eWELLNESS HEALTHCARE Corp - Quarter Report: 2014 March (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 March 31, 2014
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 333-181440
eWELLNESS HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
Nevada | 26-1607874 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
11825 Major Street, Culver City, California | 90230 | |
(Address of principal executive offices) | (Zip Code) |
(310) 915-9700
(Registrant’s telephone number, including area code)
Dignyte, Inc.
605 W Knox Rd., Suite 202, Tempe AZ, 85284
(Former name or former address, if changed since last report)
Copies of Communications to:
Rachael Schmierer, Esq.
Hunter Taubman Weiss
130 West 42nd Street, Floor 10
New York, NY 10036
P: 917-512-0828
F: 212-202-6380
Indicate by check mark whether the issuer (1) 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, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] | |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
The number of shares of Common Stock, $0.001 par value, outstanding on May 8, 2014 was 15,603,000 shares.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION | |||
Item 1 | Financial Statements | F-1 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 3 | |
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 4 | |
Item 4 | Controls and Procedures | 5 | |
PART II - OTHER INFORMATION | |||
Item 1 | Legal Proceedings | 5 | |
Item 1A | Risk Factors | 5 | |
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 5 | |
Item 3 | Defaults Upon Senior Securities | 5 | |
Item 4 | Mine Safety Disclosures | 6 | |
Item 5 | Other Information | 6 | |
Item 6 | Exhibits | 6 | |
Signatures | 7 |
2 |
PART I - FINANCIAL INFORMATION
eWELLNESS HEALTHCARE CORPORATION
(FORMERLY DIGNYTE, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEETS
(unaudited)
Mar 31, 2014 | Dec 31, 2013 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 2,100 | $ | 100 | ||||
Restricted Cash | 80,783 | 62,761 | ||||||
TOTAL CURRENT ASSETS | 82,883 | 62,861 | ||||||
TOTAL ASSETS | $ | 82,883 | $ | 62,861 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts Payable-Related Party | $ | 46,091 | $ | 40,893 | ||||
Accounts Payable | 8,208 | 3,389 | ||||||
TOTAL CURRENT LIABILITIES | 54,299 | 44,282 | ||||||
Common shares subject to possible redemption: 897,000 and 678,500 shares, respectively (at redemption value) | 81,680 | 65,290 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, authorized, 10,000,000 shares, $.001 par value, 0 shares issued and outstanding | ||||||||
Common stock, authorized, 100,000,000 shares, $.001 par value, 10,000,000 shares and 10,000,000 shares issued and outstanding, respectively (excludes 897,000 and 678,500 shares subject to possible redemption, respectively) | 10,000 | 10,000 | ||||||
Additional Paid in Capital | 11,505 | 7,038 | ||||||
Accumulated Deficit (during development stage) | (74,601 | ) | (63,749 | ) | ||||
Total Stockholders’ Deficit | (53,096 | ) | (46,711 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 82,883 | $ | 62,861 |
The accompanying notes are an integral part of these condensed financial statements
F-1 |
eWELLNESS HEALTHCARE CORPORATION
(FORMERLY DIGNYTE, INC.)
( DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2014 and 2013
and from inception (April 7, 2011) through March 31, 2014
(unaudited)
Three Months Ended | From Inception through | |||||||||||
Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2014 | ||||||||||
TOTAL REVENUES | $ | - | $ | - | $ | - | ||||||
OPERATING EXPENSES | ||||||||||||
General and administrative | 2,253 | 1,927 | 13,460 | |||||||||
Professional Fees | 7,764 | 7,851 | 57,575 | |||||||||
Total Operating Expenses | 10,017 | 9,778 | 71,035 | |||||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Interest Income | 21 | 6 | 53 | |||||||||
Interest Expense - Related Party | (856 | ) | - | (3,485 | ) | |||||||
Interest Expense | - | (20 | ) | (34 | ) | |||||||
Total Other Income (Expense) | (835 | ) | (14 | ) | (3,466 | ) | ||||||
Net Loss before Income Taxes | (10,852 | ) | (9,792 | ) | (74,501 | ) | ||||||
Income Tax Expense | - | (50 | ) | (100 | ) | |||||||
NET LOSS | $ | (10,852 | ) | $ | (9,842 | ) | $ | (74,601 | ) | |||
BASIC AND DILUTED LOSS PER COMMON SHARE | $ | (0.01 | ) | $ | (0.01 | ) | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 10,849,100 | 10,055,056 |
The accompanying notes are an integral part of these condensed financial statements.
