Optimus Healthcare Services, Inc. - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 2022

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: 333-261849

OPTIMUS HEALTHCARE SERVICES, INC.

(Exact Name of Registrant as Specified in its Charter)

(516) 806-4201

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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 ☒

Number of common shares outstanding as of August 30, 2022 was 40,286,598.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This this Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects, and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning.

These statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

Any forward-looking statement in this prospectus, in any related prospectus supplement and in any related free writing prospectus reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our business, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and therein and have filed as exhibits hereto and thereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contain or may contain estimates, projections and other information concerning our industry, our business, and the markets for our products, including data regarding the estimated size of those markets and their projected growth rates. We obtained the industry and market data in this prospectus from our own research as well as from industry and general publications, surveys and studies conducted by third parties. This data involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty, including those discussed in “Risk Factors.” We caution you not to give undue weight to such projections, assumptions, and estimates. Further, industry and general publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that these publications, studies, and surveys are reliable, we have not independently verified the data contained in them. In addition, while we believe that the results and estimates from our internal research are reliable, such results and estimates have not been verified by any independent source.

ITEM 1. FINANCIAL STATEMENTS

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

FOR THE PERIOD ENDED JUNE 30, 2022

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

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

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2022

UNAUDITED

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

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

(UNAUDITED)

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

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

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

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of operations

Optimus Healthcare Services, Inc. (formerly Between Dandelions, Inc., “Optimus”, “Company”) was initially organized under the laws of Florida on February 26, 1990, as Phoenix Management Associates, Inc. Over the ensuing years, the Company made a series of amendments to its Articles of Incorporation relating to authorization of various series of Preferred Shares and made a series of name changes. The current name of Optimus Healthcare Services, Inc. became effective with the State of Florida on January 24, 2021.

The Company is dedicated to: (1) improving patient/physician interactions and outcomes through the acquisition and deployment of telehealth and compliance technologies (TACT); (2) advancing access to clinical trial research; and (3) improving and simplifying access to vaccines and pharmaceutical products. Currently the Company provides these services through its portfolio companies, AdhereRx Corporation (d/b/a PainScript), Clinical Research Alliance, Inc. (CRA), and Worker’s Health Rx (d/b/a Vaccinations Rx).

2. Summary of significant accounting policies

Principles of Consolidation

The consolidated financial statements which include the accounts of the Company, and its subsidiaries are prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results of operations of any interim period are not necessarily indicative of the results for the full year. The fiscal year end is December 31.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to the valuation of equity issued for services, valuation of equity associated with convertible debt, the valuation of derivative liabilities, and the valuation of deferred tax assets. Actual results could differ from these estimates.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from contracts with customers,” (Topic 606). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company’s main revenue stream is from services. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.

For services performed by CRA, the Company’s performance obligations are generally met at the point in time the services are rendered.

Adhere Rx, Inc. provides software services primarily to physicians and physician groups through a cloud software as a service (SaaS) platform through which the physicians and physician groups will be billed on a periodic basis for the services. Adhere Rx, Inc. will typically meet its performance obligations over a period of time. Revenues will be recognized ratable over the related contractual term of the service.

Accounts Receivable

Trade accounts receivable are recorded at the net invoice value and are not interest bearing. The Company considers receivables past due based on the payment terms. The Company reviews its exposure to accounts receivable and reserves specific amounts if collectability is no longer reasonably assured. The Company also reserves a percentage of its trade receivable balance based on collection history and current economic trends that might impact the level of future credit losses. The Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed.

Fair Value Measurements and Fair Value of Financial Instruments

Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements, clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3: Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The estimated fair value of certain financial instruments, including all current liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The Company follows ASC subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and ASC 825-10, which permits entities to choose to measure many financial instruments and certain other items at fair value. The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021.

Derivative Liability

The Company evaluates convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. The Company currently has no derivative liability instruments.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Finite-lived Intangible Assets

Our internal software development costs primarily relate to internal-use software. Such costs are capitalized in the application development stage in accordance with ASC 350-40, Internal-use Software (“ASC 350-40”). We also capitalize software development costs upon the establishment of technological feasibility for a product in accordance with ASC 985-20, Software to be Sold, Leased, or Marketed (“ASC 985-20”). Software development costs are amortized on a straight-line basis.

Goodwill

We assess goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value. For the year ended December 31, 2021, we determined that there was no goodwill impairment.

Stock Based Compensation

The Company records stock-based compensation in accordance with the provisions of FASB ASC Topic 718, “Accounting for Stock Compensation,” which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. In accordance with guidance provided under ASC Topic 718, the Company recognizes an expense for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. On January 14, 2022, the Company granted 296,250 options, on February 3, 2022, the Company granted 55,000 options, on March 10, 2022, the Company granted 505,000 options and on June 30, 2022, the Company granted 378,750 options. For the six months ended June 30, 2022 and 2021, the Company recorded $3,886,702 and $459,313 in stock compensation expense, respectively.

Convertible Debentures

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options”. In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense, over the life of the debt.

