This Form 10-Q contains forward-looking statements rather than historical facts that involve risks and uncertainties. You can identify these statements by the use of forward- looking words such as "may," "will," "expect," "anticipate," "estimate," "continue" or other similar words. Such forward-looking statements discuss our current expectations of future results of operations or financial condition. However, there may be events in the future that we are unable to accurately predict or control and there may be risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements, which could have a material adverse effect on our business, operating results and financial condition. The forward-looking statements included herein are only made as of the date of the filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
The unaudited condensed financial statements of Life on Earth, Inc. should be read in conjunction with the notes thereto. In the opinion of management, the unaudited condensed financial statements presented herein reflect all adjustments (consisting only of normal recurring adjustments) necessary for fair presentation. Interim results are not necessarily indicative of results to be expected for the entire year.
We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America, which require that management make estimates and assumptions that affect reported amounts. Actual results could differ from these estimates.
Life On Earth, Inc. is a cloud enterprise software developer/ provider that enables rapid innovation to keep enterprise operations safe, compliant and manageable. The Company's products offered are designed to help organizations innovate and modernize legacy systems while minimizing cost and risk of business disruptions and ensure regulatory compliance. Through its recent acquisition of SmartAxiom, Inc., the Company now has the capabilities of offering software that manages and secures the Internet-of-Things (IoT) through patented, lite blockchain technology running among those devices at the edge of the Internet and enabling them to defend themselves. Our peer-to-peer distributed ledgers improve security, latency, reliability and manageability. We have uniquely created, through our SmartAxiom subsidiary, the endpoint-to-cloud blockchain solution, while our IoT Smart Contracts allow for process intelligence and management of the process. The SmartAxiom technology is proving value in verticals such as smart buildings, manufacturing lines and shipment tracking. It interoperates with enterprise systems such as IBM Blockchain and Microsoft Azure and is proven on many ARM and Intel based microcontrollers such as those from Intel, NXP, Renesas, Marvell, and Broadcom.
The Company previously was a brand accelerator and incubator Company that was focused on building and scaling concepts in the natural consumer products category ("CPG"). During the year ended May 31, 2021, the Company discontinued the wholesale beverage distribution operations, and the Company announced its intention divest away from its business as a Consumer-Packaged Goods ("CPG") Company. Accordingly, the Company's results of operations for the year ended May 31, 2021, reflect a charge in the aggregate amount of $786,436,
On December 17, 2021, we entered into a Stock Purchase Agreement ("SPA") with CareClix Holdings, Inc., a Florida corporation ("SOLI") to acquire four operating subsidiaries of SOLI. On December 31, 2031, under the terms of a Management Operating Agreement, we agreed to a partial closing of the transaction set forth in the SPA with the final closing to occur on the effectiveness of a registration statement for the shares to be issued as part of the consideration. Although we acquired control of the CareClix
In the partial closing, we now own 100% ownership of the operating subsidiaries of SOLI, which include CareClix, Inc., a Virginia corporation, CareClix Services, Inc., a Florida corporation, MyCareClix, Inc., a Florida corporation, and CareClix RPM, Inc., a Florida corporation (collectively, the "CareClix Group"). In exchange for ownership of the CareClix Group, we will issue the following securities to the common shareholders of SOLI:
1. 50,000,000 shares of our common stock;
2. 2,100,000 shares of a new class of preferred stock to be designated as Series
E Preferred Stock. The shares of Series E Preferred stock to be designated
and issued to the shareholders of CareClix have a convertibility ratio, under
the current share structure, of 100 to 1 into our shares of common stock with
conversion occurring automatically when our Articles of Incorporation have
been amended to authorize sufficient common shares for the conversion. The
net effect of these two share issuance will be that shares of SOLI held
before the transaction will be exchanged for our common shares on a 1 for 1
3. 4,000,000 shares of our Series A Preferred Stock, over a period of time, to
Upon the final closing of the Transaction, the former shareholders of SOLI will hold approximately seventy-frive percent of our issued and outstanding common equity on a fully diluted basis and will hold more than eighty-five percent of our total shareholder voting power.
