AMERICAN INTERNATIONAL HOLDINGS CORP. - Quarter Report: 2023 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2023

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: 000-50912

AMERICAN INTERNATIONAL HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

(940) 495-2155

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None.

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 ☒

As of July 12, 2023, there were 195,000,000 shares of our common stock issued and outstanding, par value $0.0001.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements”. These forward-looking statements, including without limitation forward-looking statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” involve risks and uncertainties. Any statements contained in this Quarterly Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements as to our future operating results; plans for the marketing of our services; future economic conditions; the effect of our market and product development efforts; and expectations or plans relating to the implementation or realization of our strategic goals and future growth, including through potential future acquisitions. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, use of cash and other measures of financial performance, as well as statements relating to future dividend payments. Other forward-looking statements may be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “predicts,” “targets,” “forecasts,” “strategy,” and other words of similar meaning in connection with the discussion of future operating or financial performance. These statements are based on current expectations, estimates and projections about the industries in which we operate, and the beliefs and assumptions made by management. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Accordingly, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Readers should refer to the discussions under “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 concerning certain factors that could cause our actual results to differ materially from the results anticipated in such forward-looking statements. These Risk Factors are hereby incorporated by reference into this Quarterly Report.

PART I — FINANCIAL INFORMATION

American International Holdings Corp.

Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of these condensed consolidated financial statements.

American International Holdings Corp.

Condensed Consolidated Statements of Operations (Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

American International Holdings Corp.

Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

American International Holdings Corp.

Condensed Consolidated Statements of Cash Flows (Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

American International Holdings Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2023

(Unaudited)

Note 1 – Summary of Significant Accounting Policies

Organization, Ownership and Business

On April 28, 2020, American International Holdings Corp. (“AMIH” or the “Company”) incorporated a wholly-owned subsidiary, ZipDoctor, Inc. (“ZipDoctor”) in the State of Texas. ZipDoctor provides its customers with unlimited, 24/7 access to board certified physicians and licensed mental and behavioral health counselors and therapists via a newly developed, monthly subscription based online telemedicine platform. ZipDoctor was launched in August 2020.

On February 15, 2023, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Cycle Energy Corp., a Texas corporation (“Cycle Energy”), and Marble Trital Inc., the sole shareholder of Cycle Energy (the “Shareholder”). The Shareholder is beneficially owned and controlled by Mr. Michael McLaren, the Company’s newly appointed Chief Executive Officer. Pursuant to the Exchange Agreement, which closed on February 15, 2023 (the “Closing Date”), the Shareholder exchanged (the “Exchange”) 100% of the ownership of Cycle Energy in consideration for 1,000,000 shares of the Series A Preferred Stock of the Company (the “New Series A Shares”).

On March 9, 2023, and effective on February 15, 2023, the date of the Exchange Agreement, the Company, Cycle Energy and the Shareholder, entered into a First Amendment to Share Exchange Agreement (the “First Amendment”), which amended the Exchange Agreement to be effective February 15, 2023, instead of December 31, 2022.

The merger was accounted for as a reverse merger, whereby Cycle Energy was considered the accounting acquirer and became our wholly-owned subsidiary. In accordance with the accounting treatment for a “reverse merger”, the Company’s historical financial statements prior to the reverse merger has been replaced with the historical financial statements of Cycle Energy prior to the reverse merger. The consolidated financial statements after completion of the reverse merger include the assets, liabilities, and results of operations of the combined company from and after the closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’ equity remaining in the consolidated financial statements. See Note 3 for details.

Cycle Energy Corp. is a Texas-based company and an investor, developer and asset manager with diversified assets across the energy supply chain. The Company’s portfolio includes Cycle Energy that currently owns and operates two vertically integrated businesses – Cycle Oil and Cycle Services. Cycle Energy Corp. operates from a property in Electra, Texas which the Company owns. The property is 3.14 acres with a 1,500-square-foot shop. Cycle Energy Corp. targets US oil and gas export, oil and gas producers and suppliers and commercial clients requiring Energy Products.

