UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2021March 31, 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: 000-56010
MESO NUMISMATICS, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 88-0492191 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
433 Plaza Real Suite 275
Boca Raton, Florida 33432
(Address of principal executive offices)
(800) 889-9509
(Registrant’s telephone number, including area code)
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 past 12 months, 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 large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller Reporting Company | ☒ |
| Emerging growth company | ☐ |
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 ☒
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | None | None |
As of August 13, 2021,May 19, 2022, there were 12,032,46612,161,403 shares outstanding of the registrant’s common stock.
MESO NUMISMATICS, INC.
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
MESO NUMISMATICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 10,493,363 | $ | 42,534 | ||||
| Note receivable | 250,000 | - | ||||||
| Total current assets | 10,743,363 | 42,534 | ||||||
| Property and equipment, net | 1,800 | 2,200 | ||||||
| Other assets | 175,000 | 175,000 | ||||||
| Total assets | $ | 10,920,163 | $ | 219,734 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 81,808 | $ | 375,789 | ||||
| Convertible notes payable, net | 148,247 | 148,249 | ||||||
| Accrued interest | 914,253 | 390,437 | ||||||
| Total current liabilities | 1,144,308 | 914,475 | ||||||
| Long term liabilities | ||||||||
| Convertible notes payable, net | 24,188 | 14,498 | ||||||
| Notes payable-related parties | 7,800 | 7,800 | ||||||
| Notes payable, net | 6,359,812 | 5,608,801 | ||||||
| Total liabilities | $ | 7,536,108 | $ | 6,545,574 | ||||
| Preferred stock, $0.001 par value; 8,000,000 shares authorized as Series CC; 1,000 shares issued and outstanding for the quarter ended June 30, 2021 and the year ended December 31, 2020, respectively | 83,731 | 83,731 | ||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $0.001 par value 1,050,000 shares authorized as Series AA; 50,000 shares issued and outstanding for the quarter ended June 30, 2021 and the year ended December 31, 2020, respectively | 50 | 50 | ||||||
| Preferred stock, $0.001 par value; 1,000,000 shares authorized as Series BB; 559,815 shares issued and 0 and 279,146 shares outstanding for the quarter ended June 30, 2021 and the year ended December 31, 2020, respectively | - | 279 | ||||||
| Common stock, $0.001 par value; 6,500,000,000 shares authorized; 13,634,780 and 12,471,910 shares issued and 12,032,466 and 10,869,596 shares outstanding for the quarter ended June 30, 2021 and the year ended December 31, 2020, respectively | 12,033 | 10,870 | ||||||
| Additional paid in capital | 38,471,788 | 27,364,393 | ||||||
| Accumulated deficit | (35,183,547 | ) | (33,785,163 | ) | ||||
| Total stockholders’ deficit | 3,300,324 | (6,409,571 | ) | |||||
| Total liabilities and stockholders’ deficit | $ | 10,920,163 | $ | 219,734 | ||||
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 2,461,023 | $ | 2,978,525 | ||||
| Accounts receivable | 60,184 | 17,256 | ||||||
| Prepaid expenses | 121,332 | 24,245 | ||||||
| Total current assets | 2,642,539 | 3,020,027 | ||||||
| Property and equipment, net | 19,984 | 22,909 | ||||||
| Other assets | 5,568 | 5,568 | ||||||
| Intangible assets, net | 427,573 | 451,624 | ||||||
| Right of use asset, net | 55,876 | — | ||||||
| Goodwill | 5,805,438 | 5,805,438 | ||||||
| Total assets | $ | 8,956,978 | $ | 9,305,566 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 378,305 | $ | 250,756 | ||||
| Accrued interest | 2,800,805 | 2,129,395 | ||||||
| Customer advances | 53,902 | 18,215 | ||||||
| Stock payable – related party | — | 251,536 | ||||||
| Stock payable | 10,000 | 20,000 | ||||||
| Derivative liability | 14,363 | 20,442 | ||||||
| Lease liability, current portion | 32,568 | — | ||||||
| Notes payable, net | 1,534,405 | 1,527,711 | ||||||
| Total current liabilities | 4,824,348 | 4,218,055 | ||||||
| Long term liabilities | ||||||||
| Lease liability, net of current portion | 23,308 | — | ||||||
| Convertible notes payable, net of current portion | 38,826 | 33,982 | ||||||
| Notes payable – related parties | 7,800 | 7,800 | ||||||
| Notes payable, net of current portion | 12,235,130 | 11,802,736 | ||||||
| Total liabilities | $ | 17,129,412 | $ | 16,062,573 | ||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $0.001 par value 1,050,000 shares authorized as Series AA; 1,050,000 shares issued and outstanding for the quarter ended March 31, 2022 and the year ended December 31, 2021, respectively | 1,050 | 1,050 | ||||||
| Preferred stock, $0.001 par value; 10,000 shares authorized as Series DD; 9,870 and 9,422 shares issued and outstanding for the quarter ended March 31, 2022 and the year ended December 31, 2021, respectively | 10 | 10 | ||||||
| Common stock, $0.001 par value; 6,500,000,000 shares authorized; 13,763,717 and 13,687,439 shares issued and issuable and 12,161,403 and 12,085,125 shares outstanding for the quarter ended March 31, 2022 and the year ended December 31, 2021, respectively | 12,162 | 12,086 | ||||||
| Additional paid in capital | 40,160,951 | 39,899,491 | ||||||
| Accumulated deficit | (48,346,607 | ) | (46,669,643 | ) | ||||
| Total stockholders’ deficit | (8,172,434 | ) | (6,757,007 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 8,956,978 | $ | 9,305,566 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Page 1 of 36
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the June 30, | For the Six Months Ended June 30, | For the Three Months Ended March 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
| Revenue | $ | 15,769 | $ | 28,787 | $ | 20,212 | $ | 40,107 | $ | 310,078 | $ | 4,443 | ||||||||||||
| Cost of revenue | 11,860 | 18,904 | 26,650 | 31,023 | 203,593 | 14,790 | ||||||||||||||||||
| Gross profit | 3,909 | 9,883 | (6,438 | ) | 9,084 | |||||||||||||||||||
| Gross profit (loss) | 106,485 | (10,347 | ) | |||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Advertising and marketing | 144 | 38 | 381 | 82 | 54,614 | 237 | ||||||||||||||||||
| Professional fees | 215,458 | 17,258 | 329,245 | 29,987 | 395,739 | 113,787 | ||||||||||||||||||
| Officer compensation | 19,099 | 201,852 | 34,099 | 247,336 | 22,500 | 15,000 | ||||||||||||||||||
| Depreciation expense | 200 | 200 | 400 | 400 | ||||||||||||||||||||
| Depreciation and amortization expense | 26,977 | 200 | ||||||||||||||||||||||
| Investor relations | 17,574 | 743 | 20,472 | 4,243 | 47,250 | 2,898 | ||||||||||||||||||
| General and administrative | 5,945 | 2,585 | 16,555 | 17,861 | 101,918 | 10,610 | ||||||||||||||||||
| Total operating expenses | 258,420 | 222,676 | 401,152 | 299,909 | 648,998 | 142,732 | ||||||||||||||||||
| Other expense | ||||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Interest expense | (440,457 | ) | (473,867 | ) | (759,685 | ) | (912,549 | ) | (1,140,530 | ) | (319,228 | ) | ||||||||||||
| Loss on conversion of debt | - | (3,378 | ) | - | (7,629 | ) | ||||||||||||||||||
| Derivative financial instruments | - | (2,700,486 | ) | - | (3,025,794 | ) | 6,079 | — | ||||||||||||||||
| Other expense | (231,109 | ) | - | (231,109 | ) | |||||||||||||||||||
| Net loss | $ | (926,077 | ) | $ | (3,390,524 | ) | $ | (1,398,384 | ) | $ | (4,236,797 | ) | $ | (1,676,964 | ) | $ | (472,307 | ) | ||||||
| Net loss per common share, basic and diluted | $ | (0.08 | ) | $ | (0.39 | ) | $ | (0.13 | ) | $ | (0.50 | ) | $ | (0.14 | ) | $ | (0.04 | ) | ||||||
| Weighted average number of common shares outstanding, basic and diluted | 10,931,898 | 8,740,434 | 10,920,888 | 8,537,214 | 12,091,905 | 10,883,686 | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Page 2 of 36
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
For the Six Months Ended June 30, 2021
(Unaudited)
| For the Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
| Series CC Preferred Stock | Series AA Preferred Stock | Series DD Preferred Stock | Common Stock | Additional Paid In | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | — | $ | — | 1,050,000 | $ | 1,050 | 9,422 | $ | 10 | 12,085,125 | $ | 12,086 | $ | 39,899,491 | $ | (46,669,644 | ) | $ | (6,757,007 | ) | ||||||||||||||||||||||||
| Issuance of stock for services | — | — | — | — | — | — | 76,278 | 76 | 9,924 | — | 10,000 | |||||||||||||||||||||||||||||||||
| Issuance of preferred series DD for services | — | — | — | — | 448 | — | — | — | 251,536 | — | 251,536 | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | (1,676,963 | ) | (1,676,963 | ) | |||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | — | $ | — | 1,050,000 | $ | 1,050 | 9,870 | $ | 10 | 12,161,403 | $ | 12,162 | $ | 40,160,951 | $ | (48,346,607 | ) | $ | (8,172,434 | ) | ||||||||||||||||||||||||
| Series CC Preferred Stock | Series AA Preferred Stock | Series BB Preferred Stock | Common Stock | Additional Paid In | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | 1,000 | $ | 83,731 | 50,000 | $ | 50 | 279,146 | $ | 279 | 10,869,596 | $ | 10,870 | $ | 27,364,393 | $ | (33,785,163 | ) | $ | (6,409,571 | ) | ||||||||||||||||||||||||
| Debt settlement | - | - | - | - | - | - | 1,092,866 | 1,093 | 212,016 | - | 213,109 | |||||||||||||||||||||||||||||||||
| Issuance of stock for services | - | - | - | - | - | - | 70,004 | 70 | 19,930 | - | 20,000 | |||||||||||||||||||||||||||||||||
| Cancellation of Preferred BB | - | - | - | - | (279,146 | ) | (279 | ) | - | - | 279 | - | - | |||||||||||||||||||||||||||||||
| Imputed interest on debt | - | - | - | - | - | - | - | - | 16,040 | - | 16,040 | |||||||||||||||||||||||||||||||||
| Fair value of warrants | - | - | - | - | - | - | - | - | 10,859,130 | - | 10,859,130 | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (1,398,384 | ) | (1,398,384 | ) | |||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | 1,000 | $ | 83,731 | 50,000 | $ | 50 | - | $ | - | 12,032,466 | $ | 12,033 | $ | 38,471,788 | $ | (35,183,547 | ) | $ | 3,300,324 | |||||||||||||||||||||||||
For the Three Months Ended June 30, 2021
(Unaudited)
| Series CC Preferred Stock | Series AA Preferred Stock | Series BB Preferred Stock | Common Stock | Additional Paid In | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, April 1, 2021 | 1,000 | $ | 83,731 | 50,000 | $ | 50 | 173 | $ | - | 10,905,828 | $ | 10,906 | $ | 27,741,741 | $ | (34,257,470 | ) | $ | (6,504,773 | ) | ||||||||||||||||||||||||
| Debt settlement | - | - | - | - | - | - | 1,092,866 | 1,093 | 212,016 | - | 213,109 | |||||||||||||||||||||||||||||||||
| Issuance of stock for services | - | - | - | - | - | - | 33,772 | 34 | 9,966 | - | 10,000 | |||||||||||||||||||||||||||||||||
| Cancellation of Preferred BB | - | - | - | - | (173 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Imputed interest on debt | - | - | - | - | - | - | - | - | 8,065 | - | 8,065 | |||||||||||||||||||||||||||||||||