The final closing of the Transaction is subject to the effectiveness of a registration statement on Form S-4 to be filed registering the issuance of our shares of common stock and shares of Series E Preferred Stock to the common shareholders of CareClix. We are undertaking to file the S-4 registration statement, which will be filed as soon as a pending audit of the financial statements of the acquired CareClix companies is completed.
Pending the final Closing, SOLI and LFER completed the operational changes under the Management Operating Agreement effective December 31, 2021, so that the CareClix Group and LFER began acting as a unit pending the effective date of the S-4 registration statement and our issuance of the remainder of the agreed consideration. The financial result of the CareClix subsidiaries will not be consolidated with our financial results until the final closing but are reported on a pro forma basis in the Notes to the Financial Statements. See, Note 5.
We now own the CareClix Group of Companies which specifically are: CareClix, Inc, CareClix Services, Inc, MyCareClix, Inc, and CareClix RPM, Inc.
CareClix, Inc is a digital healthcare development company centered around the CareClix® virtual care management platform. The CareClix platform was originally created in 2012 by physicians for physicians and, throughout its 10-year history, development has been led by licensed and practicing physicians and the input of our patients. This differentiates CareClix® from its competitors. Currently the CareClix® virtual telehealth platform is recognized worldwide as one of the most complete telehealth platforms for medical service providers. CareClix software CareClix' suite of services is trusted by some of the best names in healthcare with approximately 20 million individuals in the U.S. and 35 other countries currently having access to CareClix' telehealth platform or services.
CareClix Services Inc combines the CareClix software and its multinational multispecialty medical network to offer virtual healthcare services across multiple specialties to networks of patients both domestically and internationally. We offer a wide variety of health care services to: insurers, employers, affinity groups, healthcare systems, provider groups and independent physicians. The combination of our software and services empowers providers to interact with an increasing number of patients with better data in less time. CareClix Services, Inc is a leader in custom multinational telemedicine. Our customers mix and match, add or delete, a wide range of technologies, medical services, and integrations. CareClix® also matches the transparency to our customers or partner's comfort level allowing them to seamlessly (and sometimes invisibly) grow their practice, their brand, and their revenue.
MyCareClix is a direct-to-consumer family and household health and wellness company. MyCareClix intends to offer the entire suite of CareClix services directly to consumers. For a small monthly subscription fee, both individual and family consumers in the US will have access to the CareClix Network of primary care and specialty doctors, as well as access to testing, prescriptions, and ship-to-home medical products. My CareClix intends to launch a small-business program targeting small and mid-sized businesses in the US and key other countries.
CareClix RPM will distribute and monitor FDA approved healthcare devices for remote patient monitoring and chronic care management utilizing the CareClix platform to track and report monitored patient data. CareClix RPM, Inc will create turnkey solutions for providers seeking to start or expand their remote patient monitoring, data integration, remote therapeutic monitoring, or chronic care management programs. Anticipated by the end of 2022, CareClix RPM will procure and distribute devices and offer a multi-lingual patient engagement team with qualified medical oversight and thorough reporting for billing and care plan administration.
The CareClix Group of Companies are positioned in the anticipation of the global growth of virtual healthcare delivery. The company is well positioned to deliver this service with the technological and operational infrastructure we have created over the last decade. Having endured the initial growing pains essential to the foundation of any telemedicine company-namely, the careful interplay of interoperability, data transmission and organic workflow integration. Over the past decade CareClix created roots throughout the healthcare industry necessary to produce the type of quality health care delivery within a continuation of services that patients require as they navigate their healthcare and wellness needs. CareClix is a full spectrum virtual healthcare product for individuals addressing their diverse healthcare needs and not a niche product that only addresses episodic issues which may ignore comorbidities and co-conditional needs. Since our inception we have planned and implemented an offering that is more comprehensive. As a result, CareClix has gained momentum internationally through its salesforce and strategic relationships. CareClix has a unique global sales force. CareClix utilizes internal sales team, independent sales team and distribution channels such as system integrators, healthcare providers, IT companies, and benefits administrators to reach a growing number of countries and all 50 states. Adding to the growth of the platform, CareClix has undertaken a major reorganization which has produced significant internal cost efficiencies. CareClix has the internal staff and systems to meet the diverse needs of by healthcare providers without the inefficiencies common in our competitors. Combined with our robust sales program, we intend to expand our domestic and international footprint and be operationally profitable by year end.