Advertising, Marketing and Public Relations

The Company follows the policy of charging the costs of advertising, marketing, and public relations to expense as incurred. There were $17,150 and $0 advertising expenses for the six months ended June 30, 2022 and 2021, respectively.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. CRA had elected Subchapter S corporation status for income tax purposes. As a result, items of profit and loss were taxed to the shareholders of CRA and no provision was made for federal or state income taxes. Effective upon being acquired by CRAAC on November 25, 2020, the Subchapter S election of CRA was automatically terminated.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. Our federal tax return and any state tax returns are not currently under examination.

The Company has adopted FASB ASC 740-10, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Net Income (Loss) Per Common Share

The Company computes loss per common share, in accordance with FASB ASC Topic 260, Earnings Per Share, which requires dual presentation of basic and diluted earnings per share. Basic income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding, plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants. No potential dilutive common shares are included in the computation of any diluted per share amount when a loss is reported.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3. Concentration of credit risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully insured by the Federal Deposit Insurance Corporation (FDIC). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions. At June 30, 2022, the Company had deposits in excess of FDIC insurance totalling $853,870.

4. Operating lease right-of-use asset and operating lease liability

The Company entered into a lease agreement commencing on September 1, 2020 through August 31, 2027, for 2,275 square feet of office space located at 1400 Old Country Road, Suite 304, Westbury, New York, 11590.. The following table illustrates the base rent amounts over the term of the lease:

The Company entered into a lease agreement commencing on February 1, 2021 through April 30, 2026, for 1,246 square feet of office space located at One Dupont Street, Suite 112, Plainview, New York, 11803. The following table illustrates the base rent amounts over the term of the lease:

The Company has an equipment lease commencing on January 1, 2021 through December 1, 2023. The contract requires payments of $179 per month.

Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 7.5%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in other general and administrative expenses on the statements of operations.

Right-of-use asset is summarized below:

Operating lease liability is summarized below:

Maturity of the lease liability is as follows:

5. Going concern

The Company’s consolidated financial statements are prepared using the GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At June 30, 2022 and December 31, 2021, the Company had $1,211,651 and $260,838 in cash and $464,297 and $657,006 in working capital at June 30, 2022 and December 31, 2021, respectively.  For the six months ended June 30, 2022 and 2021, the Company had a net loss of $7,434,043 and $1,732,139, respectively. Continued losses may adversely affect the liquidity of the Company in the future.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date these financial statements are issued. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has operating costs and expenses at the present time for development of its business activities. The Company, however, will be required to raise additional capital over the next twelve months to meet its current administrative expenses, and it may do so in connection with or in anticipation of possible acquisition transactions. This financing may take the form of additional sales of its equity securities and/or convertible notes. There is no assurance that additional financing will be available, if required, or on terms favorable to the Company.

6. Reverse merger

Optimus Healthcare Services, Inc.

On December 28, 2020, the Company (Optimus Healthcare Services, Inc – a Florida corporation) acquired 100% of the outstanding equity interests in Optimus Healthcare Services, Inc., a Delaware corporation (“Optimus”) in exchange for 9,998,899 shares of its Series A convertible preferred stock and 18,000,000 shares of its common stock. As a result of the transaction, Optimus shareholders acquired approximately 73% of the voting shares in the Company and was reflected as the accounting acquirer in the transaction.

On November 6, 2020, Optimus acquired 51% of Clinical Research Alliance Acquisition Corp. (“CRAAC”) as a founder. On that date, neither entity had any assets or operations.

On November 25, 2020, CRAAC acquired 100% of the outstanding equity interest in in Clinical Research Alliance, Inc. (“CRA”). The Company determined that CRA was the accounting acquirer in the transaction. On September 1, 2021, Optimus exchanged $425,000 of debt it had loaned to CRAAC for 425,000 shares of CRAAC stock. After the exchange Optimus owns 99.88% of CRAAC.

The Series A Preferred Stock votes and is convertible at a rate of 1 preferred share to 1.25 common shares. In connection with the transaction all prior officers and directors of the Company (except Michael Pruitt) resigned and new officers and directors were appointed as officers and directors of the Company. In connection with this transaction, the former CEO agreed to return 5,000,000 shares of common stock.

In connection with this transaction, the Company filed a certificate of amendment to its Articles of Incorporation with the State of Florida changing its name to “Optimus Healthcare Services, Inc.” (January 24, 2021).

The transaction has been accounted for as a reverse merger with Optimus Healthcare Services, Inc. as the accounting acquirer and Between Dandelions, Inc. as the accounting acquiree. The financial reporting will reflect the accounting from the perspective of Optimus (“accounting acquirer”), except for the legal capital, which has been retroactively adjusted to reflect the capital of Between Dandelions (“accounting acquiree”) in accordance with ASC 805-40-45-1. As such, the historical financial information presented are those of CRA as the beneficial accounting acquirer in the above transaction.