| Fair value of warrants | - | - | - | - | - | - | - | - | 10,500,000 | - | 10,500,000 | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (926,077 | ) | (926,077 | ) | |||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | 1,000 | $ | 83,731 | 50,000 | $ | 50 | - | $ | - | 12,032,466 | $ | 12,033 | $ | 38,471,788 | $ | (35,183,547 | ) | $ | 3,300,324 | |||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
Page 3 of 36
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the Six Months Ended June 30, 2020
(Unaudited)
| Series CC Preferred Stock | Series AA Preferred Stock | Series BB Preferred Stock | Common Stock | Additional Paid In | Stock | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Payable | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2019 | 1,000 | $ | 83,731 | 1,000,0000 | $ | 1,000 | 279,146 | $ | 279 | 7,960,038 | $ | 7,961 | $ | 20,524,380 | $ | - | $ | (27,889,477 | ) | $ | (7,355,857 | ) | ||||||||||||||||||||||||||
| Conversion of convertible debt | - | - | - | - | - | - | 1,212,525 | 1,215 | 4,660 | - | - | 5,873 | ||||||||||||||||||||||||||||||||||||
| Repurchase of Preferred Series AA | - | - | (1,000,000 | ) | (1,000 | ) | - | - | - | - | (159,000 | ) | - | - | (160,000 | ) | ||||||||||||||||||||||||||||||||
| Granted of Preferred Series AA for service | - | - | - | - | - | - | - | - | - | 166,795 | - | 166,795 | ||||||||||||||||||||||||||||||||||||
| Imputed interest on debt | - | - | - | - | - | - | - | - | 17,125 | - | - | 17,125 | ||||||||||||||||||||||||||||||||||||
| Loss on conversion of debt | - | - | - | - | - | - | - | - | 7,629 | - | - | 7,629 | ||||||||||||||||||||||||||||||||||||
| Derivative settlement | - | - | - | - | - | - | - | - | 10,272 | - | - | 10,272 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (4,236,797 | ) | (4,236,797 | ) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | 1,000 | $ | 83,731 | - | $ | - | 279,146 | $ | 279 | 9,172,563 | $ | 9,174 | $ | 20,405,066 | $ | 166,795 | $ | (32,126,274 | ) | $ | (11,544,960 | ) | ||||||||||||||||||||||||||
For the Three Months Ended June 30, 2020
(Unaudited)
| Series CC Preferred Stock | Series AA Preferred Stock | Series BB Preferred Stock | Common Stock | Additional Paid In | Stock | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Payable | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance, April 1, 2020 | 1,000 | $ | 83,731 | 1,000,0000 | $ | 1,000 | 279,146 | $ | 279 | 8,370,038 | $ | 8,371 | $ | 20,538,148 | $ | - | $ | (28,735,750 | ) | $ | (8,187,952 | ) | ||||||||||||||||||||||||||
| Conversion of convertible debt | - | - | - | - | - | - | 802,525 | 803 | 2,487 | - | - | 3,290 | ||||||||||||||||||||||||||||||||||||
| Repurchase of Preferred Series AA | - | - | (1,000,000 | ) | (1,000 | ) | - | - | - | - | (159,000 | ) | - | - | (160,000 | ) | ||||||||||||||||||||||||||||||||
| Granted of Preferred Series AA for service | - | - | - | - | - | - | - | - | - | 166,795 | - | 37,831 | ||||||||||||||||||||||||||||||||||||
| Imputed interest on debt | - | - | - | - | - | - | - | - | 17,125 | - | - | 17,125 | ||||||||||||||||||||||||||||||||||||
| Loss on conversion of debt | - | - | - | - | - | - | - | - | 3,378 | - | - | 3,378 | ||||||||||||||||||||||||||||||||||||
| Derivative settlement | - | - | - | - | - | - | - | - | 2,928 | - | - | 2,928 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (3,390,524 | ) | (3,390,524 | ) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | 1,000 | $ | 83,731 | - | $ | - | 279,146 | $ | 279 | 9,172,563 | $ | 9,174 | $ | 20,405,066 | $ | 166,795 | $ | (32,126,274 | ) | $ | (11,544,960 | ) | ||||||||||||||||||||||||||
| For the Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Series CC Preferred Stock | Series AA Preferred Stock | Series BB Preferred Stock | Common Stock | Additional Paid In | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | 1,000 | $ | 83,731 | 50,000 | $ | 50 | 279,146 | $ | 279 | 10,869,596 | $ | 10,870 | $ | 27,364,393 | $ | (33,785,163 | ) | $ | (6,409,571 | ) | ||||||||||||||||||||||||
| Issuance of stock for services | — | — | — | — | — | — | 36,232 | 36 | 9,964 | — | 10,000 | |||||||||||||||||||||||||||||||||
| Cancellation of Preferred BB | — | — | — | — | (278,973 | ) | (279 | ) | — | — | 279 | — | — | |||||||||||||||||||||||||||||||
| Imputed interest on debt | — | — | — | — | — | — | — | — | 7,975 | — | 7,975 | |||||||||||||||||||||||||||||||||
| Fair value of warrants | — | — | — | — | — | — | — | — | 359,130 | — | 359,130 | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | (472,307 | ) | (472,307 | ) | ||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | 1,000 | $ | 83,731 | 50,000 | $ | 50 | 173 | $ | — | 10,905,828 | $ | 10,906 | $ | 27,741,741 | $ | (34,257,470 | ) | $ | (6,504,773 | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Page 4 of 36
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | For the Three Months Ended March 31, | |||||||||||||||
| 2021 | 2020 | 2022 | 2021 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
| Net loss | $ | (1,398,384 | ) | $ | (4,236,797 | ) | $ | (1,676,964 | ) | $ | (472,307 | ) | ||||
| Non-cash adjustments to reconcile net loss to net cash: | ||||||||||||||||
| Amortization of debt discount | 219,829 | 760,192 | 26,977 | 66,058 | ||||||||||||
| Depreciation and amortization expense | 400 | 400 | 445,328 | 200 | ||||||||||||
| Change in derivative liabilities | - | 3,025,794 | (6,079 | ) | — | |||||||||||
| Loss on legal settlement | 231,109 | - | ||||||||||||||
| Common shares issued for services | 20,000 | - | — | 10,000 | ||||||||||||
| Preferred shares issued for services | - | 166,795 | ||||||||||||||
| Loss on conversion of debt | - | 7,629 | ||||||||||||||
| Imputed interest on debt | 16,040 | 17,125 | — | 7,976 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | (42,928 | ) | — | |||||||||||||
| Prepaid expense | (97,087 | ) | — | |||||||||||||
| Accounts payable and accrued liabilities | 211,835 | 125,152 | 834,647 | 233,213 | ||||||||||||
| CASH USED BY OPERATING ACTIVITIES | (699,171 | ) | (133,710 | ) | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
| Loan to acquisition target | (250,000 | ) | - | |||||||||||||
| Cash paid for deposit on acquisition | - | (50,000 | ) | |||||||||||||
| CASH USED BY FINANCING ACTIVITIES | (250,000 | ) | (50,000 | ) | ||||||||||||
| CASH USED IN OPERATING ACTIVITIES | (516,106 | ) | (154,860 | ) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||
| Proceeds from issuance of debt | 11,400,000 | 331,900 | — | 900,000 | ||||||||||||
| Repurchase of preferred stock | - | (160,000 | ) | |||||||||||||
| CASH PROVIDED BY FINANCING ACTIVITIES | 11,400,000 | 171,900 | ||||||||||||||
| Principal payment of debt | (1,396 | ) | — | |||||||||||||
| CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES | (1,396 | ) | 900,000 | |||||||||||||
| Net increase (decrease) in cash | 10,450,829 | (11,810 | ) | (517,502 | ) | 745,140 | ||||||||||
| Cash, beginning of year | 42,534 | 23,379 | 2,978,525 | 42,534 | ||||||||||||
| Cash, end of year | $ | 10,493,363 | $ | 11,569 | $ | 2,461,023 | $ | 787,674 | ||||||||
| Cash paid for income tax | $ | — | $ | — | ||||||||||||
| Cash paid for interest | $ | 118 | $ | — | ||||||||||||
| NON-CASH FINANCING ACTIVITIES: | ||||||||||||||||
| Warrants discount issued on debt | $ | 10,859,130 | $ | - | $ | — | $ | 359,130 | ||||||||
| Preferred shares returned | $ | 279 | - | |||||||||||||
| Shares issued for legal settlement | $ | 213,109 | $ | - | ||||||||||||
| Discount issued on convertible debt | $ | - | $ | 332,400 | ||||||||||||
| Settlement of derivative discounts | $ | - | $ | 10,272 | ||||||||||||
| Conversion of convertible debt | $ | - | $ | 5,873 | ||||||||||||
| Cancellation of preferred series BB | $ | — | $ | 279 | ||||||||||||
| Issuance of preferred series DD | $ | 251,536 | $ | — | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
Page 5 of 36
MESO NUMISMATICS, INC.
NOTES TO CONDENSED CONSOLDIATEDCONSOLIDATED FINANCIAL STATEMENTS
June 30, 2021March 31, 2022
(Unaudited)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Nature of Business
Meso Numismatics, Inc. (the “Company”) was originally organized under the laws of Washington State in 1999, as Spectrum Ventures, LLC to develop market and sell VOIP (Voice over Internet Protocol) services. In 2002, the Company changed its name to Nxtech Wireless Cable Systems, Inc. In August 2007, the Company changed its name to Oriens Travel & Hotel Management Corp. In November 2014, the Company changed its name to Pure Hospitality Solutions, Inc.
On November 16, 2016, the Company entered into an Agreement and Plan of Merger between the Company and Meso Numismatics Corp. (“Meso”). The acquisition of Meso is to support the Company’s overall mission of specializing in ventures related to Central America and the Latin countries of the Caribbean; not limited to tourism. Meso is a small but scalable numismatics operation that the Company can leverage for low cost revenues and product marketing.
Meso Numismatics, Inc. maintains an online store with eBay (www.mesocoins.com) and participates in live auctions with major companies such as Heritage Auctions, Stacks Bowers Auctions and Lyn Knight Auctions.
The acquisition was complete on August 4, 2017 following the Company issuance of 25,000 shares of Series BB preferred stock to Meso to acquire one hundred (100%) percent of Meso’s common stock. The Company accounted for the acquisition as common control, as Melvin Pereira, the CEO and principal shareholder of the Company controlled, operated and owned both companies. On November 16, 2016, the date of the Merger Agreement and June 30, 2017, the date of the Debt Settlement Agreement, Melvin Pereira, CEO of Pure Hospitality Solutions, owned 100% of the stock of Meso Numismatics.Numismatics, Inc. Pure Hospitality Solutions, Inc. and Meso Numismatics, Inc. first came under common control on June 30, 2017.
On September 4, 2017, the Company decided to suspend its booking operations, Oveedia, to focus on continuing to build its numismatic business, Meso Numismatics. Inc. The Company did, however, use its footprint within the Latin American region to expand Meso Numismatics, Inc. at a much quicker rate.
In September 2018, the Company changed its name to Meso Numismatics, Inc. and FINRA provided a market effective date and on September 26, 2018, the new ticker symbol MSSV became effective on October 16, 2018.
On July 2, 2018, the Board of Directors authorized and shareholders approved a 1-for-1,000 reverse stock split of its issued and outstanding shares of common stock held by the holders of record. The prior year financials have been changed to reflect the 1-for-1,000 reverse stock split.
On November 27, 2019, Meso Numismatics, Inc. entered into an Assignment and Assumption Agreement with Lans Holdings Inc., whereby Lans Holdings Inc. assigned all of its rights to, obligations and interest in a Binding Letter of Intent entered into on May 23, 2019 with Global Stem Cells Group Inc. and Benito Nova, setting forth the principal terms pursuant to which the Company will acquire 50,000,000 shares of common stock of Global Stem Cells Group Inc.