Also on February 15, 2023, and as a required condition to the closing of the Exchange Agreement, the Company and Jacob D. Cohen, the then Chairman and Chief Executive Officer of the Company, entered into an Exchange Agreement (the “Cohen Exchange Agreement”). Pursuant to the Cohen Exchange Agreement, Mr. Cohen exchanged all 1,000,000 shares of the Series A Preferred Stock of the Company which he held (the “Cohen Series A Shares”), with the Company (which Cohen Series A Shares were then cancelled, prior to being reissued to the Seller as New Series A Shares, as discussed above), for (a) all of the issued and outstanding membership interests held by the Company in Epiq Scripts, LLC, a Texas limited liability company (“Epiq Scripts”)(representing 51% of Epiq Scripts)(the “Epiq Scripts Interests”); (b) all cash payments paid to the Company in the future as a Royalty Payment (as defined in the Royalty Agreement (defined below)) pursuant to that certain Royalty Agreement dated June 30, 2022, by and between Epiq MD, Inc. a Nevada corporation (“Epiq MD”) and the Company (the “Royalty Agreement” and the “Royalty Payments”); (c) all proceeds that the Company receives from any sale of the equity of ZipDoctor, Inc., a Texas corporation (the “ZipDoctor Consideration”); and (d) the rights to all debt owed to the Company from Epiq Scripts, in the amount of approximately $850,000 (the “Epiq Scripts Debt”).

Pursuant to the Cohen Exchange Agreement, the Company also agreed to pay all Royalty Payments to Mr. Cohen within five days of its receipt thereof and that any amount of the Royalty Payments not paid when due will accrue interest at the rate of the lesser of (a) 18% per annum; and (b) the highest rate allowable pursuant to law, until paid in full (as applicable, (a) or (b), the “Default Rate”).

The Cohen Exchange Agreement has an effective date of February 15, 2023, and the transactions contemplated by the Cohen Exchange Agreement closed on February 15, 2023. As a result of the closing of the transactions contemplated by the Exchange Agreement and the Cohen Exchange Agreement, and effective on the Closing Date, February 15, 2023, the Shareholder, through ownership of all 1,000,000 of the outstanding Series A Preferred Stock shares, holds voting control over 60% of the Company’s outstanding voting shares, resulting in a change of control of the Company. Prior to the closing of the Cohen Exchange Agreement, Jacob D. Cohen held 1,000,000 shares of Series A Preferred Stock, which provided him voting control over 60% of the Company’s outstanding voting shares. The shares of Series A Preferred Stock held by the Shareholder are beneficially owned by Michael McLaren, its controlling shareholder owner and officer. As a result, Mr. McLaren, as a result of his control of the Shareholder, obtained control over the Company upon the closing of the transactions contemplated by the Exchange Agreement, as he obtained voting control over 60% of the Company’s outstanding voting stock due to his ownership of the New Series A Shares.

As of March 31, 2023, our operations are limited, and consist mainly of Cycle Energy Corp. and ZipDoctor. On March 17, 2023, the Company decided to discontinue the operations of Zipdoctors, Inc. and entered into a Stock Purchase Agreement with Cosmos Health Inc. (“Cosmos” and the “SPA”). Pursuant to the SPA, the Company agreed to sell Cosmos 100% of the outstanding shares of common stock of ZipDoctor, Inc., for $150,000. The transactions contemplated by the SPA closed on April 3, 2023. The SPA contained representations and warranties of the parties customary for a transaction of the size and type of the SPA and includes various indemnification obligations of the parties. Pursuant to the Cohen Exchange Agreement, effective on February 15, 2023, the proceeds from the sale of Zipdoctor Inc. will be paid to Jacob D, Cohen. Zipdoctor Inc. has limited activities the three months ended March 31, 2023.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Cycle Energy Corp., AMIH and its wholly-owned subsidiaries: ZipDoctor Inc. (February 15, 2023 forward, until sold April 3, 2023), Cycle energy Oil and Gas Inc. (February 23, 2023 forward) and Cycle Energy Services Inc. (February 23, 2023 forward). All material intercompany transactions and balances have been eliminated in consolidation.

Cash Equivalents

Highly liquid investments with original maturities of three months or less are considered cash equivalents. There are no cash equivalents at March 31, 2023 and December 31, 2022.

The Company maintains the majority of its cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per commercial bank. From time to time, cash in deposit accounts may exceed the FDIC limits, the excess would be at risk of loss for purposes of the consolidated statements of cash flows.

Net Income (Loss) Per Common Share

We compute net income (loss) per share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share “EPS” on the face of the consolidated statement of operations. 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. There were dilutive securities for the three months ended March 31, 2023.