F-2 |
eWELLNESS HEALTHCARE CORPORATION
(FORMERLY DIGNYTE, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2014 and 2013
and from inception (April 7, 2011) through March 31, 2014
(unaudited)
Three Months Ended | From Inception through | |||||||||||
Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2014 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net Loss | $ | (10,852 | ) | $ | (9,842 | ) | $ | (74,601 | ) | |||
Adjustments to reconcile from Net Loss to net cash used in operating activities | ||||||||||||
Services received to settle subscription receivable | - | - | 10,000 | |||||||||
Imputed interest - related party | 856 | - | 3,485 | |||||||||
Changes in operating assets and liabilities | ||||||||||||
Accounts payable-related party | 5,198 | 7,484 | 46,091 | |||||||||
Accounts payable | 4,819 | 2,364 | 8,208 | |||||||||
Net cash provided by (used in) operating activities | 21 | 6 | (6,817 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from Issuance of Redeemable Common Stock | 20,000 | (2,356 | ) | 89,700 | ||||||||
Restricted Cash | (18,021 | ) | 5,500 | (80,783 | ) | |||||||
Net cash provided by financing activities | 1,979 | 3,144 | 8,917 | |||||||||
NET INCREASE IN CASH | 2,000 | 3,150 | 2,100 | |||||||||
CASH. BEGINNING OF PERIOD | 100 | - | - | |||||||||
CASH. END OF PERIOD | $ | 2,100 | $ | 3,150 | $ | 2,100 | ||||||
SUPPLEMENTAL INFORMATION | ||||||||||||
Cash paid for income taxes | $ | - | $ | 50 | $ | 100 | ||||||
Cash paid for interest | $ | - | $ | - | $ | - | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||||||
Allowable funds transferred from redeemable securities to Additional Paid In Capital | $ | 3,611 | $ | - | $ | 8,020 |
The accompanying notes are an integral part of these condensed financial statements.
F-3 |
eWELLNESS HEALTHCARE CORPORATION
(Formerly Dignyte, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Financial Statements
March 31, 2014
(unaudited)
Note 1. The Company
The Company and Nature of Business
eWellness Healthcare Corporation (f/k/a Dignyte, Inc.), (the “Company”, “we”, “us”, “our”) was incorporated in the State of Nevada on April 7, 2011, to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company has been in the developmental stage since inception and has no operations to date. Other than issuing shares to its original shareholder, the Company never commenced any operational activities.
As disclosed in the Current Report on form 8-K that was filed on April 11, 2014, we entered into a share exchange agreement (the “Initial Exchange Agreement”) pursuant to which we agreed to issue, 9,200,000 shares of our unregistered common stock, $.001 par value (the “common stock”) to the shareholders of eWellness Corporation, a Nevada corporation (“eWellness”). In addition, our former chief executive officer agreed to tender 5,000,000 shares of common stock back to the Company for cancellation and also to assign from his holdings an additional 2,500,000 shares to the shareholders of eWellness Corporation resulting in a total of 11,700,000 shares owned by those shareholders, as well as a further assignment of an additional 2,100,000 shares to other parties as stated therein.