In consideration for the Assignment, Meso Numismatics, Inc. shall::
| ● |
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| ● | Issue to Lans Holdings Inc. 1,000 shares of its Series CC Convertible Preferred Stock valued at $83,731 calculated based on conversion provision of the Company’s Articles of Incorporation filed with the Secretary of State in Nevada on November 26, 2019. Shareholders of outstanding shares of Series CC Convertible Preferred Stock shall be entitled to convert part or all of its shares of Series CC Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock at a price per share determined by dividing the number of issued and outstanding shares of stock of the Company on the date of conversion by 1,000 and multiply the results by 0.8 conversion price. |
The consideration for the assignment of $1,163,357, consisting of an aggregate of $1,079,626 of Convertible Redeemable Notes assumed from Lans Holdings Inc and.Inc. and 1,000 shares of its Series CC Convertible Preferred Stock valued at $83,731 issued to Lans Holdings Inc was recorded as compensation expense.
On November 27, 2019, and in connection with the execution of the Assignment, the Company’s Board of Directors appointed Mr. David Christensen, former director and CEO of LAHO,Lans Holdings Inc., to serve as director and president of the Company.
On December 23, 2019, Meso Numismatics, Inc. entered into the Post Closing Amendment to the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc., whereby the Original Agreement is amended to extend the deadline to enter into the New LOI to 120 days from the execution of the Post Closing Amendment and option to receive Series CC Convertible Preferred Stock granted to Lans Holdings Inc. has been extended to 120 days from the execution of the Post Closing Amendment.
On April 22, 2020, Meso Numismatics, Inc. entered into a Second Post Closing Amendment to the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc., which Assignment was first amended pursuant to the Post Closing Amendment to the Assignment and Assumption Agreement entered into on December 23, 2019. The Original Agreement is amended to extend the deadline to enter into the New LOI to 150 days from the execution of the Second Amendment and option to receive Series CC Convertible Preferred Stock granted to Lans Holdings Inc. has been extended to 150 days from the execution of the Second Amendment.
On June 25, 2020, Mr. Martin Chuah submitted his resignation as Director of the Company, effective June 26, 2020. There are no disagreements between Mr. Chuah and Meso Numismatics, Inc. on any matter relating to its operations, policies or practices.
On June 26, 2020, Meso Numismatics, Inc. completed the repurchase of 1,000,000 shares of its Series AA (“Series AA”) Super Voting Preferred Stock, representing all of the Series AA shares held by E-Network de Costa Rica S.A. and S&M Chuah Enterprises Ltd., respectively.
On June 26, 2020, Mr. Melvin Pereira submitted his resignation as Chief Executive Officer, Chief Financial Officer, Secretary and Director of Meso Numismatics, Inc., effective June 26, 2020. There are no disagreements between Mr. Pereira and Meso Numismatics, Inc. on any matter relating to its operations, policies or practices.
On June 26, 2020, due to Mr. Pereira’s resignation, Meso Numismatics, Inc.’s Board of Directors appointed Mr. David Christensen, current Director and President of the Company, to serve as Chief Executive Officer, Chief Financial Officer and Secretary, effective June 27, 2020 and granted 50,000 shares of Series AA to Mr. David Christensen.
On September 16, 2020, Meso Numismatics, Inc. entered into a Third Post Closing Amendment to the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc., which Assignment was first amended pursuant to the Post Closing Amendment to the Assignment and Assumption Agreement entered into on December 23, 2019. The Original Agreement is amended to extend the deadline to enter into the New LOI to 180 days from the execution of the Third Amendment and option to receive Series CC Convertible Preferred Stock granted to Lans Holdings Inc. has been extended to 180 days from the execution of the Third Amendment.
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On March 12, 2021, Meso Numismatics, Inc. entered into a Fourth Post Closing Amendment to the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc., which Assignment was first amended pursuant to the Post Closing Amendment to the Assignment and Assumption Agreement entered into on December 23, 2019. The Original Agreement is amended to extend the deadline to enter into the New LOI to 90 days from the execution of the Fourth Amendment and option to receive Series CC Convertible Preferred Stock granted to Lans Holdings Inc. has been extended to 90 days from the execution of the Fourth Amendment.
On June 22, 2021, Meso Numismatics, Inc. entered into a Fifth Post Closing Amendment to the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc.
| 1. | Pursuant to the terms of the Fifth Post Closing Amendment, and as full and total consideration for the Assignment and Assumption Agreement and in addition to the assumption of the New LOI and the assumption of the Assigned Debt (both terms as defined in the Assignment and Assumption |
| a. | The Company |
On June 22, 2021, the Company entered into a stock purchase agreement with Global Stem Cells Group Inc and Benito Novas. Pursuant to the terms of the stock purchase agreement, the Company shall acquire 50,000,000 shares of common stock of Global Stem Cells Group Inc., representing all of the outstanding shares of Global Stem Cells Group Inc, from Benito Novas in exchange for the following:
| a. | 1,000,000 shares of the Company’s Series AA Super Voting Preferred Stock; |
| b. | 8,974 shares of the Company’s Series DD Convertible Preferred Stock; and |
| c. | An amount equal to USD $50,000 being the balance owing to Benito Novas pursuant to the terms of the New LOI and Assignment. |
The closing of the stock purchase agreement shall occur no later thanoccurred August 18, 2021.
On June 22, 2021, the CompanyMeso Numismatics, Inc. entered into a Secured Loan Agreement with an otherwise unaffiliated third-party investor, pursuant to which the CompanyMeso Numismatics, Inc. agreed to issue to the investorInvestor a $11,600,000 face value Senior Secured Promissory Note with a $1,100,000 original issue discount, and a three year Common Stock Purchase Warrant to acquire up to 70,000,000 shares of our common stock at an exercise price of $0.10 per share, subject to adjustments.
The Senior Secured Promissory Note hasOn August 18, 2021, Meso Numismatics, Inc., completed its acquisition of Global Stem Cells Group Inc., through a maturity date three years fromStock Purchase Agreement acquiring all the issuance dateoutstanding capital stock of Global Stem Cells Group Inc and paid the purchase price of a total of 1,000,000 shares of Series AA Preferred Stock in the Company, has agreed to pay interest8,974 shares of Series DD Preferred Stock in the Company and $225,000 USD (the final payment of $50,000 was made on the unpaid principal balance of the Note at an annual compounded rate of 12% at maturity. The Senior Secured Promissory Note is secured by all of the Company’s assets.July 2, 2021).
Page 8 of 36
Pursuant to the terms of the Fifth Post Closing Amendment along with the completion of the acquisition of Global Stem Cells Group Inc., the issuance of the 1,000 shares of the Company’s Series CC Convertible Preferred Stock to Lans Holdings Inc. was terminated and replaced with a cash payment as consideration. The Company shall pay Lans Holdings Inc., by delivery in escrow, an amount equal to USD $8,200,000, which Cash Payment shall be used by Lans Holdings Inc. for the repurchase of all of its shares of common stock from its common shareholders. The company paid on November 3, 2021 the USD $8,200,000 in cash to an escrow account set up by Lans Holdings Inc.. The $8.2 million was expensed in the income statement as General and Administrative Expense – Related Party for the year ending December 31, 2021.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The unauditedaccompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Pure Hospitality Solutions, Inc. and, Meso Numismatics, Corp., and Global Stem Cells Group Inc. (since August 18, 2021). These condensed consolidated financial statements have been prepared and, in the opinion of management, contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the consolidated financial position and the consolidated statements of income and consolidated cash flows for the periods presented in conformity with generally accepted accounting principles for interim consolidated financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X, Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2021, filed on May 5, 2022, which can be found at www.sec.gov. All significant intercompany transactions have been eliminated.eliminated in consolidation.
Use of Estimates in Financial Statement Presentation
The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates included in these financial statements are associated with accounting for the derivative liability, valuation of preferred stock, and for the valuation of assets and liabilities in business combination.
Reclassifications
Certain amounts for the prior year have been revised or reclassified to conform to the current year presentation. No change in net loss resulted from these reclassifications.
On September 26, 2018, the Financial Industry Regulatory Authority (“FINRA”) set a market effective date for a 1:1000 reverse stock split that was approved by shareholders of record as of September 26, 2018. All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split, including the financial statements and notes thereto.
Cash and Cash Equivalents
The Company considers all highly liquid accounts with original maturities of three months or less to be cash equivalents. At June 30, 2021March 31, 2022 and December 31, 2020,2021, all of the Company’s cash was deposited in major banking institutions. There were no cash equivalents as of June 30, 2021March 31, 2022 and December 31, 2020.2021. Our cash balances at financial institutions may exceed the Federal Deposit Insurance Company’s (FDIC) insured limit of $250,000 from time to time.
Accounts Receivable
Accounts receivable are recorded at original invoice amount less an allowance for uncollectible accounts that management believes will be adequate to absorb estimated losses on existing balances. Management estimates the allowance based on collectability of accounts receivable and prior bad debt experience. Accounts receivable balances are written off against the allowance upon management’s determination that such accounts are uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Management believes that credit risks on accounts receivable will not be material to the financial position of the Company or results of operations. The allowance for doubtful accounts was $0 and $0 as of March 31, 2022 and December 31, 2021, respectively.
Intangible Assets
Intangible assets with finite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized, but are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment was recognized for the quarter ended March 31, 2022.
InventoryLease Accounting
The Company’s inventory is comprisedCompany leases office space and clinical space under a lease arrangement. These properties are generally leased under non-cancelable agreements that contain lease terms in excess of roughly 50% coinstwelve months on the date of entry as well as renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for base minimum rental payment, as well non-lease components including insurance, taxes, maintenance, and medals and 50% paper money. The Company has a meticulous process for the acquisition and sales process for each coin item. The Company specializes in coins from the Meso region, but also acquires coins and medals from elsewhere around the worldother common area costs.
As of June 30, 2021,At the lease commencement date, the Company recognizes a right-of-use asset and a lease liability for all leases, except short-term leases with an original term of twelve months or less. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is workinginitially measured at cost, which primarily comprises the initial amount of the lease liability, plus any prepayments to the lessor and initial direct costs such as brokerage commissions, less any lease incentives received. All right-of-use assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using the rate implicit in the contract if available or an estimate of our incremental borrowing rate for a collateralized loan with the same term as the underlying lease. The discount rates used for the initial measurement of lease liabilities as of the date of entry were based on an inventory tracking system by serial number. Until such time as an inventory tracking system exists, the inventory costs cannot be properly confirmed and written-off to cost of revenue.original lease terms.
Lease payments included in the measurement of lease liabilities consist of (i) fixed lease payments for the non-cancelable lease term, (ii) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (iii) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. Certain real estate lease agreements require payments for non-lease costs such as utilities and common area maintenance. The Company has elected an accounting policy to not separate implicit components of the contract that may be considered non-lease related.
Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. The lease payments are allocated between a reduction of the lease liability and interest expense. Depreciation of the right-of-use asset for operating leases reflects the use of the asset on straight-line basis over the expected term of the lease.
Goodwill
Goodwill represents the excess acquisition cost over the fair value of net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. If the Company concludes otherwise, the Company is required to perform the two-step impairment test. The goodwill impairment test is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not impaired. If the estimated fair value is less than the carrying value, further analysis is necessary to determine the amount of impairment, if any, by comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the reporting unit’s goodwill.
Derivative Instruments
The derivative instruments are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and is then re-valued at each reporting date, with changes in fair value recognized in operations for each reporting period. The Company uses the Binomial option pricing model to value the derivative instruments.
Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sale of products by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
There was no impact onThe Company’s main sources of revenue are comprised of the Company’s financial statements as a result of adopting Topic 606 for the six months ended June 30, 2021 and for the years ended December 31, 2020.following:
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| ● | Training-GSCG offers a Stem Cell & Exosomes Certification Program where physicians attending this training sessions will take advantage of a full review of stem cell biology, characterization and regenerative properties of cells and cell products, cytokines and growth factors and how can be apply in the clinic. The physicians will pay for the training sessions upfront and receives all the material and certificate upon completion of seminar which is when revenue is recognized by GSCG. |
| ● | Products-Physicians can order SVF Kits through GSCG which includes EC Certificate from Institute for Testing and Certificating, Inc. SVT Kits are paid for upfront and shipped from third party directly to physicians. Revenue is recognized by GSCG when product is shipped. |
The Company’s revenue stream is acquiring rare coins and banknotes from Latin America at reduced costs, which it then sends to Numismatic Guaranty Corporation and Paper Money Guaranty for authentication and grading. Once graded, the inventory is transferred to Meso’s Florida-based location and then sent around the world to the Company’s many customers, with sales recorded net of fees.
| ● | Equipment- Physicians can order equipment through GSCG which includes warranty from manufacture of equipment. Equipment is paid for upfront and shipped from manufacture directly to physicians. Revenue is recognized by GSCG when product is shipped. |
| ● | Rare coins and banknotes-MESO acquires rare coins and banknotes from Latin America at reduced costs and sales through its website and auctions. |
The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company receives in exchange for those products.