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

Long-lived assets include:

Property 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 from the date on which they become fully operational and after taking into account their estimated residual values: 

 Schedule of Estimated Useful Lives of Property, Plant and Equipment

 `

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.

Goodwill and indefinite-lived brands are not amortized, but are evaluated for impairment annually or when indicators of a potential impairment are present. Our impairment testing of goodwill is performed separately from our impairment testing of indefinite-lived intangibles. The annual evaluation for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. The Company believes such assumptions are also comparable to those that would be used by other marketplace participants.

Amortization of intangible assets with finite lives are computed using the straight-line method over the estimated useful lives as below (see Footnote 7, for further details):

Schedule of Amortization of Intangible Assets

Fair Value of Financial Instruments

The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with FASB ASC 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.

Our financial instruments include cash and cash equivalents, accounts payable and accrued liabilities, accrued interest payable, accrued compensation -related parties, convertible note payable, notes payable, notes payable – related parties and derivative liabilities.

The Company’s convertible notes payable are measured at amortized cost. The derivative liabilities are stated at their fair value as a level 3 measurement. The Company used the Monte Carlo model to determine the fair values of these derivative liabilities.

Oil and Gas Properties

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred.

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from operations before income taxes.

Limitation on Capitalized Costs

Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of:

(a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus

(b) the cost of properties not being amortized; plus

(c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of

(d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties.

Oil and Gas Reserves

Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices.

Goodwill

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests and any fair value of the Company’s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognized in profit or loss as a gain on bargain purchase.

The Company adopted Accounting Standards Update (“ASU”) 2017-04, Intangible – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. After adopting this guidance, the Company performs the quantitative impairment test by comparing the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, the amount by which the carrying amount exceeds the reporting unit’s fair value is recognized as impairment. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, allocation of assets, liabilities and goodwill to reporting units, and determination of the fair value of each reporting unit.

Depreciation, depletion, and Amortization and Accretion

The estimates of proved reserves materially impact depreciation, depletion, amortization and accretion (“DD&A”) expense. If the estimates of proved reserves decline, the rate at which we record DD&A expense will increase, reducing future net income. Such a decline may result from lower market prices, which may make it uneconomic to drill for and produce from higher-cost fields.

Proved Reserves

Estimates of our proved reserves included in this report are prepared in accordance with U.S. SEC guidelines for reporting corporate reserves and future net revenue. The accuracy of a reserve estimate is a function of:

Our proved reserve information included in this report was predominately based on estimates. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, reserve estimates will be different from the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of an estimate may justify material revisions to the estimate.

Asset Retirement Obligation

Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. We have not yet determined our ARO, but once we receive our proven reserves third party report, we will calculate the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. Periodic accretion of discount of the estimated liability is recorded as accretion expense in the accompanying consolidated statements of operations and comprehensive income.

ARO liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive lives of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated ARO.

Convertible Notes Payable

The Company accounts for convertible notes payable in accordance with the FASB ASC 815, Derivatives and Hedging, since the conversion feature is not indexed to the Company’s stock and it cannot be classified in equity. The Company allocates the proceeds received from convertible notes payable between the liability component and conversion feature component. The conversion feature that is considered embedded derivative liabilities has been recorded at fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company has also recorded the resulting discount on debt related to the conversion feature and is amortizing the discount using the straight line method over the life of the debt instruments.

Derivative Liabilities

The Company accounts for derivative liabilities in accordance with the FASB ASC 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires companies to recognize all derivative liabilities in the balance sheet at fair value, and marks it to market at each reporting date with the resulting gains or losses shown in the statement of operations of such period.

Management’s Estimates and Assumptions

The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States (“US GAAP”) 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 condensed consolidated financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

Concentration and Risks

The Company’s operations are subject to risks including financial, operational, regulatory and other risks including the potential risk of business failure.

For the three months ended March 31, 2023 and year ended December 31, 2022, the Company had revenue from continuing operations which was derived from a single customer or a few major customers, with one customer making up 100% of the total revenue.

Revenue Recognition

Zip Doctor, Inc: Zip Doctor generates its revenue from monthly membership subscriptions. Revenue is recognized at the time of delivery and includes a delivery fee for each delivery or a subscription fee on a monthly basis for memberships. Under Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) Revenue from Contracts with Customers, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account under Topic 606. The Company’s contracts with its customers do not include multiple performance obligations. Zip Doctor recognizes revenue when a performance obligation is satisfied by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration Zip Doctor expects to be entitled to in exchange for such products or services. Activity for ZipDoctor are reflected from February 15, 2023, until discontinued on April 3, 2023.