7. Business acquisition

AdhereRx

On March 25, 2021, Optimus Health, Inc., a wholly owned subsidiary of the Company, acquired 100% of the outstanding equity interests in AdhereRx Corporation (d/b/a Painscript) (“Painscript”) in exchange for an aggregate of 2,000,000 shares of the Company’s common stock which includes 400,000 shares held in escrow. Per the agreement, the escrow shares are released if Painscript meets the definition of commercialization success and are cancelled if it doesn’t meet the definition of commercialization success. A review of this contingent consideration was made and was determined to be classified as equity because the contingent consideration is a fixed amount of shares. Prior to Closing, the Company made a loan of $150,000 to Painscript, which was converted to an intercompany loan upon closing of the acquisition. At the Closing, the Company made an intercompany loan of $100,000 to Painscript. The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The purchase price allocation is as follows:

VaccinationsRx

On January 28, 2022, the Company entered into a stock purchase agreement with Worker’s Health Rx, Inc. (“VaccinationsRx”) and Marc Wiener, the sole shareholder, who is also our chief executive officer, pursuant to which we acquired 100% of the outstanding equity interests of VaccinationsRx in exchange for the issuance of 250,000 shares of our common stock and $350,000. The cash portion of the purchase price was paid by June 30, 2022.

Vaccinations Rx is a concierge vaccination pharmacy dedicated to simplifying access to vaccines and pharmaceutical products.. It maintains an extensive on-site inventory of common and esoteric vaccines and hyperimmune agents and is able to fulfill vaccination needs on very short notice. For patients, it eliminates the burden of tracking down vaccines that their physician may not carry, and provides vaccinations in the comfort of the patient’s home or office. We partner with providers to ensure patients have access to vaccines they need, while eliminating the burden and cost on providers associated with stocking vaccines. For employers, we come to their place of business and set up immunization points of distribution (PODs) for numerous vaccines, including influenza and COVID-19. This reduces the burden of vaccination by providing a safe environment and it improves employee efficiency. We will be paid cash for our services, but we will help patients seek reimbursement from their insurers.

8. Property, plant and equipment

Property, plant and equipment consisted of the following at June 30, 2022 and December 31, 2021:

Depreciation expense was $690 and none for the six months ended June 30, 2022 and 2021, respectively.    

9. Intangible assets

Intangible assets consisted of the following at June 30, 2022 and December 31, 2021:

Amortization expense was $202,026 and $0 for the six months ended June 30, 2022 and 2021, respectively.    

10. Marketable securities and other investments

Our marketable securities are stated at fair value in accordance with ASC Topic 321, Investments- Equity Securities.  Any changes in the fair value of the Company’s marketable securities are included in net income under the caption of net loss from investments. The market value of the securities is determined using prices as reflected on an established market. Realized and unrealized gains and losses are determined on an average cost basis. The marketable securities are investments predominately in shares of large publicly traded securities which are being invested until such time the funds are needed for operations. 

The value of these marketable securities at June 30, 2022 and December 31, 2021 is as follows:

The above marketable securities are reflected as level 1 assets as the securities prices are quotes in an established market. The Company has reflected $96,479 in net unrealized losses and has reported these securities as net losses from investments on the statement of operations during the six months ended June 30, 2022. There were realized gains or losses on marketable securities totaling $42,509 and $0 in the six months ended June 30, 2022 and 2021.

11. Line of credit

As of June 30, 2022 and December 31, 2021, the balance of the line of credit was $144,011 and $150,079, respectively. The Company has a line of credit with Chase Bank with a credit limit of $250,000. The line of credit has a variable interest rate equal to the sum of the prime rate plus 1.64%. During the six months ended June 30, 2022, the Company repaid $6,068 towards the line of credit balance.

12. Notes payable

As of June 30, 2022 and December 31, 2021, the balance of the notes payable was $617. The notes are outlined in the following table:

13. Notes payable, related party

As of June 30, 2022 and December 31, 2021, the balance of the notes payable, related party was $25,200. The notes are outlined in the following table:

14. Paycheck protection program loan

PPP Loans

The Company received loan proceeds in the amount of approximately $145,683 on May 1, 2020. The Company received loan proceeds on the second advance under the PPP in February 2021 totaling $148,975. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after twenty-four weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the period.

The Company was granted forgiveness of $126,546 on the original PPP loan. As a result, the Company recorded a gain on PPP forgiveness in the amount of $126,546 during the year ended December 31, 2020. The unforgiven portion of the PPP loan totaling $19,137 is payable over five years at an interest rate of 1%, with a deferral of payments for the first twelve months.

As of June 30, 2022, the non-current portion is $9,437 and the current portion is $5,304.

In November 2021, the Company was granted forgiveness on the full $148,975 of the second advance under the PPP.

During the six months ended June 30, 2022, the Company repaid $2,045 on the PPP loan.

15. Convertible notes payable

The carrying value of convertible notes payable, net of discount, as of June 30, 2022 and December 31, 2021 was $2,177,324 and $663,014, respectively.

May 2021 Financing $2,200,000 Face Value

On May 25, 2021, the Company entered into a securities purchase agreement with certain institutional investors (collectively, the “May 2021 Investors”) pursuant to which the Company issued convertible notes in an aggregate principal amount of $2,200,000 for an aggregate purchase price of $2 million (collectively, the “May 2021 Notes”). In connection with the issuance of the May 2021 Notes, the Company issued to the May 2021 Investors warrants to purchase an aggregate of 165,000 shares of common stock (collectively, the “Warrants”) and 1,727,859 shares of common stock. The May 2021 Notes accrue interest at a rate of 9% per annum, subject to increase to 20% per annum upon and during the occurrence of an event of default. Interest is payable in cash on a quarterly basis. The May 2021 Notes are convertible at any time, at the holder’s option, into shares of the Company’s common stock at a conversion price of $1.00 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends and stock splits.