Income Taxes
The Company uses the liability method to record income tax activity. Deferred taxes are determined based upon the estimated future tax effects of differences between the financial reporting and tax reporting bases of assets and liabilities, given the provisions of currently enacted tax laws.
The accounting for uncertainty in income taxes recognized in an enterprise’s financial statements uses the threshold of more-likely-than-not to be sustained upon examination for inclusion or exclusion. Measurement of the tax uncertainty occurs if the recognition threshold has been met.
Net Earnings (Losses) Per Common Share
The Company computesaccounts for net loss per share in accordance with Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”), which requires presentation of basic and diluted earnings (loss) per share (“EPS”) on the face of the statement of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS.
Basic net loss per share is computed by dividing net earnings (loss)loss by the weighted average number of shares of common stock andoutstanding during each period. It excludes the dilutive effects of any potentially issuable common shares. The effect of common stock equivalents outstanding duringis anti-dilutive with respect to losses and therefore basic and dilutive is the year. Dilutive common stock equivalents may consist of shares issuable upon conversion of convertible preferred shares and convertible notes payable (calculated using the treasury stock method). Common stock issuable is considered outstanding as of the original approval date for purposes of earnings per share computations. As of June 30, 2021 the conversion of convertible notes would result in an additional 2,015,696 shares of common stock and exercise of warrants would result in an additional 96,000,000 shares of common stock.same
Diluted net loss per share is calculated by including any potentially dilutive share issuances in the denominator. The following securities are excluded from the calculation of weighted average diluted shares at March 31, 2022 and December 31, 2020, respectively, because their inclusion would have been anti-dilutive.
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Convertible notes outstanding | 194,092 | 75,710 | ||||||
| Convertible preferred stock outstanding | 37,647,060 | 37,647,060 | ||||||
| Shares underlying warrants outstanding | 103,500,000 | 103,500,000 | ||||||
| 141,341,152 | 141,222,770 | |||||||
Fair Value of Financial Instruments
The fair value of financial instruments, which include cash, accounts payable and accrued expenses and advances from related parties were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from financial instruments.
Fair value is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the valuation methodologies is as follows:
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
At June 30, 2021March 31, 2022 and December 31, 2020,2021, the carrying amounts of the Company’s financial instruments, including cash, account payables, and accrued expenses, approximate their respective fair value due to the short-term nature of these instruments.
At June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company does not have any assets or liabilities except for convertible notes payable required to be measured at fair value in accordance with FASB ASC Topic 820, Fair Value Measurement.
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The following presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on non-recurring basis as of June 30, 2021March 31, 2022 and December 31, 2020:2021:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| June 30, 2021 | ||||||||||||||||
| Convertible Notes Payable, net of discount | $ | - | $ | 172,435 | $ | - | $ | 172,435 | ||||||||
| Total | $ | - | $ | 172,435 | $ | - | $ | 172,435 | ||||||||
| December 31, 2020 | ||||||||||||||||
| Convertible Notes Payable, net of discount | $ | - | $ | 162,747 | $ | - | $ | 162,747 | ||||||||
| Total | $ | - | $ | 162,747 | $ | - | $ | 162,747 | ||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| March 31, 2022 | ||||||||||||||||
| Derivative liability | 14,363 | 14,363 | ||||||||||||||
| Total | $ | - | $ | - | $ | 14,363 | $ | 14,363 | ||||||||
| December 31, 2021 | ||||||||||||||||
| Derivative liability | 20,442 | 20,442 | ||||||||||||||
| Total | $ | - | $ | - | $ | 20,442 | $ | 20,442 | ||||||||
Comprehensive Income
The Company records comprehensive income as the change in equity of a business during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income (loss) includes foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
Stock Based Compensation
Stock basedShare-based compensation costs areissued to employees is measured at fair valuethe grant date, based on date of grant and recognition of compensation over the service period for awards expected to vest. The Company determines the fair value of awardsthe award, and is recognized as an expense over the requisite service period. The Company measures the fair value of the share-based compensation issued to non-employees at the grant date using the Black - Scholes valuation model.stock price observed in the trading market (for stock transactions) or the fair value of the award (for non-stock transactions), which were considered to be more reliably determinable measures of fair value than the value of the services being rendered.
New Accounting Pronouncements
In February 2016,March 2020, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lesseeoptional guidance to record a rightease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02reference rate reform. The optional guidance is effective for all interimupon issuance and annual reporting periods beginning aftercan be applied on a prospective basis at any time between January 1, 2020 through December 15, 2018. Early31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements. The Company is permitted. A modified retrospective transition approach is required for lessees for capitalprogressing in its evaluation of LIBOR cessation exposures, including the review of debt-related contracts, leases, business development and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.licensing arrangements, royalty and other agreements. The Company has no physical office space onlyamended certain agreements and continues to review other agreements for potential impacts. With regard to debt-related exposures in particular, all existing interest rate swaps linked to LIBOR will mature in 2022. The Company is still evaluating the impact to its LIBOR-based debt. Based on its evaluation thus far, the Company does not anticipate a monthmaterial impact to month online virtual office lease that doesn’t required implementationits consolidated financial statements as a result of ASU 842 in the periods ended June 30, 2021 and December 31, 2020 to assets and liabilities.reference rate reform.
In June 2018,October 2021, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvementamended guidance that requires acquiring entities to Nonemployee Share-Based Payment Accounting, whichrecognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is parteffective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the FASB’s simplification initiative to maintain or improve the usefulnessfiscal year of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. This update provides consistency in the accounting for share-based payments to nonemployees with that of employees. The Company has adopted ASU 2018-07 in the first quarter of 2019.adoption. The adoption of ASU 2018-07 didthis guidance will not have a material impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and related disclosures.contract liabilities acquired in future business combinations.
In August 2018,November 2021, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which modifiesnew guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures on fair value measurements by removingof such transactions to include the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2nature of the fair value hierarchytransactions and the policy for timing of such transfers.significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). The ASUguidance is effective for public entities for fiscal yearsannual periods beginning after December 15, 2019.in 2022 and is to be applied on either a prospective or retrospective basis. The Company has not historically had any transfers between Level 1 and Level 2 or assets or liabilities measured at fair value under Level 3. The Company does not expectis currently evaluating the adoptionimpact of this ASU to have a material impactadoption on its consolidated financial statements.
Other accounting standards and amendments to existing accounting standards that have been issued and have future effective dates are not applicable or are not expected to have a significant impact on the Company’s consolidated financial statements
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Going Concern
The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since inception, resulting in an accumulated deficit of approximately $35,183,547$48 million and a working capital deficit of $2,200,000 as of June 30, 2021March 31, 2022 and future losses are anticipated. These factors, among others, generally tend to raise substantial doubt as to itsabout the Company’s ability to obtain additional long-term debt or equity financing in order to have the necessary resources to further design, develop and launch the website and market the Company’s new service.continue as a going concern.
In orderThe ability of the Company to continue its operations as a going concern is dependent on management’s plans, which include the Company needs to develop a reliable sourceraising of revenues, and achieve a profitable level of operations in the futurecapital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to obtain the necessary financing to meet its obligations arising from normal business operations when they come due.fund working capital requirements.
Accordingly,The Company will require additional funding to finance the growth of its current and expected future operations as well to achieve its strategic objectives. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. The accompanying unaudited financial statements are accounted for as if the Company ishave been prepared on a going concern basis, which contemplates the realization of assets and doesthe satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recoverability andrecovery of the recorded assets or the classification of recorded asset amounts or the amount and classification of liabilities or other adjustments that might be necessary should bethe Company be unable to continue as a going concern.
NOTE 3 – REVENUE RECOGNITION
On January 1, 2018, the Company adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”), the Company recognizes revenue from the sales of products, by applying the following steps:
| (1) | Identify the contract with a customer |
| (2) | Identify the performance obligations in the contract |
| (3) | Determine the transaction price |
| (4) | Allocate the transaction price to each performance obligation in the contract |
| (5) | Recognize revenue when each performance obligation is satisfied |
There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the periods ended June 30,March 31, 2021 and December 31, 2020.2021.
The Company’s onlymain source of revenue stream is acquiring rare coins and banknotes from Latin America at reduced costs, which it then sends to Numismatic Guaranty Corporation and Paper Money Guaranty for authentication and grading. Once graded,comprised of the inventory is transferred to Meso’s Florida-based location and then sent around the world to the Company’s many customers, with sales recorded net of fees. following:
| ● | Training-GSCG offers a Stem Cell & Exosomes Certification Program where physicians attending this training sessions will take advantage of a full review of stem cell biology, characterization and regenerative properties of cells and cell products, cytokines and growth factors and how can be apply in the clinic. The physicians will pay for the training sessions upfront and receives all the material and certificate upon completion of seminar which is when revenue is recognized by GSCG. |
| ● | Products-Physicians can order SVF Kits through GSCG which includes EC Certificate from Institute for Testing and Certificating, Inc. SVT Kits are paid for upfront and shipped from third party directly to physicians. Revenue is recognized by GSCG when product is shipped. |
| ● | Equipment- Physicians can order equipment through GSCG which includes warranty from manufacture of equipment. Equipment is paid for upfront and shipped from manufacture directly to physicians. Revenue is recognized by GSCG when product is shipped. |
| ● | Rare coins and banknotes-MESO acquires rare coins and banknotes from Latin America at reduced costs and sales through its website and auctions. |
The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company receives in exchange for those products.
The following table presents the Company’s revenue by product category for the three months ended March 31, 2022 and 2021:
| For the Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Coins and banknotes | $ | 11,330 | $ | 4,443 | ||||
| Training | 53,394 | - | ||||||
| Product supplies | 154,817 | - | ||||||
| Equipment | 90,537 | - | ||||||
| Total revenue | $ | 310,078 | $ | 4,443 | ||||
Listed below are the revenues, cost of revenues, gross profits, assets and net loss by Company:
| For the Three Months Ended | ||||||||||||
| March 31, 2022 | ||||||||||||
| Global Stem | Meso | |||||||||||
| Cells Group | Numismatics | Total | ||||||||||
| Revenue | $ | 298,748 | $ | 11,330 | $ | 310,078 | ||||||
| Cost of revenue | 192,484 | 11,109 | 203,593 | |||||||||
| Gross profit | $ | 106,264 | $ | 221 | $ | 106,485 | ||||||
| Gross Profit % | 35.57 | % | 1.95 | % | 34.34 | % | ||||||
| Assets | $ | 7,723,828 | $ | 1,233,150 | $ | 8,956,978 | ||||||
| Net loss | $ | (1,463,046 | ) | $ | (213,917 | ) | $ | (1,676,963 | ) | |||
COVID-19
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 significant outbreak of COVID-19 has resulted in a widespread health crisis adversely affecting our 2022 and 2021 business, results of operations and financial condition.
The outbreak of COVID-19 has resulted in a widespread health crisis that adversely affected the economies and financial markets in which we operate. Restrictions in travel along with in person meetings limited our training of new customers along with selling them products and equipment.
NOTE 4 – NOTES PAYABLE
Convertible Notes Payable
During 2015, the Company entered into Convertible Debentures with Digital Arts Media Network and Ajene Watson, LLC. The promissory note agreements bear interest from eight (8%) percent to ten (10%) and have a one (1) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible, at the investors’ sole discretion, into shares of common stock at variable conversion prices. As of June 30, 2021 and December 31, 2020, Digital Arts Media Network and Ajene Watson, LLC had an outstanding balance of $148,247.