The closing of the Initial Exchange Agreement was conditioned upon certain, limited customary representations and warranties, as well as, among other things, our compliance with Rule 419 (“Rule 419) of Regulation C under the Securities Act of 1933, as amended and the consent of our shareholders as required under Rule 419. However, Rule 419 required that the share exchange transaction (the “Share Exchange”) contemplated by the Initial Exchange Agreement occur on or before March 18, 2014. Accordingly, after numerous discussions with management and eWellness, the parties entered into an Amended and Restated Share Exchange Agreement (the “Share Exchange Agreement”) to reflect a revised business combination structure, pursuant to which we would: (i) file a registration statement on Form 8-A (“Form 8A”) to register our common stock pursuant to Section 12(g) of the Exchange Act, which we did on May 1, 2014 and (ii) seek to convert the participants of the Rule 419 transaction into participants of a similarly termed private offering (the “Converted Offering”). We also agreed to change our name to eWellness Healthcare Corporation to more accurately reflect our new business and operations after the Share Exchange, which occurred and was effective as of April 25, 2014.
As the parties satisfied all of the closing conditions, on April 30, 2014, we closed the Share Exchange. As a result, eWellness is now our wholly owned subsidiary and its shareholders own approximately 76.97% of the our issued and outstanding common stock, after giving effect to the cancellation of 5,000,000 shares of our common stock held by Andreas A. McRobbie-Johnson, our former chief executive officer and the further assignment of his shares of common stock as described therein.
Prior to the execution and delivery of the Share Exchange Agreement, the board of directors of Dignyte, Inc. approved the Share Exchange and the transactions contemplated thereby. Similarly, the board of directors of eWellness approved the Share Exchange. On April 25, 2014, immediately prior to the execution and delivery of the Share Exchange Agreement, Dignyte amended its certificate of incorporation to change its corporate name from “Dignyte, Inc.” to “eWellness Healthcare Corporation.”
F-4 |
eWELLNESS HEALTHCARE CORPORATION
(Formerly Dignyte, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Financial Statements
March 31, 2014
(unaudited)
Following the Share Exchange, we have abandoned our prior business plan and we are now pursuing eWellness’s historical businesses and proposed businesses. eWellness is in the initial phase of developing a unique telemedicine platform that offers Distance Monitored Physical Therapy Programs (“DMpt”) to pre-diabetic, cardiac and health challenged patients, through contracted physician practices and healthcare systems specifically designed to help prevent patients that are pre-diabetic from becoming diabetic. Our historical business and operations will continue independently.
The foregoing description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by the Share Exchange Agreement, a copy of which is attached to the Company’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 6, 2014, and Exhibit 10.1 attached thereto which is incorporated herein by reference.
Note 2. Summary of Significant Accounting Policies
Development Stage
The Company’s financial statements are presented as statements of a development stage enterprise. Activities during the development stage primarily include related party equity-based and or equity financing. The Company has not commenced any significant operations and, in accordance with ASC Topic 915, the Company is considered a development stage company.
Basis of Presentation
The interim financial information of the Company as of period ended March 31, 2014 and March 31, 2013 and for the period from inception of development stage April 7, 2011 to March 31, 2014 is unaudited and does not reflect the consolidated business and operations of eWellness Corporation. The balance sheet as of December 31, 2013 is derived from audited financial statements. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense footnotes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Consolidated Financial Statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2013. In the opinion of management, all adjustments which are necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results that can be expected for the entire year ending December 31, 2014. The unaudited financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2013.
F-5 |
eWELLNESS HEALTHCARE CORPORATION
(Formerly Dignyte, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Financial Statements
March 31, 2014
(unaudited)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these good faith estimates and judgments.