Each Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $1.25 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the exercise price then in effect. The May 2021 Investors may exercise the Warrants on a cashless basis if the shares of common stock underlying the Warrants are not then registered pursuant to an effective registration statement. In the event the May 2021 Investors exercise the Warrants on a cashless basis, then we will not receive any proceeds.

June 2022 Financing $2,200,000 Face Value

On June 7, 2022, the Company entered into a securities purchase agreement with certain institutional investors (collectively, the “June 2022 Investors”) pursuant to which the Company issued convertible notes in an aggregate principal amount of $2,200,000 for an aggregate purchase price of $2 million (collectively, the “June 2022 Notes”). In connection with the issuance of the June 2022 Notes, the Company issued to the June 2022 Investors warrants to purchase an aggregate of 1,540,000 shares of common stock (collectively, the “Warrants”) and 200,000 shares of common stock. The June 2022 Notes accrue interest at a rate of 9% per annum, subject to increase to 20% per annum upon and during the occurrence of an event of default. Interest is payable in cash on a quarterly basis. The June 2022 Notes are convertible at any time, at the holder’s option, into shares of the Company’s common stock at a conversion price of $1.00 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends and stock splits.

Each Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $1.25 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the exercise price then in effect. The June 2022 Investors may exercise the Warrants on a cashless basis if the shares of common stock underlying the Warrants are not then registered pursuant to an effective registration statement. In the event the June 2022 Investors exercise the Warrants on a cashless basis, then we will not receive any proceeds.

The Company has accounted for the May 2021 Notes and June 2022 Notes as a financing transaction, wherein the net proceeds that were received were allocated to the financial instrument issued. Prior to making the accounting allocation, the Company evaluated the notes under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. There were no embedded instruments which required bifurcation.

We did analyze the detachable Warrants under ASC 480-10 and ASC 815. The Warrants did not fall under the guidance of ASC 480-10. After analyzing the Warrants under ASC 815, it was determined that the Warrants did meet all the requirements for equity classification under guidance of ASC 815-40-25-1 through 6.

For the six months ended June 30, 2022, the Company recorded $112,200 in accrued interest and $581,411 in the amortization of debt discount.

16. Equity

Sale of Securities

In August 2021, the Company commenced an offering of up to $2 million shares of the Company common stock at a price of $1 per share. The Company has sold 1,160,000 shares of its common stock through this offering.

Preferred Stock

The Company has 70,000,001 shares of Preferred Stock authorized with a par value of $.001.

Series A —The Company has 1,102 and 10,000,001 shares of Series A Preferred outstanding as of June 30, 2022 and December 31, 2021, respectively. The Series A Preferred has the following designations:

In connection with the December 28, 2020 merger with Optimus Healthcare Services, Inc., a Delaware corporation (“Optimus”), the Company issued 9,998,899 shares of its Series A convertible preferred stock. Simultaneously, the Company cancelled 9,998,889 shares previously held by its former CEO. In January 2022, all but 1,102 of the outstanding Series A Preferred shares were converted into 12,498,624 shares of common stock.

Series B — The Company has 8,105,724 shares of Series B Preferred outstanding as of June 30, 2022 and December 31, 2021. The Series B Preferred has the following designations:

Stock options

The Company selected the Black-Scholes-Merton (“BSM”) valuation technique to calculate the grant date fair values for the stock options because it believes that this technique is reflective of all the inputs that market participants would likely consider in transactions involving warrants. The inputs include the strike price, underlying price, term to expiration, volatility, and risk-free interest rate.

Stock option activity for the period ended June 30, 2022 is summarized as follows:

During the six months ended June 30, 2022, the Company recorded $3,886,702 in stock-based compensation expense. At June 30, 2022, there was $7,564,796 in unrecognized costs related to the stock options granted.

Noncontrolling interest

On September 1, 2021, Optimus exchanged $425,000 of debt it had loaned to CRAAC for 425,000 shares of CRAAC stock which increased Optimus’ ownership percentage of CRAAC from 51% to 99.88%.

Changes in the Company’s ownership interests in our less than 100% owned subsidiary during the year ended December 31, 2021 were as follows:

Net Loss Attributable to Optimus Healthcare Services, Inc.

Transfers (to) from the Noncontrolling Interest

17. Commitments and contingencies

During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of June 30, 2022 and December 31, 2021, the Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.

Note 18 Income taxes

The components of income tax expense (benefit) for the six months ended June 30, 2022 was as follows:

The following table reconciles the difference between the statutory federal income tax rate for the Company and the effective income tax rate for the three months ended June 30, 2022:

Deferred income taxes reflect the net tax effect of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income taxes.