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During 2019, the Company entered into an aggregate of $387,980 Convertible Debentures with two lenders which bear interest from eight (8%) percent to fifteen (15%) percent and have a one (1) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible, at the lenders’ sole discretion, into shares of common stock at variable conversion prices. During 2019, the two lenders had advanced a total of $354,870, net of discount and attorney fees, in the amount of $33,110 to the Company.
On November 25, 2019, Meso Numismatics, Inc. pursuant to the certificate of designation of the Series BB Preferred Stock, elected to exchange the preferred shares for other indebtedness calculated at a price per share equal to $1.20. Upon the Company’s mailing of the Exchange Agreement, the shareholder shall havehad the option, within 30 days of such mailing date and subject to the execution of this Agreement to receive the Indebtedness in the form of a convertible note. ShouldIf the shareholder did not give the Meso Numismatics, Inc. notice the Indebtedness shall automatically bewas issued in the form of a promissory note.
The convertible note agreements bear no interest and have a four (4) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible, at the investors’ sole discretion, into shares of common stock at conversion price equal to the lowest bid price of the Common Stock as reported on the National Quotations Bureau OTC Markets exchange for the three prior trading days including the day upon which a Notice of Conversion is received by the Company. As of December 31, 2019, 81,043 Preferred Series BB shares were exchange for an aggregate of $97,252 convertible notes. During the year ending December 31, 2020, the Company made $25,000, payments on the outstanding convertible notes. As of March 31, 2022 and December 31, 2021, the convertible promissory notes had an outstanding balance of $72,252.
On November 27, 2019, Meso Numismatics Inc. entered into an AssignmentThe balance of the convertible notes as of March 31, 2022 and Assumption Agreement with Lans Holdings Inc., whereby Lans Holdings Inc. assigned allDecember 31, 2021 is as follows:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Convertible notes payable | $ | 72,252 | $ | 72,252 | ||||
| Less: Discount | 33,426 | 38,270 | ||||||
| Convertible notes payable, net | $ | 38,826 | $ | 33,982 | ||||
As of its rights to, obligationsMarch 31, 2022 and interest in a Binding Letter of Intent entered into on May 23, 2019 with Global Stem Cells Group Inc. and Benito Novas, setting forth the principal terms pursuant to whichDecember 31, 2021, the Company will acquire 50,000,000 shareshad approximately $251,144 of common stock of Global Stem Cells Group Inc. to Meso Numismatics Inc. for assumption of certain Convertible Redeemable Notes issued by Lans holdings Inc. to lenders., pursuant to a securities purchase agreement.accrued interest.
Pursuant toAs of March 31, 2022 and December 31, 2021, the Assignment and Assumption Agreement and subject to any pre-existing defaults under the Notes, Meso Numismatics Inc. reissued the below Notes to a lender upon the following terms:principal balance of outstanding convertible notes payable was $72,252.
| Original Date of Note | Note Date | Maturity Date | Principal Face Amount of Note | Interest Rate | |||||||
| 12/12/2016 | 11/27/2019 | 11/27/2020 | $ | 239,196.00 | 10% | ||||||
| 12/15/2016 | 11/27/2019 | 11/27/2020 | 291,930.00 | 12% | |||||||
| 5/16/2019 | 11/27/2019 | 11/27/2020 | 83,000.00 | 15% | |||||||
| 6/28/2019 | 11/27/2019 | 11/27/2020 | 191,000.00 | 15% | |||||||
| 7/15/2019 | 11/27/2019 | 11/27/2020 | 84,500.00 | 15% | |||||||
| 8/2/2019 | 11/27/2019 | 11/27/2020 | 98,000.00 | 15% | |||||||
| 9/17/2019 | 11/27/2019 | 11/27/2020 | 92,000.00 | 15% | |||||||
| $ | 1,079,626.00 | ||||||||||
Promissory Notes Payable
During the period ended March 31, 2020 and December 31, 2019, the lender converted $4,676 of principal into common stock resulting into a balance of $1,074,950.
From January 28, 2020 to March 30, 2020,2015, the Company entered into an aggregateline of $58,410 of Convertible Debenturescredit with Digital Arts Media Network treated as a lender whichpromissory note. The promissory note bear interest of eight (8%at ten (10%) percent and have a one (1) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible, at the lenders’ sole discretion, into shares of common stock at variable conversion prices. The lender had advanced a total of $52,600, net of discount and attorney fees, in the amount of $5,810 to the Company.
From April 30, 2020 to June 24, 2020, the Company entered into an aggregate of $109,020 of Convertible Debentures with a lender which bear interest at eight (8%) percent and have a one (1) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible, at the lenders’ sole discretion, into shares of common stock at variable conversion prices. The lender had advanced a total of $93,300, net of discount in the amount of $15,720 to the Company.
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From May 4, 2020 to June 1, 2020, the Company entered into an aggregate of $146,200 of Convertible Debentures with a lender which bear interest at fifteen (15%) percent and have a one (1) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible, at the lenders’ sole discretion, into shares of common stock at variable conversion prices. The lender had advanced a total of $132,000, net of discount in the amount of $14,200 to the Company.
On May 19, 2020, the Company issued 802,525 shares of common stock in conversion of $3,290 convertible notes payable at conversion price of $0.0041: a loss of $3,378 was recorded.
On June 25, 2020, the Company entered into a Convertible Debentures with a lender in the amount of $60,000 which bear interest at fifteen (15%) percent and have a one (1) year maturity date. The note may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory note. The note is convertible, at the lenders’ sole discretion, into shares of common stock at variable conversion prices. The lender had advanced a total of $54,000, net of discount in the amount of $6,000 to the Company.
On July 15, 2020, the Company issued 905,929 shares of common stock in conversion of $4,122 convertible notes payable at conversion price of $0.00455: no loss was recorded.
On July 17, 2020, the Company entered into a Convertible Debentures with a lender in the amount of $238,095 which bear interest at eight (8%) percent and have a one (1) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. There are no shares of common stock issuable upon the execution of the promissory notes. The notes are convertible, at the lenders’ sole discretion, into shares of common stock at variable conversion prices. The lender had advanced a total of $195,000, net of discount in the amount of $43,095 to the Company.
On November 30, 2020, the Company issued 791,104 shares of common stock in conversion of $4,747 convertible notes payable at conversion price of $0.0070: a loss of $2,034 was recorded.
On December 7, 2020, the Company signed Debt Restructure Agreements to restructure the debt obligations with three separate lenders. The three lenders all had outstanding convertible promissory notes with our company in the aggregate principal amount plus default penalty and accrued but unpaid interest of $5,379,624, and the parties have agreed to terminate the old convertible promissory notes in favor of new secured promissory notes and warrants to purchase shares of our common stock. The Company agreed to the new notes and warrants over the prior convertible notes because the old notes were in default and contained unfavorable terms on conversions. The new notes extended the maturity date, are not convertible into our common shares, but instead secure the debt obligations with our assets. The new notes have a maturity date of December 7, 2023 and an aggregate principal amount of $5,379,624 and, as an incentive; we have issued cashless warrants to purchase 15,000,000 shares of our common stock at an exercise price of $0.03 per share in connection with the restructuring.
These debentures are convertible, at the investors’ sole option, into common shares at the following terms:
Page 14 of 36
The balance of the convertible notes as of June 30, 2021 and December 31, 2020 is as follows:
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Convertible notes payable | $ | 220,499 | $ | 220,499 | ||||
| Less: Discount | 48,064 | 57,752 | ||||||
| Convertible notes payable, net | $ | 172,435 | $ | 162,747 | ||||
During the periods ending June 30, 2021 and December 31, 2020 the Company received $0.00 and $526,900, respectively, from funding on new convertible notes.
During the periods ending June 30, 2021 and December 31, 2020, the Company incurred $0.00 and $9,663 losses on the conversion of convertible notes, respectively. In connection with the convertible notes, the Company recorded $7,320 and $293,568, respectively of interest expense and $9,688 and $1,842,103, respectively of debt discount amortization expense. As of June 30, 2021 and DecemberMarch 31, 2020, the Company had approximately $336,196 and $328,876, respectively of accrued interest.
During the periods ending June 30, 2021 and December 31, 2020, the Company made $0.00 and $25,000, respectively of payments on the outstanding convertible notes, and converted $0.00 and $14,742, respectively, of principal and interest into 0.00 and 2,909,558 shares of common stock. At December 7, 2020 the Company exchanged $5,379,624 of principal and accrued but unpaid interest on convertible notes for $5,379,624 promissory notes and cashless warrants to purchase 15,000,000 shares of our common stock. As of June 30, 2021 and December 31, 2020,2022, the principal balance of the outstanding convertible notes payableloan was $220,499.
Promissory Notes Payable$130,025 and accrued interest of $82,804.
On November 25, 2019, Meso Numismatics, Inc. pursuant to the certificate of designation of the Series BB, Preferred Stock elected to exchange the preferred shares for other indebtedness calculated at a price per share equal to $1.20. Upon the Company’s mailing of the Exchange Agreement, the shareholder shall have the option, within 30 days of such mailing date and subject to the execution of this Agreement to receive the Indebtedness in the form of a convertible note. Should the shareholder not give the Meso Numismatics, Inc. notice the Indebtedness shall automatically be issued in the form of a promissory note. The promissory note agreements bear no interest and have a four (4) year maturity date.date with a 20% premium to be paid upon maturity. The notes may be repaid in whole or in part at any time prior to maturity. As of December 31, 2019, 276,723 Preferred Series BB shares were exchange for an aggregate of $332,068 promissory notes. As of March 31, 2022 and December 31, 2021, the principal balance of the promissory notes was $398,482.
On December 3, 2019, Melvin Pereira, the CEO, converted 18,500 shares of the 25,000 shares of Series BB preferred stock to acquire one hundred (100%) percent of Meso’s common stock into 250,999 shares of the Company’s common stock and elected to exchange the remaining 6,500 shares of Series BB preferred stock for a promissory note of $7,800.
On July 13, 2020, the Company entered into a Promissory Debentures with a lender in the amount of $6,000 which bear interest at eighteen (18%) percent and have a two (2) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. The lender had advanced a total of $5,000, net of discount in the amount of $1,000 to the Company.
On July 15, 2020, the Company entered into a Promissory Debentures with a lender in the amount of $84,000 which bear interest at eighteen (18%) percent and have a two (2) year maturity date. The notes may be repaid in whole or in part at any time prior to maturity. The lender had advanced a total of $70,000, net of discount in the amount of $14,000 to the Company.
At December 7, 2020 the Company exchanged $5,379,624 of principal, default penalty and accrued but unpaid interest on convertible notes for $5,379,624 promissory notes and cashless warrants to purchase 15,000,000 shares of our common stock.stock with three separate lenders. The new notes have a maturity date of November 23, 2023 and an aggregate principal amount of $5,379,624 shall bear interest at a fifteen (15%) percentage compounded annual interest rate and, as an incentive; we have issued cashless warrants to purchase 15,000,000 shares of our common stock at an exercise price of $0.03 per share in connection with the restructuring. The Company recorded the fair value of the 15,000,000 warrants issued with debt at approximately $262,376 at December 31, 2020 as a discount. Lender is granted security interest and lien in all rights, title and interest in the assets and property of the as collateral.
On December 9, 2020, the Company entered into a Promissory Debentures with a lender in the amount of $110,000 which bear compounded annual interest at eighteen (18%) percent and have a two (2) year maturity date and cashless warrants to purchase 1,000,000 shares of our common stock. The notes may be repaid in whole or in part at any time prior to maturity. The lender had advanced a total of $100,000, net of discount in the amount of $10,000 to the Company. The Company recorded the fair value of the 1,000,000 warrants issued with debt at approximately $17,491 at December 31, 2020 as a discount.