Cycle Oil and Gas: Sales of crude oil, natural gas, and natural gas liquids (NGLs) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (MMBtu) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant.

The following table of the Company’s revenue by source for the three months ended March 31, 2023 and the year- ended December 31, 2022:

Schedule of Revenue by Source

Income Taxes

The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized.

Related Parties

The Company follows subtopic 850-10 of FASB ASC 850, Related Party Disclosures for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Material related party transactions have been identified in Note 8, 10 and 12 in the condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

Note 2 – Deposit

Deposits as of March 31, 2023 and December 31, 2022 were $53,130 and $0, respectively. $50,000 is related to a letter of credit issued in connection with the filling of a P-5 Organization Report with the Commission as required by Texas Natural Resources Code in order to perform operations within the jurisdiction of the Railroad Commission of Texas.

Note 3 – Reverse Merger

Acquisition of American International Holdings Corp.

On Feb 15, 2023, Cycle Energy Corp. entered into a Share Exchange Agreement with American International Holdings Corp., a Texas Corporation. American International Holdings Corp. is a holding company with Zipdoctor Inc.

Pursuant to the terms of the Agreement, the Company acquired 1,000,000 Series A Preferred Stock of American International Holdings Corp. in exchange for 100% of the issued and outstanding securities of the Company. The company had 195,000,000 shares of common stock outstanding with a closing price of $0.009/share. The total fair asset value of Series A preferred stock was $2,632,500=(195,000,000/0.4)*0.6*0.009. Considering that the net liabilities of American International Holdings Corp. was $4,556,973 as of February 15, 2023, goodwill of $7,189,473 was recorded related to the reverse merger. We will evaluate the goodwill for impairment on an ongoing basis and make adjustments as necessary.

The following table summarizes the consideration given for the Company and the fair values of the assets of liabilities assumed at the acquisition date.

Schedule of Fair Values of the Assets of Liabilities Assumed at the Acquisition Date

Accounting Treatment of the Merger

For financial reporting purposes, the Share Exchange represented a “reverse merger” and Cycle Energy Corp was deemed to be the accounting acquirer in the transaction. The Share Exchange has been accounted for as a reverse merger.

Cycle Energy Corp. is deemed to be the acquirer for financial reporting purposes, and American International Holdings, Inc. is treated as the acquired company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the Share Exchange are those of Cycle Energy Corp and are recorded at the historical cost basis of Cycle Energy Corp, and the financial statements after completion of the Share Exchange will include the assets and liabilities of American International Holdings and Cycle Energy Corp, and the historical operations of American International Holdings and Cycle Energy Corp from the acquisition date forward.

Goodwill is not deductible for income tax purposes.

Note 4 – Other Receivables

On February 23, 2023, the Company (the “purchaser”) entered into an asset purchase agreement with Marble Trital Inc (the “seller”), a related party. Pursuant to the agreement, the purchaser acquired One Million Five Hundred Thousand $1,061,348 receivable from sale of Cycle Oil and Gas Canada by assuming notes payables from a related party, please see note 10 and 17 for further discussion. Short term investment from continuing operations as of March 31, 2023 and December 31, 2022 were $1,061,348 and $0, respectively.

Note 5 – Oil and Gas Properties

On February 23, 2023, the Company (the “purchaser”) entered into an asset purchase agreement with Marble Trital Inc. to acquire proved developed producing oil and gas properties with a net balance of $471,120 and 100% ownership of Cycle Oil and Gas Inc. (Texas). Please see Note 17 and 18 for further discussion.

On May 1, 2022, Cycle Oil and Gas, Inc. (Texas) purchased the oil and gas properties from Triple S Gas Inc. for $320,000 which consists of 1) total cash consideration Three Hundred and Twenty Thousand ($320,000) Dollars. 2) A ($10,000)   non-refundable deposit due on signing. And the Company also needs to pay a 2.5% gross overriding royalty interest capped at Two Hundred and Fifty Thousand Dollars ($250,000) based on the specific quantities sold in oil and gas. As of March 31, 2023, no royalty payments had been paid. If there is no production, there is no royalty due.