We anticipate our new subsidiaries being major players in the telemedicine space. We believe we can capture market share in the United States and across the globe. There are many new telemedicine companies who will not be able to weather the storm and meet the complex needs of the medical provider community which we believe is the most essential element of providing good medical services. As we continue towards our ultimate goal of empowering good healthcare through technology and support, we plan to engage outside parties to help scale the CareClix businesses, both organically and possibly through further M&A.
We acquired the CareClix Group in order to expand into the Telemedicine and Medical Software Services industry. The group of companies under the CareClix Group will operate as our wholly owned subsidiaries and include a telemedicine medical services company, a direct-to-consumer company, a software-as-a-platform company, and an RPM (remote patient monitoring) company.
Our principal executive offices currently are located at 1345 6th Ave. 2nd Floor, New York NY 10022 and our telephone number (646) 844-9897.
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a "Public Health Emergency of International Concern." On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a "pandemic".
The ultimate extent of the impact of any epidemic, pandemic or other health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. The significant outbreak of COVID-19 has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide, and may continue to do so, which could adversely affect our business, results of operations and financial condition.
During the quarter ended February 28, 2022, we had no sales activity and no revenue, although our new subsidiaries acquired in the partial closing at December 31, 2022 had operating revenues. See Note 5.
The Company strategy is to develop and expand the telemedicine activities of our CareClix subsidiaries both domestically and worldwide.
The Company currently has no full-time employees and services as needed have been provided by. our original members of the Board of Directors, who also serve as officers or in executive functions.
Several conditions and events cast substantial doubt about the Company's ability to continue as a going concern. We incurred net losses from inception of approximately $22,600,000, have limited revenues, and require additional financing in order to finance its business activities on an ongoing basis. Our future capital requirements will depend on numerous factors including, but not limited to, the anticipated success of the CareClix subsidiaries and whether we successfully acquire other revenue generating companies or assume other new businesses that generate material revenues.
At February 28, 2022, we had cash on hand of approximately $17,700 and an accumulated deficit of approximately $22,600,000. See "Liquidity and Capital Resources."
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements and accompanying notes. The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. Many of our estimates or judgments are based on anticipated future events or performance, and as such are forward-looking in nature, and are subject to many risks and uncertainties, including those discussed below and elsewhere in this Report. We do not undertake any obligation to update or revise this discussion to reflect any future events or circumstances. There are certain critical accounting estimates that we believe require significant judgment in the preparation of our financial statements. We have identified below our accounting policies that we use in arriving at key estimates that we consider critical to our business operations and the understanding of our results of operations. This is not a complete list of all of our accounting policies, and there may be other accounting policies that are significant to us. For a detailed discussion on the application of these and our other accounting policies, see Note 1 to Financial Statements of this Report.
The Company recognizes revenue under ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," ("ASC 606"). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model (as described in Note 1 to the Financial Statements of this Report) to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer.
Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill and other intangibles are reviewed for impairment annually or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the asset. If, on the basis of qualitative factors, it is considered more likely than not that the fair value of the asset is greater than the carrying amount, further testing of goodwill for impairment is not required. If the carrying amount of the asset exceeds the asset's fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that asset. Identifiable intangible assets acquired in business combinations are recorded at the estimated acquisition date fair value. Finite lived intangible assets are amortized over the shorter of the contractual life or their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated.
We have no significant 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 stockholders.
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2022 AND FEBRUARY 28, 2021:
Sales for the three months ended February 28, 2022 were approximately $0 compared to $0 for the three months ended February 28, 2021.
Operating expenses totaled approximately $1,408,000 for the three months ended February 28, 2022. as compared to approximately $64,000 for the three months ended February 28, 2021. The increase in operating expenses of $ 1,344,000 was primarily due to increased officers' compensation of $1,319,000 and increased professional fees of $46,000.
