement. The shares were valued at $0.10 per share or $25,000.

Note 12 — Going Concern

As reflected in the accompanying financial statements, the Company has a net loss of $100,427 for the six months ended June 30, 2019, an accumulated deficit of $107,947. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty.

Note 13 – Subsequent Events

On July 5, 2019, our Board of Directors adopted and approved our 2019 Stock Option and Incentive Plan (the “Plan”). The Plan is intended to promote the interests of our Company by providing eligible person with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Company as an incentive for them to remain in the service of the Company. The maximum number of shares available to be issued under the Plan is currently 10,000,000 shares, subject to adjustments for any stock splits, stock dividends or other specified adjustments which may take place in the future. The Company has issued a total of 1,035,000 shares to eligible persons under the Plan.

On July 8, 2019, the Company issued a convertible promissory note with a principal amount of $40,000 to a non-related third party in exchange for $40,000 in cash. The promissory note is unsecured, has a maturity date of July 8, 2020 and accrues interest at the rate of 8% per annum until paid in full by the Company. In the event that the Company files, and has qualified by the SEC, an offering Statement under Regulation A (“Offering Statement”) of the Securities Act of 1933, as amended (the “Securities Act”) in order to sell shares of its common stock, the holder of the note shall have the right to convert all or any portion of the principal amount and interest due on the note into shares of common stock through the Offering Statement during the term of the Offering Statement.

Management has evaluated all subsequent events through August 21, 2019, the date the financial statements were available to be issued. No change to the financial statements for the quarter ended June 30, 2019 is deemed necessary as a result of this evaluation.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

The following discussion should be read in conjunction with the American International Holdings Corp. financial statements and accompanying notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect the plans, estimates and beliefs of American International Holdings Corp. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” and similar expressions are intended to identify forward-looking statements. The actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report and in other reports we file with the Securities and Exchange Commission (“SEC’), specifically the most recent Annual Report on Form 10-K.” The Company undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise, unless required by law. All references to years relate to the fiscal year ended December 31 of the particular year.

Business

Results of Operations for AMIH

Three months ended March 31, 2019 compared to the three months ended March 31, 2018

Revenues for the three months ended June 30, 2019 and 2018 was $75,706 and $6,299, respectively

Cost of sales were $23,059 for the three months ended June 30, 2019 and compared to $0 for the three months ended June 30, 2018.

Selling, general and administrative expenses were $119,191 for the three months ended June 30, 2019, compared to $429 for the three months ended June 30, 2018.

Six months ended June 30, 2019 compared to the six months ended June 30, 2018.

Revenues for the six months ended June 30, 2019 and 2018 were $90,947 and $6,299, respectively.

Cost of sales were $35,715 for the six months ended June 30, 2019 compared to $0 for the six months ended June 30, 2018.

Selling, general and administrative expenses were $140,392 and $429, respectively

Liquidity and Capital Resources for AMIH

As of June 30, 2019, AMIH had total assets of $471,971, including $11,510 in cash. At December31, 2018, AMIH had total assets of $123,350, including $18,796 in cash.

As of June 30, 2019 and December 31, 2018, AMIH had total current liabilities of $314,862 and $128,734 respectively.

AMIH had negative working capital of $303,352 and $101,072 as of June 30, 2019 and December 31, 2018, respectively.

Net cash used in operating activities was $46,485 for the six months ended June 30, 2019. Net cash used in operating activities was $3,340 for the six months ended June 30, 2018.

Net cash used in investing activities for the six month ended June 30, 2019 and 2018, was $17,034 and $0, respectively. Net cash used investing activities for the six months ended June 30, 2019 was used purchased property and equipment used in operations.

Net cash provided by financing activities during the six months ended June 30, 2019 was $56,233, compared to $45,000 during the six months ended June 30, 2018. During the six months ended June 30, 2019, the Company sold common shares for $10,000, borrowed $60,000 in short-term borrowing and $18,808 form related parties. It also repaid $31,633 in borrowing from related parties, $942 principal payments on long-term debt. During the six months ended June 30, 2018, the Company borrowed $46,500 in short-term borrowing from related parties, and repaid $1,500 in borrowing from related parties.

Off-Balance Sheet Arrangements

As of June 30, 2019 and December 31, 2018, AMIH did not have any off-balance sheet arrangements as defined in Item 303(aX4Xii) of Regulation S-K promulgated under the Securities Act of 1934.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. As of June 30, 2019, the Company’s chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report. Such conclusion reflects the departure of our chief financial officer and assumption of duties of the principal financial officer by our chief executive officer and the resulting lack of accounting experience of our now principal financial officer and a lack of segregation of duties. Until we are able to remedy these material weaknesses, we are relying on third party consultants to assist with financial reporting.

Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no updates to any legal proceedings previously disclosed.

ITEM 1A. RISK FACTORS

For the six months ended June 30, 2019, there were no material changes from risk factors as disclosed in Part I, Item lA of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.