On June 1,2022, Cycle Oil and Gas purchased the oil and gas properties from Ray Loveless Enterprises LLC. for $250,000 total cash consideration Two Hundred and Fifty Thousand ($250,000) Dollars. And the Company also needs to pay a 2.5% gross overriding royalty interest capped at Three Hundred and Twenty-Five Thousand Dollars ($325,000) based on the specific quantities sold in oil and gas. As of March 31, 2023, no royalty payments had been paid. If there is no production, there is no royalty due.

Oil and Gas Properties were as follows as of March 31, 2023 and December 31, 2022:

Schedule of Oil and Gas Properties

Depreciation expense for the three months ended March 31, 2023, and 2022 was $68,765 and $0, respectively. Accumulated depreciation as of March 31, 2023 and December 31, 2022 were $68,765 and $0, respectively.

Note 6 – Fixed Assets

Equipment and vehicles were as follows as of March 31, 2023 and December 31, 2022:

Schedule of Property and Equipment

Depreciation expense for the three months ended March 31, 2023, and 2022 was $2,000 and $0, respectively. Accumulated depreciation as of March 31, 2023 and December 31, 2022 were $2,000, and $0, respectively

Note 7 – Patent

Intangible assets, including only patents related to the oil and gas industry and equipment, were acquired through an asset purchase agreement effective on February 23, 2023, please see note 17 for further discussion. These intangible assets are amortized over seven years. The balance of patents were as follows at March 31, 2023 and December 31, 2022:

Schedule of Intangible Asset

Amortization expense for the three months ended March 31, 2023 and 2022 was $15,885 and $0, respectively.

Schedule of expected amortization of patent in the next seven years.

Schedule of Expected Amortization of Patent 

Note 8 – Accrued Compensation - Related Parties

At March 31, 2023 and December 31, 2022 accrued compensation was $200,000 and $110,000, respectively, representing cash compensation due to the Company’s former executive officers and directors, for services rendered.

Note 9– Convertible Notes Payable

Convertible notes payable represents the following at March 31, 2023 and December 31, 2022:

Schedule of Convertible Notes Payable

Note 10– Convertible Notes Payable – Related Parties

The Company assumed the convertible notes payable, of which the note holder was the Chief executive officer, on an asset purchase agreement effective on February 23, 2023, please see note 17 for further discussion. On February 23, 2023, the Convertible note had an outstanding balance of $1,500,000. The convertible note balance as of March 31, 2023 and December 31, 2022 is as follows:

Schedule of Convertible Notes Payable from Related Parties

Note 11 – Notes Payable

Notes payable represents the following at March 31, 2023 and December 31, 2022:

Schedule of Notes Payable

Note 12 – Notes Payable - Related Parties

Notes payable represents the following at March 31, 2023 and December 31, 2022:

Schedule of Notes Payable from Related Parties

Note 13 – Derivative Liabilities

Notes that are convertible at a discount to market are considered embedded derivatives.

Under FASB, U.S. GAAP, ASC 815, Derivatives and Hedging, requires that all derivative financial instruments be recorded on the balance sheet at fair value. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market-based pricing models incorporating readily observable market data and requiring judgment and estimates.

The Company’s convertible note has been evaluated with respect to the terms and conditions of the conversion features contained in the note to determine whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company determined that the conversion features contained in the notes totaled $633,920 and represent an embedded derivative instrument that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s condensed consolidated balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using the Monte Carlo model at the inception date of the note and will do so again on each subsequent consolidated balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense at each consolidated balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion.

The Convertible Note derivatives were valued as of March 31, 2023 and December 31, 2022, at issuance, at conversion as set forth in the table below. 

Schedule of Convertible Note Derivatives

As of March 31, 2023 and February 15, 2023, the Company had derivative liabilities of $1,927,357 and $1,837,008, respectively, and recorded changes in derivative liabilities in the amount of $(70,765) and $0 during the three months ended March 31, 2023 and the year ended December 31, 2022.

The following assumptions were used for the valuation of the derivative liability related to the Notes:

Note 14 – Capital Stock

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of preferred stock, $0.0001 par value, of which 1,000,000 shares were designated as Series A Convertible Preferred Stock and 2,000,000 were designated as Series B Preferred stock, the balance of 2,000,000 shares of preferred stock were undesignated as of March 31, 2023 and December 31, 2022.