Significant components of U.S. federal and state deferred tax assets and liabilities as of June 30, 2022 and December 31, 2021 are as follows:

Future utilization of NOL’s arising in tax years after December 31, 2017 are limited to eighty percent of taxable income and are allowed to be carried forward indefinitely. NOL’s generated in 2017 and prior may carry forward 20 years. As of June 30, 2022, the Company has $0.193 million of NOL’s generated prior to December 31, 2017 and $4.8 million of NOL’s generated after 2017. The Company’s NOL carryforwards generated prior to December 31, 2017 will begin to expire in the year 2031. Included in the total NOLs discussed above, are $.203 million of NOLs generated by the Company’s 100% owned subsidiary Adhererx Corporation. When the Company acquired Adhererx Corporation in 2020, Adhererx Corporation underwent an ownership change as defined by section 382 of the Internal Revenue Code, and as such the NOL will be subject to annual limitation. Management has reviewed and evaluated the relevant technical merits of each of its tax positions and determined that there are no uncertain tax positions that would have a material impact on these financial statements.

19. Subsequent events

Common stock issued

On July 11, 2022, the Company issued 375,000 shares of common stock pursuant to a subscription agreement entered into on June 24, 2022. The shares were categorized in common stock to be issued as of June 30, 2022.

On July 6, 2022, the Company issued 200,000 shares of common stock pursuant to the financing agreement dated June 7, 2022. The shares were categorized in common stock to be issued as of June 30, 2022.

Debt settlement and release

On July 1, 2022, the Company entered into an agreement whereby the Company agreed to issue 362,000 shares of common stock in satisfaction of $362,112 owed.

Subscription agreement

On July 28, 2022, the Company sold 375,000 shares of common stock for $1.00 per share, or $375,000.

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

You should read the following discussion and analysis of our financial condition and plan of operations together with “Summary Financial Data” and our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. All amounts in this Quarterly Report on Form 10-Q are in U.S. dollars, unless otherwise noted. 

Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” “Company,” “Optimus,” or “Optimus Healthcare Services” refer to Optimus Healthcare Services, Inc.., individually, or as the context requires, collectively with its subsidiaries.

Overview

The Company is dedicated to: (1) improving patient/physician interactions and outcomes through the acquisition and deployment of telehealth and compliance technologies (TACT); (2) advancing access to clinical trial research; and (3) improving and simplifying access to vaccines and pharmaceutical products. Currently the Company provides these services through its portfolio companies, AdhereRx Corporation (d/b/a “PainScript”), Clinical Research Alliance, Inc. (“CRA”), and Worker’s Health Rx (d/b/a “Vaccinations Rx”).

Our vision for the Company is to continue to grow by acquiring controlling interests in healthcare-related businesses with strong leadership teams, innovative products and services, and proven technologies or processes that expand access to high quality healthcare and improve overall health outcomes and physical well-being. Our goal at Optimus is to empower physicians and patients with the information, guidance and tools needed to make informed health care choices. The Company seeks synergies among its portfolio companies and facilitates access to its management team which has extensive industry experience - including 17 drug or device approvals - and its network of financial and business partners to help finance growth and accelerate business market trajectories.

Clinical Research Alliance

On December 28, 2020, the Company acquired 100% of the outstanding equity interests in Optimus Healthcare Services, Inc., a Delaware corporation (“Optimus”), in exchange for 9,998,899 shares of its Series A convertible preferred stock and 18,000,000 shares of its common stock. In connection with the transaction all prior officers and directors of the Company (except director Michael Pruitt) resigned and new officers and directors were appointed as officers and directors of the Company. On November 25, 2020, Clinical Research Alliance Acquisition Corp. (“CRAAC”), an entity 99% owned by Optimus, acquired 100% of the outstanding equity interests in CRA in exchange for 70 shares of its common stock.

CRA provides services to a world-class team of dedicated oncologists across the Tri-State area united by a shared commitment to conduct clinical research. CRA provides independent, community-based oncology practices and hospitals in diverse communities with the necessary infrastructure and support to enroll their patients in cutting edge clinical trials without the patients having to leave their physicians’ offices, hospitals or their local communities.

CRA currently supports a number of community-based physicians and has signed an agreement with its first acute care hospital in New York City. CRA’s current focus is with oncologists in private practice, as well as rural and small hospitals in diverse communities.

CRA contracts with pharmaceutical companies and Contract Research Organizations (“CRO”) to conduct clinical trials (Phases I-IV) for investigational new drugs, biologics and medical devices, and has worked with over 40 pharmaceutical companies since inception. CRA’s customers consist primarily of large and mid-sized pharmaceutical and biotech companies. In the last 12 years, CRA has conducted 180 clinical trials. As CRA was the highest enroller in many of these clinical trials, many of those clinical trials led to FDA approval for the trial compounds used to treat various cancers. Depending on the clinical trial design, CRA invoices the pharmaceutical manufacturer for some or all of the following services: startup fees, diagnostic tests, laboratory tests, patient stipends, pharmacy fees, patient visits, document storage and the reporting of serious adverse events.

CRA also contracts with independent community-based oncology practices and hospitals in diverse communities to assist in the conduct of the clinical trials. CRA’s services to the community-based practices and hospitals in diverse communities include:

Our contracts with the community-based practices and hospitals include specific budgets for particular services rendered. The contracts may range in duration from a few months to several years or longer depending on the nature of the work performed. In some cases, a portion of the contract fee is paid at the time the contract is executed with the balance of the contract fee payable either monthly or in installments upon the achievement of milestones over the study duration. Our contracts generally may be terminated or reduced in scope either immediately or upon short notice. Our contracts with our community-based oncology practices and hospitals result in the payment of fees for services rendered to the principal investigator that is conducting a particular clinical trial. The COVID-19 pandemic did not impact any open trials that were ongoing as CRA was able to conduct business remotely instead of through on-site visits. However, it did impact the number of new trials that were initiated in 2020 and 2021.