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On January 6, 2021, the Company entered into a Promissory Debentures with a lender in the amount of $1,000,000 which bear interest at eighteen (15%) percent and have a one (1) year maturity date and cashless warrants to purchase 10,000,000 shares of our common stock, at exercise prices of $0.03 per share. The notes may be repaid in whole or in part at any time prior to maturity. The lender had advanced a total of $900,000, net of discount in the amount of $100,000 to the Company. The Company recorded the fair value of the 10,000,000 warrants issued with debt at approximately $359,130$237,811 at March 31, 2021the date of issuance as a discount. This debt instrument is currently in default as of January 6, 2022.
On June 22, 2021, the Company entered into a Promissory Debentures with a lender in the amount of $11,600,000 which bear interest at twelve (12%) percent and have a three (3) year maturity date and cashless warrants to purchase 70,000,000 shares of our common stock, at exercise prices of $0.10 per share. The notes may be repaid in whole or in part at any time prior to maturity. The lender had advanced a total of $10,500,000, net of discount in the amount of $1,100,000 to the Company. The Company recorded the fair value of the 70,000,000 warrants issued with debt at approximately $10,500,000$5,465,726 at Junethe date the warrants were issued as a discount. Lender is granted senior security interest and lien in all rights, title and interest in the assets and property of the Company as collateral.
On August 18, 2021, through a Stock Purchase Agreement in which 100% of the outstanding shares of Global Stem Cell Group, Inc. the Company acquired a 2018 Jaguar F-Pace which was acquired from Benito Novas for $45,000 on January 8, 2019 and assumed the related auto loan, with an original loan amount of $20,991 at 8.99% interest for 48 months and monthly payments of $504.94. As of March 31, 202, the principal balance of the outstanding auto loan was $4,380.
On August 18, 2021, through a Stock Purchase Agreement in which 100% of the outstanding shares of Global Stem Cell Group, Inc. the Company assumed the November 17, 2020, agreement with an Investor for proceeds in the amount of $400,000 treated as a promissory. In exchange for the gross proceeds, the Investor shall receive the right to a perpetual 7.75% (payment percentage) of the revenues of Global Stem Cell Group. The payments of the payment percentage shall be calculated by multiplying the gross quarterly revenues appearing in the financial statements by the payment percentage and treated as accrued interest. Payments shall be made ninety (90) days from the end of each respective fiscal quarter with the first payment to be made on the quarter ending December 31, 2020. Payments may be accrued and deferred if payment would deplete cash, cash equivalent and/or short term investment balances on each respective fiscal quarter by more than twenty (20%) percent. As of March 31, 2022, the principal balance of the outstanding loan was $400,000 and accrued interest totals $110,858. This debt instrument is currently in default due to the non-payment of interest.
On September 20, 2021, the Company entered into a Promissory Debentures with a lender in the amount of $1,100,000 which bear interest at twelve (12%) percent and have a three (3) year maturity date and cashless warrants to purchase 7,500,000 shares of our common stock, at exercise prices of $0.085 per share. The notes may be repaid in whole or in part at any time prior to maturity. The lender had advanced a total of $1,000,000, net of discount in the amount of $100,000 to the Company. The Company recorded the fair value of the 7,500,000 warrants issued with debt at approximately $360,607 at the time of issuance as a discount.
On December 30, 2021, asthe parties wished to modify the terms of the Promissory Debentures dated July 13, 2020 in the amount of $6,000 and accrued interest in the amount of $1,578 by issuing a discount.new promissory note and extend the date of maturity. In consideration for the new terms, the Promissory Debenture dated December 30, 2021 shall include a five (5%) percent premium for a total of $7,958 which bear interest at twelve (12%) percent and have a seventeen (17) months maturity date. The notes may be repaid in whole or in part at any time prior to maturity.
On December 30, 2021, the parties wished to modify the terms of the Promissory Debentures dated July 15, 2020 in the amount of $84,000 and accrued interest in the amount of $22,162 by issuing a new promissory note and extend the date of maturity. In consideration for the new terms, the Promissory Debenture dated December 30, 2021 shall include a five (5%) percent premium for a total of $111,470 which bear interest at twelve (12%) percent and have a seventeen (17) months maturity date. The notes may be repaid in whole or in part at any time prior to maturity.
The balance of the promissory as of June 30, 2021March 31, 2022 and December 31, 20202021 is as follows:
| June 30, | December 31, | March 31, | December 31, | |||||||||||||
| 2021 | 2020 | 2022 | 2021 | |||||||||||||
| Promissory notes payable | $ | 18,511,692 | $ | 5,911,692 | $ | 20,241,939 | $ | 20,243,335 | ||||||||
| Less: Discount | 12,144,080 | 295,091 | 6,390,358 | 6,822,622 | ||||||||||||
| Less: Deferred finance costs | 74,247 | 82,466 | ||||||||||||||
| Promissory notes payable, net | $ | 6,367,612 | $ | 5,616,601 | $ | 13,777,334 | $ | 13,338,247 | ||||||||
During the periods ending June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company made no$1,396 and $1,812 payments, respectively on the outstanding promissory notes, and recorded $516,496$658,177 and $61,561,$1,781,394, respectively of interest expense and $210,141$432,265 and $3,676,$874,476, respectively of debt discount amortization expense. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had approximately $578,057$2,536,429 and $61,561,$1,878,251, respectively of accrued interest. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the principal balance of outstanding promissory notes payable was $18,511,692$20,241,939 and $5,911,692,$20,243,335, respectively.
Derivatives Liabilities
The Company determined that the convertible notes outstanding as of DecemberMarch 31, 20202022 contained an embedded derivative instrument as the conversion price was based on a variable that was not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 – 40.
The Company determined the fair values of the embedded convertible notes derivatives and tainted convertible notes using the lattice valuation model with the following assumptions:
| March 31, | ||||
| 2022 | ||||
| Common stock issuable | 194,092 | |||
| Market value of common stock on measurement date | $ | 0.07 | ||
| Adjusted exercise price | $ | 0.06 | ||
| Risk free interest rate | 1.60 | % | ||
| Instrument lives in years | 2.75 Year | |||
| Expected volatility | 114 | % | ||
| Expected dividend yields | None | |||
At December 7, 2020 the Company exchanged $5,379,624 of principal, default penalty and accrued but unpaid interest on convertible notes for $5,379,624 promissory notes and cashless warrants to purchase 15,000,000 shares of our common stock which eliminated the derivative liability associated with this debt. The remaining convertible notes resulted in a small number of shares which are covered under the number of authorized common stock resulting in the elimination of the derivative liability at December 31, 2020.
The balance of the fair value of the derivative liability as of June 30, 2021March 31, 2022 and December 31, 20202021 is as follows:
| Balance at December 31, 2019 | $ | 4,730,990 | ||
| Additions | 532,401 | |||
| Fair value loss | 1,233,277 | |||
| Conversions | (6,496,668 | ) | ||
| Balance at December 31, 2020 | - | |||
| Additions | - | |||
| Fair value loss | - | |||
| Conversions | - | |||
| Balance at June 30, 2021 | $ | - |
| Balance at December 31, 2020 | $ | - | ||
| Additions | 24,186 | |||
| Fair value loss | (3,744 | ) | ||
| Conversions | - | |||
| Balance at December 31, 2021 | 20,442 | |||
| Additions | - | |||
| Fair value gain | (6,079 | ) | ||
| Conversions | - | |||
| Balance at March 31, 2022 | $ | 14,363 |
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NOTE 5 – CONVERTIBLE PREFERRED STOCK
Designation of Series CC Convertible Preferred Stock
On November 26, 2019, the Company filed with the Secretary of State with Nevada an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), authorizing one thousand (1,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series CC Convertible Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
At any time prior to November 25, 2022 (“Automatic Conversion Date”) the Company may redeem for cash out of funds legally available therefor, any or all of the outstanding Series CC Convertible Preferred Stock at a price equal to $1,000 per share. If not converted prior, on the Automatic Conversion Date, any and all remaining issued and outstanding shares of Series CC Convertible Preferred Stock shall automatically convert at the Conversion Price, which is a price per share determined by dividing the number of issued and outstanding shares of (common?) stock of the Company on the date of conversion by 1,000 and multiply the results by 0.8 conversion price.0.8.
Each holder of outstanding shares of Series CC Convertible Preferred Stock shall be entitled to convert prior to the Automatic Conversion Date, convert part or all of its shares of Series CC Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock at a price per share determined by dividing the number of issued and outstanding shares of stock of the Company on the date of conversion by 1,000 and multiply the results by 0.8 conversion price.
The holders of the Series CC Convertible Preferred Stock shall not be entitled to receive dividends paid on the Company’s common stock.
The holders of the Series CC Convertible Preferred Stock shall not be entitled to vote on any matter submitted to the shareholders of the Company for their vote, waiver, release or other action.
On November 27, 2019, Meso Numismatics, Inc. entered into an Assignment and Assumption Agreement with Global Stem Cells Group Inc., a corporation duly formed under the laws of the State of Florida, Benito Novas and Lans Holdings Inc. a Nevada Corporation whose securities ceased to be registered as of September 18, 2019, whereby LAHOLans Holdings Inc. assigned all of its rights, obligations and interest in, the Letter of Intent it previously entered into with Global Stem Cells Group Inc. and Benito Novas.
In consideration for the Assignment, Meso Numismatics, Inc. issued to Lans Holdings Inc. 1,000 shares of its Series CC Convertible Preferred Stock valued at $83,731 calculated based on conversion provision of the Company’s Articles of Incorporation filed with the Secretary of State in Nevada on November 26, 2019. Shareholders of outstanding shares of Series CC Convertible Preferred Stock shall be entitled to convert part or all of its shares of Series CC Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock at a price per share determined by dividing the number of issued and outstanding shares of stock of the Company on the date of conversion by 1,000 and multiply the results by 0.8 conversion price.
The Convertible Series CC Preferred Stock has been classified outside of permanent equity and liabilities since it embodies a conditional obligation that the Company may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. The Company has recorded $83,731 which represents 1,000 Series CC Convertible Preferred Stock at $83.73 per share, issued and outstanding as of MarchDecember 31, 2021 and December 31, 2020, outside of permanent equity and liabilities.
On November 12, 2020, the Company filed with the Secretary of State in Nevada the amendment to Certificate of Designation authorizing the increase from 1,000 to 8,000,000 shares of the Series CC Convertible Preferred Stock.
On June 22, 2021, Meso Numismatics, Inc. entered into a Fifth Post Closing Amendment to the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc. Pursuant to the terms of the Fifth Post Closing Amendment along with the completion of the acquisition of Global Stem Cells Group Inc., the issuance of the 1,000 shares of the Company’s Series CC Convertible Preferred Stock to Lans Holdings Inc. was terminated and replaced with a cash payment as consideration.
As of March 31, 2022 and December 31, 2021, the Company has no preferred shares of Series CC Preferred Stock issued and outstanding, respectively. During the period of these financial statements, no dividend was declared or paid on the Series CC preferred shares.
Page 17 of 36
NOTE 6 – STOCKHOLDERS EQUITY
Common Shares
The Board of Directors wasand shareholders were required to increase the number of authorized shares of common stock from (a) 200,000,000 to 500,000,000 during June 2015, (b) 500,000,000 to 1,500,000,000 during July 2015, and (c) 1,500,000,000 to 6,500,000,000 during March 2016, to adhere to the Company’s contractual obligation to maintain the required reserve share amount for debtholders.
On July 2, 2018, the Board of Directors authorized and shareholders approved a 1 for 1,000 reverse stock splits of its issued and outstanding shares of common stock held by the holders of record as of , June 30, 2018. The below transactions have been changed to reflect the 1 for 1,000 reverse stock split.2021 Transactions
2020 Transactions
On January 8, 2020, the Company issued 410,000 shares of common stock in conversion of $2,583 convertible notes payable at conversion price of $0.0063: a loss of $4,251 was recorded.
On May 19, 2020, the Company issued 802,525 shares of common stock in conversion of $3,290 convertible notes payable at conversion price of $0.0041: a loss of $3,378 was recorded.