Note 3. Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the period ended March 31, 2014, the Company has no revenues and no operations. As of March 31, 2014, the Company had not emerged from the development stage and has an accumulated loss of $74,601. Subsequent to the period ending March 31, 2014, the Company completed a share exchange with eWellness Corporation and eWellness is now a wholly owned subsidiary of the Company. (See Note 8 below). The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4. Restricted Cash
Restricted cash is cash not available for immediate use. As of March 31, 2014, the Company had $80,783 in restricted cash equivalents in an escrow account at Evolve Bank & Trust in connection with the sale of our common stock pursuant to the terms set forth in our prospectus dated September 18, 2012. As outlined in the prospectus, the Company will be entitled to utilize up to 10% of the proceeds remaining after underwriting commissions, underwriting expenses and dealer allowances have been met in as much as the minimum offering of 50,000 shares has been reached. Per the prospectus, in the event an acquisition is not consummated within 18 months of the effective date of the prospectus or by March 18, 2014, the deposited funds will be returned on a pro rata basis to all investors. Because an acquisition was in process prior to this deadline, the funds were not returned. As noted in this report (See Note 8 below), the acquisition was completed subsequent to March 31, 2014.
Note 5. Accounts Payable-Related Party
During the period from inception (April 7, 2011) to March 31, 2014, a related party, a company in which the Secretary-Treasurer and CFO of the Company is also serving as CFO, has paid $52,961 on the behalf of the Company. The amounts outstanding as of March 31, 2014 and December 31, 2013 were $46,091 and $40,893, respectively. During the period ended March 31, 2014, the Company recorded $856 imputed interest on the amount owed to the related party.
Note 6. Preferred and Common Stock
Preferred Stock
The total number of shares of preferred stock which the Company shall have authority to issue is 10,000,000 shares with a par value of $0.001. There have been no preferred shares issued as of March 31, 2014.
F-6 |
eWELLNESS HEALTHCARE CORPORATION
(Formerly Dignyte, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Financial Statements
March 31, 2014
(unaudited)
Common Stock
The total number of shares of common stock which the Company shall have authority to issue is 100,000,000 shares with a par value of $0.001. At inception on April 7, 2011, the Company issued 10,000,000 shares for the value of $10,000 (received by way of a demand promissory note in the principal amount of ten thousand dollars payable by Mr. McRobbie-Johnson to the Company). This promissory note has been repaid through consulting services performed by Mr. McRobbie-Johnson.
During the period ended March 31, 2014, the Company sold 200,000 shares of its common stock for $20,000 pursuant to the offering described in its prospectus dated September 18, 2012. The proceeds from the sale of our common stock are held in an escrow account as discussed in Note 4.
As of the period ended March 31, 2014, the Company has 10,000,000 shares of $0.001 par value common stock issued and outstanding.
Holders of shares of common stock are entitled to cast one vote for each share held at all stockholders’ meetings for all purposes including the election of directors. The common stock does not have cumulative voting rights.
No holder of shares of stock of any class is entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.
Note 7. Commitments, Contingencies
The President and director of the Company is involved in other business activities and may, in the future, become involved in other business opportunities that become available. He may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.
The Company does not own or lease property or lease office space. The office space used by the Company was arranged by the President and director of the Company to use at no charge.
From time to time the Company may become a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
Note 8. Subsequent Events
At the beginning of April, the Company sold 103,000 shares of common stock for $10,300. These shares were issued on April 23, 2014.
F-7 |
eWELLNESS HEALTHCARE CORPORATION
(Formerly Dignyte, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Financial Statements
March 31, 2014
(unaudited)
On April 11, 2014, we entered into a share exchange agreement (the “Initial Exchange Agreement”) pursuant to which we agreed to issue 9,200,000 shares of our unregistered common stock, $.001 par value (the “common stock”) to the shareholders of eWellness Corporation, a Nevada corporation (“eWellness”). In addition, our former chief executive officer agreed to tender 5,000,000 shares of common stock back to the Company for cancellation and also to assign from his holdings an additional 2,500,000 shares to the shareholders of eWellness Corporation resulting in a total of 11,700,000 shares owned by those shareholders, as well as a further assignment of an additional 2,100,000 shares to other parties as stated therein.
As the parties satisfied all of the closing conditions, on April 30, 2014, we closed the Share Exchange. As a result, eWellness is now our wholly owned subsidiary and its shareholders own approximately 76.97% of the our issued and outstanding common stock, after giving effect to the cancellation of 5,000,000 shares of our common stock held by Andreas A. McRobbie-Johnson, our former chief executive officer and the further assignment of his shares of common stock as described therein.