CRA employs experienced Clinical Research Coordinators that travel to the community-based practices and hospitals for required study visits. Additionally, CRA’s principal investigator for a specific clinical trial is in contact with the oncology practices and hospitals to provide the necessary oversight. Community-based practices and hospitals choose CRA because we provide the opportunity to conduct and conveniently enroll their patients in important clinical trials often unavailable to those community-based practice groups and hospitals. In addition, CRA is committed to increasing clinical trial access to patients from diverse and underserved communities that will better represent the real-world population. Although CRA’s historical focus has been in the area of oncology, in the future we intend to expand our therapeutic reach into gastroenterology, dermatology, cardiology, urology and ophthalmology. The National Institutes of Health estimate that there are currently 126,164 active clinical studies in these therapeutic areas.

The clinical research industry is fragmented, consisting of many small, niche service providers, a number of medium-sized providers and a number of large CROs that are differentiated by the scale of their global operations, breadth of service portfolios and supporting technology infrastructure. Companies like CRA generally compete on the basis of previous product experience, the ability to recruit patients, the depth of therapeutic and scientific expertise, the strength of project teams, price and increasingly on the ability to apply new innovation that can drive significant time and cost savings throughout the development process.

On May 1, 2020, CRA entered into a note agreement for an aggregate principal amount of $146,250 with JPMorgan Chase Bank, N.A. (“JPMorgan Chase”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (“SBA”) (the “2020 PPP Loan”). On February 19, 2021, CRA entered into a note agreement for an aggregate principal amount of $148,975 with JPMorgan Chase under the CARES Act administered by the SBA (the “2021 PPP Loan” and together with the 2020 PPP Loan, the “PPP Loans”). CRA received total aggregate proceeds of $295,225 under the PPP Loans. In accordance with the requirements of the CARES Act, CRA used proceeds from the PPP Loans primarily for payroll costs. The 2020 PPP Loan was scheduled to mature on May 1, 2021 and the 2021 PPP Loan was scheduled to mature on February 19, 2022, each with a 1% interest rate and subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act. $126,545.50 of the 2020 PPP Loan was forgiven on March 26, 2021. The remaining balance of $19,136.50 of the 2020 PPP Loan was not forgiven because an employee was terminated during the period. This amount is due in five years and is being repaid on a monthly basis. The 2021 PPP Loan was fully forgiven on November 3, 2021.

PainScript

On March 25, 2021, Optimus Health, Inc., a wholly owned subsidiary of the Company, acquired 100% of the outstanding equity interests in AdhereRx Corporation (d/b/a PainScript) (“PainScript”) in exchange for an aggregate of 2,000,000 shares of the Company’s common stock, including shares issuable upon satisfaction of certain milestones. On December 28, 2021, we entered into an amendment to the stock acquisition agreement by and among the Company, Optimus Health, AdhereRx Corporation and Daniel Cohen, pursuant to which we agreed to modify the commercial milestones which need to be achieved for the release of 400,000 shares of the Company’s common stock to be equal to: (i) the generation of at least $80,000 in aggregate revenue between December 31, 2021 and March 31, 2022; or (ii) between December 31, 2021 and March 31, 2022, the entry into one or more commercial enterprise contracts that will generate revenue during their term not less than $200,000 from commercial sales of the Chronic Care Management application (a “Commercialization Success”). On April 13, 2022, we entered into a second amendment to the stock acquisition agreement by and among the Company, Optimus Health, AdhereRx Corporation and Daniel Cohen, pursuant to which we agreed that upon a Commercialization Success and the Company’s receipt of revenue in excess of $200,000 from the commercial enterprise contracts entered into in connection with such Commercialization Success or a Change of Control (as defined therein), the Company shall release the 400,000 shares of Company common stock to the PainScript shareholders.

PainScript is a telehealth company that leverages a telehealth and compliance technology (TACT) software-as-a-service platform (SaaS) focused on creating a personalized pathway to support interventions for chronic care patients suffering from opioid and other substance use disorders (SUD), as well as those patients treated for pain management.

According to data released by the Centers for Medicare and Medicaid Services (CMS), there were nearly 52.7 million fee-for-service telehealth visits by Medicare beneficiaries in 2020, up from 840,000 in 2019. Based on information included in an article published by the Substance Abuse and Mental Health Services Administration in 2018, there are approximately 100 million chronic pain patients, of which 23 million are chronic severe pain patients, and approximately 18 - 20 million chronic pain patients currently in treatment. We believe there are approximately 7-10.5 million patients with substance use disorder (SUD), of which approximately 1-2 million are currently in treatment and approximately 43.8 million patients with mental illness, of which 7 - 10 million are currently in treatment.