On July 15, 2020, the Company issued 905,929 shares of common stock in conversion of $4,122 convertible notes payable at conversion price of $0.00455: no loss was recorded.
On November 30, 2020, the Company issued 791,104 shares of common stock in conversion of $4,747 convertible notes payable at conversion price of $0.0070: a loss of $2,034 was recorded.
2021 Transactions
On February 24, 2021, the Company issued 36,232 shares of common stock for consulting services where were valued in the amount of $10,000.
On April 16, 2021, the Company issued 33,772 shares of common stock for consulting services which were valued in the amount of $10,000.
On June 28, 2021, the Company issued 1,092,866 shares of common stock as settlement of the lawsuit, with Joseph Canouse,which were valued in the amount of $213,109.
On December 23, 2021, the Company issued 52,659 shares of common stock for consulting services which were valued in the amount of $10,000.
2022 Transactions
On March 23, 2022, the Company issued 76,278 shares of common stock for consulting services which were valued in the amount of $10,000.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company has 12,032,46612,161,403 and 10,869,59612,085,125 common shares issued and outstanding, respectively.
Warrants
During the year ended December 31, 2020, the Company issued warrants to purchase 16,000,000 shares of common stock, at exercise prices of $0.03 per share. These warrants expire three years from issuance date. The Company recorded the fair value of the 16,000,000 warrants issued with debt at approximately $279,867 at December 31, 2020 as a discount.
On January 6, 2021, the Company issued warrants to purchase 10,000,000 shares of common stock, at exercise prices of $0.033 per share. These warrants expire three years from issuance date. The Company recorded the fair value of the 10,000,000 warrants issued with debt at approximately $359,130$237,811 as a discount.
On June 22, 2021, the Company issued warrants to purchase 70,000,000 shares of common stock, at exercise prices of $0.100 per share. These warrants expire three years from issuance date. The Company recorded the fair value of the 70,000,000 warrants issued with debt at approximately $10,500,000$5,465,726 as a discount.
On September 20, 2021, the Company issued warrants to purchase 7,500,000 shares of common stock, at exercise prices of $0.085 per share. These warrants expire three years from issuance date. The Company recorded the fair value of the 7,500,000 warrants issued with debt at approximately $360,607 as a discount.
Page 18 of 36
The following table summarizes the Company’s warrant transactions during the six monthsperiods ended June 30, 2021March 31, 2022 and year ended December 20202021:
| Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | |||||||||||||
| Outstanding at year ended December 31, 2019 | - | $ | - | |||||||||||||
| Granted | 16,000,000 | 0.030 | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding at year ended December 31, 2020 | 16,000,000 | $ | 0.030 | 16,000,000 | $ | 0.030 | ||||||||||
| Granted | 80,000,000 | 0.092 | 87,500,000 | 0.091 | ||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding at quarter ended June 30, 2021 | 96,000,000 | $ | 0.081 | |||||||||||||
| Outstanding at year ended December 31, 2021 | 103,500,000 | $ | 0.082 | |||||||||||||
| Granted | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding at quarter ended March 31, 2022 | 103,500,000 | $ | 0.082 | |||||||||||||
Warrants granted in the year ended December 31, 2020 were valued using the Black Scholes Model with the risk-free interest rate of 0.20%, expected life 3 years, expected dividend rate of 0% and expected volatility ranging of 411.72%.
Warrants granted in the six monthsyear ended June 30,December 31, 2021 were valued using the Black Scholes Merton Model with the risk-free interest rate ofwithin ranges 0.20% to 0.44%0.45%, expected lifeterm of 3 years, expected dividend rate of 0% and expectedhistorical volatility ranging of 348.64%within ranges 338.36% to 394.78%. The final value assigned to the warrants was determined using a relative fair value calculation between the amount of warrants and promissory notes.
Designation of Series AA Super Voting Preferred Stock
On June 30, 2014, the Company filed with the Secretary of State with Nevada an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), authorizing the issuance of up to eleven million (11,000,000) shares of preferred stock, par value $0.001 per share.
On May 2, 2014, the Company filed with the Secretary of State with Nevada in the form of a Certificate of Designation that authorized the issuance of up to one million (1,000,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series AA Super Voting Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
Each holderAll of outstanding sharesthe Holders of the Series AA Super Voting Preferred Stock together, voting separately as a class, shall be entitledhave an aggregate vote equal to ten thousand (10,000) votes forsixty-seven (67%) percent of the total vote on all matters submitted to the stockholders that each sharestockholder of Series AA Super Voting Preferredthe Corporation’s Common Stock held on the record date for the determination of stockholdersis entitled to vote at each meeting of stockholders of the Company.Corporation (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action and consideration.
The holders of the Series AA Super Voting Preferred Stock shall not be entitled to receive dividends paid on the Company’s common stock.
Upon liquidation, dissolution and winding up of the affairs of the Company, whether voluntary or involuntary, the holders of the Series AA Super Voting Preferred Stock shall not be entitled to receive out of the assets of the Company, whether from capital or earnings available for distribution, any amounts which will be otherwise available to and distributed to the common shareholders.
The shares of the Series AA Super Voting Preferred Stock will not be convertible into the shares of the Company’s common stock.
During 2014, the Company and S & M Chuah Enterprises Ltd, agreed to an exchange of 900,000,000 common shares previously issued to S & M Chuah Enterprises Ltd, entity controlled by Ken Chua, CEO & board member for 500,000 shares of Series AA Preferred Stock of the Corporation, par value $0.001 per share. The 900,000,000 common shares were returned to the Company’s transfer agent for cancellation. The shares were valued on the date of the agreement using the par value of $0.001, since the shares were non-convertible, non-tradable super voting only.
Page 19 of 36
During 2014, the Company and E-Network de Costa Rica S.A., entity controlled by Melvin Pereira mutually agreed upon amount of 500,000 shares of Series AA Preferred Stock of the Corporation, par value $0.001 per share, as a compensation for becoming the new CEO of Pure Hospitality Solutions Inc. The shares were valued on the date of the agreement and are non-convertible, non-tradable super voting only.
On November 26, 2019, the Company filed with the Secretary of State with Nevada an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), authorizing the increase to 1,050,000 shares of the Series AA Super Voting Preferred Stock.
On June 26, 2020, Meso Numismatics, Inc. completed the repurchase of 1,000,000 shares of its Series AA (“Series AA”) Super Voting Preferred Stock for an aggregate total purchase price equal to $160,000, representing all of the Series AA shares held by E-Network de Costa Rica S.A. and S&M Chuah Enterprises Ltd., respectively.
On June 26, 2020, due to Mr. Pereira’s resignation, Meso Numismatics, Inc.’s Board of Directors appointed Mr. David Christensen, current Director and President of the Company, to serve as Chief Executive Officer, Chief Financial Officer and Secretary, effective June 27, 2020 and granted 50,000 shares of Series AA to Mr. David Christensen.
The $166,795 value of the 50,000 shares of Series AA Super Voting Preferred Stock to Mr. David Christensen is based on the 10,000 votes per preferred share to one vote per common share. Valuation based on definition of control premium is defined as the price to which a willing buyer and willing seller would agree in any arms-length transaction to acquire control of the Company. The premium paid above the market value of the company is real economic benefit to controlling the Company. Historically, the average control premium applied in M&A transactions averages approximately 30%, which represents the value of control.
On August 18, 2021, Meso Numismatics, Inc., completed its acquisition of Global Stem Cells Group Inc., through a Stock Purchase Agreement acquiring all the outstanding capital stock of Global Stem Cells Group Inc and paid the purchase price of a total of 1,000,000 shares of Series AA Preferred Stock in the Company, 8,974 shares of Series DD Preferred Stock in the Company and $225,000 USD (the final payment of $50,000 was made on July 2, 2021).
The Series AA Preferred shares issued on August 18, 2021, were valued based upon industry specific control premiums and the Company’s market cap at the time of the transaction. The $963,866 value of the 1,000,000 shares of Series AA Super Voting Preferred Stock issued to Benito Novas were valued based on a calculation by a third party independent valuation specialist.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company has 50,0001,050,000 preferred shares of Series AA Preferred Stock issued and outstanding.outstanding, respectively. During the period of these financial statements, no dividend was declared or paid on the Series AA preferred shares.
Designation of Series BB Preferred Stock
On March 29, 2017, the Company filed with the Secretary of State with Nevada in the form of a Certificate of Designation that authorized the issuance of up to one million (1,000,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series BB Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
Each holder of outstanding shares of Series BB Preferred Stock shall be entitled to convert on a 1 for 1 basis into shares of the Company’s common stock, any or all of their shares of Series BB Preferred Stock after a minimum of six (6) months have elapsed from the issuance of the preferred stock to the holder. The Series BB Preferred Stock has no voting rights until the Holder redeems the preferred stock into the Company’s common stock. The Series BB Preferred Stock shall not be adjusted by the Corporation.
The holders of the Series BB Preferred Stock shall not be entitled to receive dividends paid on the Company’s common stock.
The Series BB Preferred Stock has a liquidation value of $1.00. Upon liquidation, dissolution and winding up of the affairs of the Company, whether voluntary or involuntary, the holders of the Series BB Preferred Stock shall be entitled to share equally and ratably in proportion to the preferred stock owned by the holder to receive out of the assets of the Company, whether from capital or earnings available for distribution, any amounts which will be otherwise available to and distributed to the common shareholders.
As of December 31, 2019, 81,043 Preferred Series BB shares were exchangeexchanged for an aggregate of $97,252 convertible notes and 276,723 Preferred Series BB shares were exchangeexchanged for an aggregate of $332,068 promissory notes of which 78,620 were returned and cancelled and 279,146 were still outstanding at December 31, 2020. During the three months ended March 31, 2021, the remaining 279,146 were returned and cancelled.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had 0 and 279,146, respectively, ofno preferred shares of Series BB Preferred Stock issued and outstanding. During the period of these financial statements, no dividend was declared or paid on the Series BB preferred shares.
Page 20 of 36
Designation of Series DD Convertible Preferred Stock
On November 26, 2019, the Company filed with the Secretary of State with Nevada an amendment to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), authorizing ten thousand (10,000) shares of a new series of preferred stock, par value $0.001 per share, designated “Series DD Convertible Preferred Stock,” for which the board of directors established the rights, preferences and limitations thereof.
Each holder of outstanding shares of Series DD Convertible Preferred Stock shall be entitled to its shares of Series DD Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by 3.17 conversion price.
The holders of the Series DD Convertible Preferred Stock shall not be entitled to receive dividends paid on the Company’s common stock.
The holders of the Series DD Convertible Preferred Stock shall not be entitled to vote on any matter submitted to the shareholders of the Company for their vote, waiver, release or other action.
On August 18, 2021, Meso Numismatics, Inc., completed its acquisition of Global Stem Cells Group Inc., through a Stock Purchase Agreement acquiring all the outstanding capital stock of Global Stem Cells Group Inc and paid the purchase price of a total of 1,000,000 shares of Series AA Preferred Stock in the Company, 8,974 shares of Series DD Preferred Stock in the Company and $225,000 USD (the final payment of $50,000 was made on July 2, 2021).
The $5,038,576 value of the 8,974 shares of Series DD Convertible Preferred Stock to Benito Novas is based on converting into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by 3.17 conversion price. The $5,038,576 value of the 8,974 shares of Series DD Convertible Preferred Stock represents the fair value of the consideration paid allocated to the assets and liabilities acquired from Global Stem Cells Group Inc.
In consideration of mutual covenants set forth in the Professional Service Consulting Agreement, Dave Christensen, current Director, President, Chief Executive Officer, Chief Financial Officer and Secretary, shall be compensated monthly based on annual rate of $90,000, starting January 1, 2022. Additionally, the agreement included an issuance of 896 shares of Series DD Preferred Stock of the Company. An amount of 448 shares were issued on August 18, 2021 and the remaining 448 were issued February 18, 2022.