The holders of Series B Preferred Stock have the same dividend rights as common stockholders on a fully converted basis, are entitled to receive pari passu with any distribution of any of the assets of the Company to the holders of the Company’s common stock, but not prior to any holders of senior securities. Each share of Series B Preferred Stock may be converted, at the option of the holder thereof, into that number of shares of common stock of the Company as equals $1.00 divided by 90% of the average of the volume weighted average prices (“VWAP”) of the Company’s common stock, for the five trading days immediately preceding the date the notice of conversion is received, subject to the limit of 4.999% of the Company’s outstanding shares of common stock. The holders of Series B Preferred Stock have no voting rights. As of March 31, 2023 and December 31, 2022, there were no Series B Preferred Stock outstanding.

Series A Preferred Stock

The holders of Series A Preferred Stock have no dividend rights or liquidation preference. Each holder of Series A Preferred Stock may, at its option, convert its shares of Series A Preferred Stock into that number of shares of common stock equal to the holder’s pro rata share of all Series A Preferred Stock then issued and outstanding, multiplied by (i) 60%, minus the aggregate percentage of the Company’s outstanding common stock previously converted by holders of the Series A Preferred Stock, through such applicable date (the “Remaining Percentage”), multiplied by (ii) the outstanding shares of common stock as of the applicable date of determination, divided by 0.40, divided by (iii) the total number of shares of Series A Preferred Stock then outstanding. No individual conversion by any individual holder shall be in an amount greater than 9.99% of the outstanding common stock of the Company on the date on which the holder delivers notice of such conversion to the Company (the “Individual Conversion Limitation”). The result of the above, is that such Series A Preferred Stock is convertible into 60% of the Company’s outstanding common stock (on a post-conversion basis, i.e., 150% of the Company’s outstanding common stock on a pre-conversion basis) currently.

For so long as any shares of the Series A Preferred Stock remain issued and outstanding, the holders thereof, voting separately as a class, shall have the right to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to the Remaining Percentage of the total vote. All Series A Shares vote together with the common stock on all shareholder matters as its own voting class.

Additionally, so long as Series A Preferred Stock is outstanding, the Company shall not, without the affirmative vote of the holders of at least 66-2/3% of all outstanding shares of Series A Preferred Stock, voting separately as a class (i) amend, alter or repeal any provision of the Articles of Incorporation or the Bylaws of the Company so as to adversely affect the designations, preferences, limitations and relative rights of the Series A Preferred Stock, (ii) effect any reclassification of the Series A Preferred Stock, (iii) designate any additional series of preferred stock, the designation of which adversely effects the rights, privileges, preferences or limitations of the Series A Preferred Stock; or (iv) amend, alter or repeal any provision of the Series A Designation (except in connection with certain non-material technical amendments).

On February 15, 2023, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Cycle Energy Corp., a Texas corporation (“Cycle Energy”), and Marble Trital Inc., the sole shareholder of Cycle Energy (the “Shareholder”). The Shareholder is beneficially owned and controlled by Mr. Michael McLaren, the Company’s newly appointed Chief Executive Officer. Pursuant to the Exchange Agreement, which closed on February 15, 2023 (the “Closing Date”), the Shareholder exchanged (the “Exchange”) 100% of the ownership of Cycle Energy in consideration for 1,000,000 shares of the Series A Preferred Stock of the Company (the “New Series A Shares”).

On March 9, 2023, and effective on February 15, 2023, the date of the Exchange Agreement, the Company, Cycle Energy and the Shareholder, entered into a First Amendment to Share Exchange Agreement (the “First Amendment”), which amended the Exchange Agreement to be effective February 15, 2023, instead of December 31, 2022.