Prior to the execution and delivery of the Share Exchange Agreement, the board of directors of Dignyte, Inc. approved the Share Exchange and the transactions contemplated thereby. Similarly, the board of directors of eWellness approved the Share Exchange. On April 25, 2014, immediately prior to the execution and delivery of the Share Exchange Agreement, Dignyte amended its certificate of incorporation to change its corporate name from “Dignyte, Inc.” to “eWellness Healthcare Corporation.”
Following the Share Exchange, we have abandoned our prior business plan and we are now pursuing eWellness’s historical businesses and proposed businesses. eWellness is in the initial phase of developing a unique telemedicine platform that offers Distance Monitored Physical Therapy Programs (“DMpt”) to pre-diabetic, cardiac and health challenged patients, through contracted physician practices and healthcare systems specifically designed to help prevent patients that are pre-diabetic from becoming diabetic. Our historical business and operations will continue independently.
The foregoing description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by the Share Exchange Agreement, a copy of which is attached to the Company’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 6, 2014, and Exhibit 10.1 attached thereto which is incorporated herein by reference.
On May 8, 2014, the Company issued 400,000 shares for a consulting services contract and 3,000 for marketing services.
F-8 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements. These forward looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including but not limited to: variability of our future revenues and financial performance; risks associated with product development and technological changes; the acceptance of our products in the marketplace by potential future customers; general economic conditions. You should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.
THE COMPANY
Business Overview
eWellness Healthcare Inc. (f/k/a “Dignyte, Inc.”)(“eWellness” or the “Company”), was incorporated in the State of Nevada on April 7, 2011, to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company has been in the developmental stage since inception and has no operations to date. Other than issuing shares to its original shareholder, the Company never commenced any operational activities.
The Company was formed for the purpose of creating a corporation which could be used to consummate a merger or acquisition.
In November 2011, the Company’s board of directors and shareholders approved a four for one (4:1) forward stock split and an increase in its authorized capital to 100 million shares of common stock and 10 million shares of blank check preferred stock. In accordance therewith, on November 10, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation. All references herein to the Company’s authorized and issued capital stock are based on its capitalization after the above corporate action.
As disclosed in the Current Report on form 8-K that was filed on April 11, 2014, we entered into a share exchange agreement (the “Initial Exchange Agreement”) pursuant to which we agreed to issue shares of our unregistered common stock the shareholders of eWellness Corporation, a Nevada corporation (“eWellness”).
Following the Share Exchange, we have abandoned our prior business plan and we are now pursuing eWellness’s historical businesses and proposed businesses. eWellness is in the initial phase of developing a unique telemedicine platform that offers Distance Monitored Physical Therapy Programs (“DMpt”) to pre-diabetic, cardiac and health challenged patients, through contracted physician practices and healthcare systems specifically designed to help prevent patients that are pre-diabetic from becoming diabetic. Our historical business and operations will continue independently.
As shown in the financial statements accompanying this Quarterly Report, the Company has had no revenues to date and has incurred only losses since its inception. The Company has had no operations and has been issued a “going concern” opinion from our accountants, based upon the Company’s reliance upon the sale of our common stock as the sole source of funds for our future operations.
eWellness’ operations and corporate offices are located at 11825 Major Street Culver City, CA 90230, with a telephone number of (310) 915-9700.
eWellness Healthcare Corporation’s fiscal year end is December 31.
3 |
Results of Operations for the three months ended March 31, 2014 and 2013.
The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this Quarterly Report.
Operating Expenses
Operating expenses during the three months ended March 31, 2014 totaled $10,017 compared to $9,778 for the three months ended March 31, 2013. Operating expenses increased primarily as a result of an increase in general and administrative expense partially offset by a decreased in professional fees.
Net Loss
Net loss during the three months ended March 31, 2014 totaled $10,852 compared to $9,842 for the three months ended March 31, 2013. The increase in the net loss is a result of increased operating expenses as discussed above.