PainScript’s SaaS platform has been scientifically validated in nine peer-reviewed and published studies, co-funded by the National Institute of Health, or NIH, and/or the National Institute of Mental Health, or NIMH. PainScript’s approach is easily accessible and user-friendly via a digital platform to provide the physician and patients daily, evidence-based clinical queries and telehealth monitoring interventions designed to effectively improve patient compliance with individual care plans, treatment protocols, and medication adherence. Increased compliance with physician prescribed treatments is believed to lead to better health outcomes and a reduction in related healthcare costs. The TACT platform uses daily contact between scheduled physician meetings as clinical evidence demonstrates greater adherence to treatment protocols that, in turn, may lead to an improved health benefit. The TACT platform is designed with a HIPAA compliant “concierge medicine” approach, allowing for real-time doctor-patient interactions, remote monitoring and communication, and a potential early warning of treatment or health related complications.

PainScript began initial commercial operations with a “soft launch” late in 3Q 2021, with commercial product application updates developed simultaneously with commercial installations. Anticipating a 4-6-month sales cycle, PainScript began commercial activities by offering physician practices a 60-90 day “Kickstarter” program to deploy the TACT platform on a limited patient population. Following validation of the initial approach, a traditional enterprise usage relationship based on anticipated practice volume for patients that meet the standard “medically necessary” criteria will be employed. By mid-April of 2022, and while PainScript had enrolled over 960 patients across six different practice groups in nine locations, the market clearly shifted as COVID restrictions relaxed and a general return to normal activities changed practice needs for telehealth.  PainScript responded by adopting new practice approaches and price points for services in 2Q2022, dropped the “Kick Starter” option and began to rebuild customer relationships. With an expanded contract salesforce and a new approach, PainScript has relaunched with nine practice groups representing over 650 patients and a robust pipeline. The sales cycle remains 4-6 months, followed by a 60+ day on-boarding to first patient enrollment. On-boarding is impacted by the time required of Android and Apple store “white labeling” functions and is not a controllable issue by PainScript. Initial practice revenue, priced on a per patient/per month model, begins 30 days post-first patient enrollment.

PainScript derives revenues from the physician practice group based on a “per patient, per month” model. Practices may consider billing for these services to public and private healthcare plans (or payors) for medically necessary usage of the PainScript TACT platform, using existing and closely aligned American Medical Association (AMA) Current Procedural Terminology (CPT) codes. These existing CPT codes may include Digital Evaluation and Management, Remote Patient Monitoring and/or Remote Therapeutic Monitoring. All decisions of what to bill, or if to bill, are made in the professional judgment of the treating physician.

The initial market focus is chronic pain patients under a physician’s direct management, medically assisted treatment facilities for Opioid Use Disorders and related recovery and SUD patients under psychiatric care. An additional area of focus for near term development as a subsequent vertical is bariatric treatment – both physician based and surgical. A Scientific Advisory Board (“SAB”) for bariatric treatment has been recruited and the nascent division is anticipated to operate under the d/b/a of “HealthScript.”

The telehealth market is rapidly evolving and highly competitive. We expect competition to intensify in the future as existing competitors and new entrants introduce new telehealth services and software platforms or other technology to U.S. healthcare providers, particularly hospitals and healthcare systems. We currently face competition from a range of companies, including other specialized software providers that are continuing to grow and enhance their service offerings and develop sophisticated and effective transaction and service platforms. In addition, large, well-financed healthcare providers have in some cases developed their own telehealth services and technologies utilizing their own and third-party platforms and may provide these solutions to their patients.

Vaccinations Rx

On January 28, 2022, the Company entered into a stock purchase agreement with Worker’s Health Rx, Inc., d/b/a Vaccinations Rx (“Vaccinations Rx”) and Marc Wiener, the sole shareholder, who is also our chief executive officer, pursuant to which we acquired 100% of the outstanding equity interests of Vaccinations Rx in exchange for the issuance of 250,000 shares of our common stock and $350,000. The cash portion of the purchase price has been paid in full. 

 Vaccinations Rx is a pharmacy dedicated to simplifying access to vaccines and pharmaceutical products. It maintains an extensive on-site inventory of common and esoteric vaccines and hyperimmune agents and is able to fulfill vaccination needs on very short notice. For patients, it can eliminate the burden of tracking down vaccines that their physician may not carry, and could provide vaccinations in the comfort of the patient’s home or office. For employers, we can go to their place of business and set up immunization points of distribution (“POD”) for numerous vaccines, including influenza and COVID-19. This reduces the burden of vaccination by providing a safe environment and it improves employee efficiency. We will be paid cash for our services, but we will help patients seek reimbursement from their insurers. In addition, Vaccinations Rx is exploring the possibility of providing pharmaceuticals and clinical and consulting services to senior living providers which includes, but is not limited to, skilled nursing facilities, assisted living facilities, memory care centers and group homes.

Recent Developments

On June 7, 2022, we entered into a securities purchase agreement with certain accredited investors pursuant to which we issued senior secured convertible notes in an aggregate principal amount of $2.2 million for an aggregate purchase price of $2.0 million (“June 2022 Notes”). In connection with the issuance of the June 2022 Notes, we issued to the investors warrants to purchase an aggregate of 1,540,000 shares of common stock and 200,000 shares of common stock.