During the three months ended February 28, 2022, the Company recorded interest and financing costs of approximately $74,000 as compared to approximately $70,000 during the three months ended February 28, 2021. Interest and financing costs primarily result from the amortization of deferred financing balances that were incurred by the Company to finance operations. During the three months ended February 28, 2021, the Company recorded a charge for the change in the fair value of contingent consideration related to the acquisition of Just Chill and a gain for the change in the fair value of a derivative liability related to an underlying note that has been converted to 2,138,775 shares of the Company's common stock and the Company no longer has an obligation for the derivative liability.
For the three months ended February 28, 2022, we incurred a net loss of $2,874,000, compared to a net loss of $170,000 for the three months ended February 28, 2021. The increase in the net loss of S2,704,000 resulted from a number of factors. In addition to those listed above, the Company recorded a loss from the sale of the SA subsidiary of $1,135,000 and a loss from discontinued operations of its SA subsidiary of $283,000. These charges were partially offset by an aggregate gain on the disposal of its VK and JCG subsidiaries of $26,000.
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2022 AND FEBRUARY 28, 2021:
Sales for the nine months ended February 28, 2022, were approximately $0 compared to $0 for the nine months ended February 28, 2021.
Operating expenses totaled approximately $1,917,000 for the nine months ended February 28, 2022, as compared to approximately $311,000 for the nine months ended February 28, 2021. The increase in operating expenses of $1,606,000 was primarily related to increased officers' compensation of $1,551,000 and increased professional fees of $105,000.
During the nine months ended February 28, 2022, the Company recorded interest and financing costs of approximately $400,000 as compared to approximately $423,000 during the nine months ended February 28, 2021. Interest and financing costs primarily result from the amortization of deferred financing balances that were incurred by the Company to finance operations. During the nine months ended February 28, 2022, the Company recorded a gain for the change in the fair value of its contingent consideration of $352,000 as compared to charge of $163,000 during the three months ended February 28, 2021, related to the acquisition of Just Chill, which had arisen from the measurement of LFER stock on the 12-month anniversary of the acquisition and subsequent Balance Sheet reporting dates. The contingency shares were issued to the JCG Group during the nine months ended February 28, 2022. During the nine months ended February 28, 2022, the Company recorded a gain for the change in the fair value of its derivative liability of $111,000 as compared to a similar gain of $10,000 during the nine months ended February 28, 2021. During the nine months ended February 28, 2022, the underlying note of the derivative liability has been converted to 2,138,775 shares of the Company's common stock and the Company no longer has an obligation for the derivative liability.
For the nine months ended February 28, 2022, we incurred a net loss of $3,934,000, as compared to a net loss of $887,000 for the nine months ended February 28, 2021. The increase in the net loss of S3,047,000 resulted from several factors. In addition to those listed above, the Company recorded a loss from the sale of the SA subsidiary of $1,135,000 and a loss from discontinued operations of its SA subsidiary of $971,000. These charges were partially offset by an aggregate gain on the disposal of its VK and JCG subsidiaries of $26,000.
As of February 28, 2022, we held current assets in the amount of $17,700 consisting of cash and cash equivalents and other current assets of $3,689. Our current liabilities as of February 28, 2022, totaled $1,591,000, and consisted of accounts payable and accrued expenses in the amount of $704,000, notes payable of $214,000, convertible notes of payable of $665,000, and lines of credit in the amount of $7,000. Our working capital deficit as of February 28, 2022, was $1,570,000. Our recent financings have consisted primarily of private issuances of convertible notes and preferred stock.
During the nine months ended February 28, 2022, the Company received $158,500 from the sale of 158,500 shares of Series C Preferred Stock and received $88,000 from the issuance of a notes payable to related parties, $61,000 from the sale of Series C Preferred Stock to a related party, and, $65,000 from the issuance of a convertible note payable.
For the nine months ended February 28, 2022, our operating activities used $79,734 in cash, compared to $135,156 during the nine months ended February 28, 2021. For the nine months ended February 28, 2022, financing activities provided a net $182,797 in cash, compared to a net $134,304 in cash for the nine months ended February 28, 2021. Investing activities used $95,323 in cash during the nine months ended February 28, 2022, compared to $0 for the nine months ended February 28, 2021. Our cash and cash equivalents increased by a net $17,000 during the nine months ended February 28, 2022.
© Edgar Online, source Glimpses