Liquidity and Capital Resources
The Company had $2,100 and $100 cash as of March 31, 2014 and December 31, 2013, respectively. The Company had $80,783 and $62,761 of restricted cash as of March 31, 2014 and December 31, 2013, respectively. Since the minimum offering of 50,000 shares has been reached, up to 10% of the proceeds remaining after underwriting commissions, underwriting expenses and dealer allowances or $2,100 is now unrestricted and available for use by the Company.
Net cash provided by operating activities was $21 for the three months ended March 31, 2014, compared to $6 for the same period in 2013.
Net cash provided by financing activities during the three months ended March 31, 2014, was $1,979 compared to $3,144 for the three months ended March 31, 2013.
There were 18,500 shares of our common stock issued during the three months ended March 31, 2014. The cash for these shares was received in the year ended December 31, 2013 and deposited in an escrow account as provided for under the terms of our offering of securities as set forth in our September 18, 2012 prospectus. In addition, there were 200,000 shares of our common stock sold for cash of $20,000 during the three months ended March 31, 2014. During the period ended March 31, 2014, there were no warrants exercised.
The Company had not yet earned any revenues or established operations as of and for the period ended March 31, 2014. Subsequent to the end of the period, the Company completed an acquisition. (See Note 8 to the financial statements). Even with the acquisition, our current cash position is not sufficient to fund our cash requirements during the next twelve months including operations and capital expenditures.
We had assets at March 31, 2014 of $82,883. We will be reliant upon shareholder loans, private placements or public offerings of equity to fund any kind of operations. We have secured no sources of loans.
Off-Balance Sheet Arrangements
There are 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 that is material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company”, we are not required to provide the information under Item 3.
4 |
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls as of the end of the period covered by this report, March 31, 2014. This evaluation was carried out under the supervision and with the participation of our chief executive officer, Darwin Fogt, and our chief financial officer, David Markowski (the “Certifying Officers”). Based upon that evaluation, our Certifying Officers concluded that as of the end of the period covered by this report, March 31, 2014, our disclosure controls and procedures are effective in timely alerting management to material information relating to us and required to be included in our periodic filings with the Securities and Exchange Commission (the “Commission”).
Our Certifying Officers further concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by the issuer in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and are also effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow time for decisions regarding required disclosure.
Changes in Internal Controls Over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or material pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
As a “smaller reporting company”, we are not required to provide disclosure under this Item 1A.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the three months ended March 31, 2014, the Company issued and sold to investors 218,500 shares of common stock for cash of $21,850. Of this amount, $1,850 was received before January 1, 2014. These shares and proceeds are held in escrow pursuant to the terms set forth in our prospectus dated September 18, 2012. Since the minimum offering of 50,000 shares has been reached, up to 10% of the proceeds remaining after underwriting commissions, underwriting expenses and dealer allowances or $2,100 is now unrestricted and available for use by the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
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ITEM 4. MINE SAFETY DISCLOSURES.
None.
None.
Exhibit No. | Description | |
31.1 | Rule 13a-14(a)/15d-14(a) Principal Executive Officer Certification* | |
31.2 | Rule 13a-14(a)/15d-14(a) Principal Financial and Accounting Officer Certification* | |
32.1 | Certifications under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)* | |
32.2 | Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)* | |
101.INS | XBRL INSTANCE DOCUMENT ** | |
101.SCH | XBRL TAXONOMY EXTENSION SCHEMA ** | |
101.CAL | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE ** | |
101.DEF | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE ** | |
101.LAB | XBRL TAXONOMY EXTENSION LABEL LINKBASE ** | |
101.PRE | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE ** |
* | Filed herewith | |
** | In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”. |
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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, thereunto duly authorized.
eWellness Healthcare Corporation | ||
Date: May 15, 2014 | By: | /s/ Darwin Fogt |
Darwin Fogt | ||
Director and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: May 15, 2014 | By: | /s/ David Markowski |
David Markowski, Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
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