The June 2022 Notes each have a term of twenty-four months and mature on June 7, 2024, unless earlier converted. The June 2022 Notes accrue interest at a rate of 9% per annum, subject to increase to 20% per annum upon and during the occurrence of an event of default. Interest is payable in cash on a quarterly basis beginning on July 1, 2022. The June 2022 Notes are convertible at any time, at the holder’s option, into shares of our common stock at an initial conversion price of $1.00 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the conversion price then in effect.

Each warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $1.25 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the exercise price then in effect. The investors may exercise the warrants on a cashless basis if the shares of common stock underlying the warrants are not then registered pursuant to an effective registration statement. In the event the investors exercise the warrants on a cashless basis, then we will not receive any proceeds.

The June 2022 Notes rank pari passu with the senior secured convertible notes issued in a May 2021 financing (the “May 2021 Notes”) and senior to all current and future indebtedness of the Company and are secured by substantially all of the assets of the Company. In addition, some of the Company’s subsidiaries entered into a subsidiary guaranty agreement and guaranteed the obligations owed to investors under the June 2022 Notes.

A Registration Rights Agreement was executed in connection with the issuance of the June 2022 Notes, the warrants and the common stock. If we fail to have it filed with the SEC within 180 days following the date of the financing, or if the Company fails to maintain the effectiveness of the registration statement until all of such shares of common stock have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act of 1933, as amended, without any volume or manner of sale restrictions, then the Company will be obligated to pay to the holders of the May 2021 Notes then, in addition to any other rights the holders may have hereunder or under applicable law, until the applicable event of default is cured, liquidated damages equal to an amount in cash, their pro rata portion of $20,000, on the date of such event of default and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter.  If the Company is not 144 eligible and if all the securities included by this Registration Statement and the June 2022 financing are not subject to one or more registration statements declared effective by the Commission within 180 days of the date hereof, the following partial liquidated damages shall apply: (i) if none of the registrable securities are so registered, $40,000 per month; and (ii) if only the registrable securities covered by the May 2021 Registration Rights Agreement are subject to a registration statement declared effective by the Commission within the applicable time period, $20,000 per month, in each case until cured.

On April 13, 2022, we entered into a second amendment to the stock acquisition agreement by and among the Company, Optimus Health, AdhereRx Corporation and Daniel Cohen, pursuant to which we agreed that upon a Commercialization Success and the Company’s receipt of revenue in excess of $200,000 from the commercial enterprise contracts entered into in connection with such Commercialization Success or a Change of Control (as defined therein), the Company shall release the 400,000 shares of Company common stock to the PainScript shareholders.

On January 28, 2022, the Company entered into a stock purchase agreement with Worker’s Health Rx, Inc. (d/b/a “Vaccinations Rx”) and Marc Wiener, the sole shareholder, who is also our chief executive officer, pursuant to which we acquired 100% of the outstanding equity interests of Vaccinations Rx in exchange for the issuance of 250,000 shares of our common stock and $350,000. The cash portion of the purchase price has been paid in full.

On December 17, 2021, the Company filed an amendment to its Amended and Restated Articles of Incorporation amending the voting and conversion rights of the Series A Preferred stock such that each share of Series A preferred stock now converts into 1.25 shares of common stock and votes on an as converted basis.

On November 29, 2021, we entered into a non-binding Letter of Intent to acquire all the outstanding capital stock of Worker’s Health Rx., d/b/a Vaccinations Rx, for 250,000 shares of the Company’s common stock and $350,000 cash.

We entered into a securities purchase agreement dated May 25, 2021, with funds affiliated with Arena Investors LP (“Arena”) pursuant to which we issued convertible notes in an aggregate principal amount of $2.2 million for an aggregate purchase price of $2.0 million (the “Notes”). In connection with the issuance of the Notes, we issued Arena warrants to purchase an aggregate of 165,000 shares of common stock (the “May 2021 Warrants”) and 1,727,859 shares of common stock.

On March 25, 2021, Optimus Health, Inc., a wholly owned subsidiary of the Company, acquired 100% of the outstanding equity interests in AdhereRx Corporation (d/b/a PainScript) (“PainScript”) in exchange for an aggregate of 2,000,000 shares of the Company’s common stock, including shares issuable upon satisfaction of certain milestones.

We filed a Certificate of Amendment with the Florida Secretary of State on January 24, 2021, to reflect that we changed our name from Between Dandelions, Inc. to Optimus Healthcare Services, Inc. In conjunction with the name change, we received approval from the OTCIQ to change our company symbol from “HOPS” to “OHCS.”

On December 28, 2020, the Company acquired 100% of the outstanding equity interests in Optimus Healthcare Services, Inc., a Delaware corporation (“Optimus”) in exchange for 9,998,899 shares of its Series A convertible preferred stock and 18,000,000 shares of its common stock. In connection with the transaction all prior officers and directors of the Company (except Michael Pruitt) resigned and new officers and directors were appointed as officers and directors of the Company.

On November 25, 2020, Clinical Research Alliance Acquisition Corp. (“CRAAC”), an entity majority owned by Optimus, acquired 100% of the outstanding equity interests in Clinical Research Alliance, Inc. (“CRA”) in exchange for 70 shares of its common stock.