Also on February 15, 2023, and as a required condition to the closing of the Exchange Agreement, the Company and Jacob D. Cohen, the then Chairman and Chief Executive Officer of the Company, entered into an Exchange Agreement (the “Cohen Exchange Agreement”). Pursuant to the Cohen Exchange Agreement, Mr. Cohen exchanged all 1,000,000 shares of the Series A Preferred Stock of the Company which he held (the “Cohen Series A Shares”), with the Company (which Cohen Series A Shares were then cancelled, prior to being reissued to the Seller as New Series A Shares, as discussed above), for (a) all of the issued and outstanding membership interests held by the Company in Epiq Scripts, LLC, a Texas limited liability company (“Epiq Scripts”)(representing 51% of Epiq Scripts)(the “Epiq Scripts Interests”); (b) all cash payments paid to the Company in the future as a Royalty Payment (as defined in the Royalty Agreement (defined below)) pursuant to that certain Royalty Agreement dated June 30, 2022, by and between Epiq MD, Inc. a Nevada corporation (“Epiq MD”) and the Company (the “Royalty Agreement” and the “Royalty Payments”); (c) all proceeds that the Company receives from any sale of the equity of ZipDoctor, Inc., a Texas corporation (the “ZipDoctor Consideration”); and (d) the rights to all debt owed to the Company from Epiq Scripts, in the amount of approximately $850,000 (the “Epiq Scripts Debt”).

Pursuant to the Cohen Exchange Agreement, the Company also agreed to pay all Royalty Payments to Mr. Cohen within five days of its receipt thereof and that any amount of the Royalty Payments not paid when due will accrue interest at the rate of the lesser of (a) 18% per annum; and (b) the highest rate allowable pursuant to law, until paid in full (as applicable, (a) or (b), the “Default Rate”).

The Cohen Exchange Agreement has an effective date of February 15, 2023, and the transactions contemplated by the Cohen Exchange Agreement closed on February 15, 2023. As a result of the closing of the transactions contemplated by the Exchange Agreement and the Cohen Exchange Agreement, and effective on the Closing Date, February 15, 2023, the Shareholder, through ownership of all 1,000,000 of the outstanding Series A Preferred Stock shares, holds voting control over 60% of the Company’s outstanding voting shares, resulting in a change of control of the Company. Prior to the closing of the Cohen Exchange Agreement, Jacob D. Cohen held 1,000,000 shares of Series A Preferred Stock, which provided him voting control over 60% of the Company’s outstanding voting shares. The shares of Series A Preferred Stock held by the Shareholder are beneficially owned by Michael McLaren, its controlling shareholder owner and officer. As a result, Mr. McLaren, as a result of his control of the Shareholder, obtained control over the Company upon the closing of the transactions contemplated by the Exchange Agreement, as he obtained voting control over 60% of the Company’s outstanding voting stock due to his ownership of the New Series A Shares.

As of March 31, 2023, 1,000,000 Series A Convertible Preferred shares, of which were fully owned by the Chief Executive office, were issued and outstanding.

Common Stock

The Company is authorized to issue up to 195,000,000 shares of common stock, $0.0001 par value, 195,000,000 common stock shares were issued and outstanding as of March 31, 2023.

During the three months ended March 31, 2023, the Company converted a total of $457,952 of its outstanding convertible debt into 119,398,125 shares of common stock and at various prices per share of common stock ranging from $0.0063 to $.0023 per share.

Note 15 – Going Concern

These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

As reflected in the accompanying consolidated financial statements, the Company has a net loss of $426,789 and $0 for the three months ended March 31, 2023 and 2022. 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 condensed consolidated financial statements 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. There can be no assurance that the Company will become commercially viable without additional financing, the availability and terms of which are uncertain. If the Company cannot secure necessary capital when needed on commercially reasonable terms, its business, condition (financial and otherwise) and commercial viability may be harmed. Although management believes that it will be able to successfully execute its business plan, which includes third party financing and the raising of capital to meet the Company’s future liquidity needs, there can be no assurances in this regard. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Note 16 – Commitments and Contingencies

Commitments

Prior to its acquisition on February 23, 2023, Cycle Oil and Gas, Inc. (Texas) purchased the oil and gas properties from Triple S Gas Inc. Pursuant to the asset purchase agreement. the Company needs to pay a 2.5% gross overriding royalty interest capped at Two Hundred and Fifty Thousand Dollars ($250,000) based on the specific quantities sold in oil and gas. As of March 31, 2023, no royalty payments have been paid. If there is no production, there is no royalty due.

Prior to its acquisition on February 23, 2023, Cycle Oil and Gas, Inc. (Texas)purchased the oil and gas properties from Ray Loveless Enterprises LLC. Pursuant to the asset purchase agreement. the Company needs to Company also needs to pay a 2.5% gross overriding royalty interest capped at Three Hundred and Twenty-Five Thousand Dollars ($325,000) based on the specific quantities sold   in oil and gas. As of March 31, 2023, no royalty payments have been paid.   If there is no production, there is no royalty due.

Contingencies

In the ordinary course of business, the Company may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company believes the ultimate resolution of any such current proceeding will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

AMIH vs. Winfred Fields

On November 11, 2019, the Company filed an original petition and jury demand against Winfred Fields, a shareholder, in the 458th Judicial District Court of Fort Bend County seeking damages related to breach of contract and fraud related charges. The Company executed an exchange agreement with Mr. Fields on or around April 12, 2019 whereby Mr. Fields was required to tender to the Company a total of 10,833 of the 12,500 shares of the Company’s common stock that Mr. Fields then owned (the “Exchanged Shares”) in exchange for a promissory note with a maturity date of April 12, 2021 payable in the amount of $42,500 (the “Fields Note”) (see also “Note 8 – Loans from Related Parties”). The Exchange Agreement required that Mr. Fields immediately return the stock certificates for the Exchanged Shares to the Company or its designated agent for immediate cancellation and for Mr. Fields to retain the remaining 1,000,000 shares. Mr. Fields agreed in the Exchange Agreement that these shares would not become unrestricted until such time as Mr. Fields received an opinion of counsel satisfactory to the Company that the shares were not restricted for trade under SEC regulations. After executing the Exchange Agreement, Mr. Fields—rather than return the Exchanged Shares or obtain said opinion of counsel—attempted to deposit and trade the Exchanged Shares and the restricted shares, which was a direct violation of the Exchange Agreement. The Company asserts that Mr. Fields knowingly, willingly and fraudulently attempted to deposit and trade the Exchanged Shares and is seeking damages and equitable relief. Upon several attempts to serve Mr. Fields, service was perfected on or around February 3, 2020. On March 2, 2020, Mr. Fields filed a response generally denying all claims. On May 22, 2020, the Company filed its first request for production and request for disclosure and discovery insisting that Mr. Fields produce all documentation related to the fraudulent transaction and is awaiting a response to these requested discovery items. The outcome of this action is currently unknown at this time. In November 2019, the Company recovered 650,000 shares from Mr. Fields which were cancelled in 2019. Mr. Fields twice moved for summary judgment, once against the Company’s claims, and once in favor of his own claims. However, the court denied his motions. The Company has moved for summary judgment on its claims and against Mr. Fields’ claims and is awaiting a hearing to be set for a future date in the 3rd quarter 2023.

Note 17 – Material Agreements

On February 23, 2023, the Company (the “purchaser”) entered into an asset purchase agreement with Marble Trital Inc (the “seller”). Pursuant to the agreement, the purchaser acquired the following: 1) One Million Five Hundred Thousand $1,061,348 receivable from sale of Cycle Oil and Gas Canada, 2) Machinery equipment and Vehicle with a net balance of $525,819) 100% ownership of Cycle Oil and Gas Inc. (Texas) and 100% ownership of Cycle Energy Services Inc., by assuming of convertible notes with an outstanding balance of $1,500,000 From related party. Please see Note 10 for further discussion. In addition, the Company also acquired intangible asset, including patent and technology, with a book value of $1,127,391 by assuming of $1,127,391 convertible notes from third party. Please see Note 7 and Note 9 for further discussion.

The One Million Five Hundred Thousand $1,061,348 receivable from sale of Cycle Oil and Gas Canada was recorded as other receivable as of March 31, 2023, please see Note 4 for more details.

Cycle Oil and Gas Inc. (Texas) was incorporated on October 2021, was a diversified energy company based in the state of Texas. During 2022, it acquired Triple “S” Gas & Ray Loveless Enterprises in Wichita & Wilbarger counties for a combined purchase price of $1,145,000. Cycle Oil has an extensive catalog of workover candidates with over 125 shallow vertical wells producing from the Gunsite & Cisco sand formations and wells range from 300’ to 2000’ deep allowing for quick & inexpensive workovers. This acquisition of Cycle oil and gas resulted in a business combination. As of March 31, 2023, all assets and liabilities of Cycle Oil and Gas were included in the Company’s balance sheet. And the results of operations from February 23, 2023 to March 31, 2023 were included in the Company’s Statements of operations for the three months ended March 31, 2023. This transaction resulted in goodwill of $226,083. We will evaluate the goodwill for impairment on an ongoing basis and make adjustments as necessary. See Note 18 for further discussion.