The $503,072 value of the 896 shares of Series DD Convertible Preferred Stock is based on converting into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by 3.17 conversion price. The $251,536 value of the 448 shares of Series DD Convertible Preferred Stock issued February 18, 2022 was recorded as stock payable. The full amount of $503,552 was expensed at the date of grant, as a matter of accounting policy. There is $251,776 recorded as stock payable – related party due to Dave Christensen, CEO, at December 31, 2021.
On February 18, 2022, the Company issued to Dave Christensen, CEO, the 448 shares of Series DD Convertible Preferred Stock valued at $251,536 which was recorded as stock payable at December 31, 2021.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had no9,870 and 9,422 preferred shares of Series DD Convertible Preferred Stock issued and outstanding.outstanding, respectively. During the period of these financial statements, no dividend was declared or paid on the Series DD preferred shares.
NOTE 7 – RELATED PARTY TRANSACTIONS
On March 31, 2018, the Company changed its corporate registered offices to 433 Plaza Real Suite, 275, Boca Raton, Florida 33432. The online virtual office lease is for a month to month term at $53.10 per month. Prior to March 31, 2018, the Company shared its corporate registered offices with Ajene Watson LLC at 3265 Johnson Avenue, Suite 213, Riverdale, NY 10463. The lease is for a year-to-year term. During the year ended December 31, 2020 and the year ended December 31, 2019, the Company incurred no material rent expenses. The Company has no physical office leases that required implementationIn consideration of ASU 842mutual covenants set forth in the year ended December 31, 2020 to assets and liabilities.
On November 27, 2019, and in connection with the execution of the Assignment and the LOI, the Company’s Board of Directors appointed Mr. David Christensen former director and CEO of Lans Holdings, Inc., to serve as director and president of the Company (see Note 1).
On December 3, 2019, Melvin Pereira, the CEO, converted 18,500 shares of the 25,000 shares of Series BB preferred stock to acquire one hundred (100%) percent of Meso’s common stock into 250,999 shares of the Company’s common stock and elected to exchange the remaining 6,500 shares of Series BB preferred stock for a promissory note of $7,800.
On June 25, 2020, Mr. Martin Chuah submitted his resignation as Director of the Company, effective June 26, 2020. There are no disagreements between Mr. Chuah and Meso Numismatics Inc. on any matter relating to its operations, policies or practices.
On June 26, 2020, Mr. Melvin Pereira submitted his resignation as Chief Executive Officer, Chief Financial Officer, Secretary and Director of Meso Numismatics Inc., effective June 26, 2020. There are no disagreements between Mr. Pereira and Meso Numismatics Inc. on any matter relating to its operations, policies or practices.
On June 26, 2020, Meso Numismatics Inc. completed the repurchase of 1,000,000 shares of its Series AA (“Series AA”) Super Voting Preferred Stock for an aggregate total purchase price equal to $160,000, representing all of the Series AA shares held by E-Network de Costa Rica S.A. and S&M Chuah Enterprises Ltd., respectively.
On June 26, 2020, due to Mr. Pereira’s resignation, Meso Numismatics Inc.’s Board of Directors appointed Mr. DavidProfessional Service Consulting Agreement, Dave Christensen, current Director, and President, of the Company, to serve as Chief Executive Officer, Chief Financial Officer and Secretary, effective June 27, 2020 and granted 50,000shall be compensated monthly based on annual rate of $90k starting January 1, 2022. Additionally, the agreement includes an issuance of 896 shares of Series AADD Preferred Stock of the Company. An amount of 448 shares were issued on August 18, 2021 and the remaining 448 were issued February 18, 2022. Amounts paid to Mr. David Christensen.Enterprise Technology Consulting, a Company 100% owned by Dave Christensen, CEO, for consulting services during the three months ended March 31, 2022 was $7,500.
Page 21 of 36The Company paid Lans Holdings Inc., by delivery in escrow on November 3, 2021, an amount equal to USD $8,200,000.
On August 18, 2021, through a Stock Purchase Agreement in which 100% of the outstanding shares of Global Stem Cell Group, Inc. the Company acquired a 2018 Jaguar F-Pace which was acquired from Benito Novas for $45,000 on January 8, 2019 and assumed the related auto loan, with an original loan amount of $20,991 at 8.99% interest for 48 months and monthly payments of $504.94. As of March 31, 2022, the principal balance of the outstanding auto loan was $4,380.
On August 18, 2021, through a Stock Purchase Agreement the Company acquired 50,000,000 shares of common stock from Aesthetic Marketing Group, LLC which represented 100% of the outstanding shares. These shares were acquired from Aesthetic Marketing Group, LLC. Aesthetic Marketing Group, LLC is wholly owned by Benito Novas, CEO of Global Stem Cell Group, Inc.
Benito Novas’, (CEO of Global Stem Cell Group, Inc.) brother, sister and nephew provide marketing/administrative and training/R&D services to Global Stem Cells Group and were paid as consultants during the periods ending March 31, 2022 and December 31, 2021 in aggregate of $40,985 and $101,175, respectively.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
On May 12, 2015, the Company issued a convertible promissory Note (the “Note”) in the principal amount of $25,000 to Tarpon Bay Partners, LLC (“Tarpon Bay”) whose principal at the time is now known as a “Bad Actor” under SEC rules. On or about January 23, 2017, Tarpon Bay elected to convert principal and interest under the Note into shares of the Company’s common stock. On or about June 6, 2017 the Note was assigned to J.P. Carey Enterprises, Inc. (“J.P.”). On or about June 7, 2017, J.P. elected to convert principal and interest under the Note into shares of the Company’s common stock. Joseph Canouse, a principal at J.P., initiated a lawsuit against the Company in Fulton County Court, in Georgia for, among other things, breach of contract. A default judgment was entered into against the Company for failure to response to these claims. The court then issued an Order of Judgement against the Company in the amount of $282,500 which was recorded in accounts payable as of December 31, 2017. The Company appealed the Courts’ decision and in November 2018, while the Court of Appeals affirmed liability under the judgment, the Court of Appeals vacated the award of the entire judgment amount and remanded the case back to the trial court with instructions.
On June 23, 2021, the Company entered into a settlement agreement of the Joseph Canousefor an outstanding lawsuit for consideration of $300,000 in cash and 1,092,866 shares of common stock in the amount of $213,109. The $513,109 settlement was offset by the $282,500 which was recorded in accounts payable as of December 31, 2017 resulting in expense of $231,109 during the six months ended June 30, 2021.
On June 28, 2021, the Company paid $300,000 in cash and issued 1,092,866 shares of common stock as settlement of the lawsuit, in the amount of $213,109, resulting in an outstanding balance of $0 as of December 31, 2021.
Per an Agreement between Global Stem Cell Group and a lender dated November 17, 2020, in the event that any of Global Stem Cell Group, and/or the Entities and /or Parent (individually the “Company” and collectively the “Companies”) dispose of any Assets to any party or third party or parties (an “Asset Disposition”), then Global Stem Cell Group shall undertake to cause such party, third party or parties to acquire the Right from the Investor. The consideration for the Right shall be equal to the fair value (“FV”) of the Assets at the time of the Asset Disposition (the “Asset Disposition Payment”). The Asset Disposition Payment shall not exceed 27.5% (twenty-seven and a half percent) of the FV of the Assets. As part of the agreement, should the Global Stem Cell Group consummate its acquisition agreement with Meso Numismatics, Inc., so long as Meso Numismatics, Inc. agrees to be bound by the provision after the acquisition, then that provision will not trigger at the time of sale of the Global Stem Cell Group to Meso Numismatics, Inc.
During the period ending December 31, 2021, Global Stem Cell Group, Inc. entered into the Cancun lease with HELLIMEX, S.A. DE CV beginning January 16 2022 and ending on January 15, 2024. The property is located in the Tulum Trade Center, consisting of 1,647 square feet with a monthly rent of $2,714 and security deposit of $5,588.
NOTE 9 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
| June 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| Computer and office equipment (5 year useful life) | $ | 4,000 | $ | 4,000 | $ | 66,445 | $ | 66,445 | ||||||||
| Less: accumulated depreciation | (2,200 | ) | (1,800 | ) | (46,461 | ) | (43,536 | ) | ||||||||
| Total property and equipment, net | $ | 1,800 | $ | 2,200 | $ | 19,984 | $ | 22,909 | ||||||||
Depreciation expense for the sixthree months ended June 30,March 31, 2022 and March 31, 2021 was $2,926 and year ended December 31, 2020 was $400 and $800,$200, respectively.
NOTE 10 – OTHER ASSETSACQUISITION
On April 22, 2020, the Company entered intoAugust 18, 2021, through a Second Post Closing Amendment to the Assignment,Stock Purchase Agreement in which extended the deadline to enter into the New LOI to 150 days from the execution100% of the Second Amendmentoutstanding shares of Global Stem Cell Group, Inc. were acquired for $225,000 in cash, the issuance of 1,000,000 shares of preferred series AA stock and option to receive Series CC Convertible Preferred Stock granted to Lans Holdings Inc. has been extended to 150 days from the executionissuance of the Second Amendment.8,974 shares of preferred series DD stock.
The preliminary purchase price for the merger was determined to be $6.229 million, which consists of (i) 1 million shares of Series AA preferred stock valued at approximately $964,000, (ii) 8,974 shares of Series DD preferred stock valued at approximately $5.04 million and (iii) $225,000 in cash of which $175,000 was advanced in prior to closing of the transaction.
The Company accounted for the Stock Purchase Agreement as a business combination under the acquisition method of accounting. Under ASC 805 Business Acquisitions, determination of the accounting acquirer follows the requirements for control contained within ASC 810 Consolidations. Meso Numismatics, Inc. was determined to be the accounting acquirer based upon the terms of the Stock Purchase Agreement and other factors including the voting provisions contained within the Series AA preferred stock. Those voting provisions require that for (1) any change of control or (2) for any change in directors that the Series AA can only vote in a unanimous fashion, therefore the shares held by the current CEO and board Chairman prior to the date of the acquisition remain in control of the combined entity. In addition, no new officers or directors were brought on board as a result of the Company shall payacquisition.
The following table presents an advance amount equalallocation of the purchase price to $225,000the net assets acquired, inclusive of intangible assets, with the excess fair value recorded to goodwill. The goodwill, which is not deductible for tax purposes, is attributable to the assembled workforce of Global Stem Cells Group, Inc, which shallplanned growth in new markets, and synergies expected to be paid as follows:achieved from the combined operations of Meso Numismatics, Inc. and Global Stem Cells Group.
| Description | As of | |||
| Cash Payments to GSCG | $ | 225,000 | ||
| Fair value of 1,000,000 shares of preferred series AA stock | 963,866 | |||
| Fair value of 8,974 shares of preferred series DD stock | 5,038,576 | |||
| Accounts payable and accrued liabilities | 164,252 | |||
| Note payables | 407,588 | |||
| Due to MESO | 250,000 | |||
| Total consideration | $ | 7,049,282 | ||
| Cash and cash equivalents | 716,647 | |||
| Accounts receivable | 14,006 | |||
| Property and equipment, net | 25,491 | |||
| Intangible assets, net | 487,700 | |||
| Total fair value of assets acquired | 1,243,844 | |||
| Consideration paid in excess of fair value (Goodwill) (1) | $ | 5,805,438 | ||
| The |
On September 16, 2020, Meso Numismatics Inc. entered into a Third Post Closing Amendment to the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc., which Assignment was first amended pursuant to the Post Closing Amendment to the Assignment and Assumption Agreement entered into on December 23, 2019. The Original Agreement is amended to extend the deadline to enter into the New LOI to 180 days from the execution of the Third Amendment and option to receive Series CC Convertible Preferred Stock granted to Lans Holdings Inc. has been extended to 180 days from the execution of the Third Amendment.
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In addition,Under the provisions of purchase accounting, the Company shall payhas up to 1 year from the remaining balance equaldate of the acquisition to $100,000finalize the accounting for the assets acquired and liabilities assumed. The amounts included in the table above are therefore still subject to Global Stem Cells Group Inc, which shall be paid as follows:
revision should additional information become available to the Company regarding the assets acquired and liabilities assumed.
NOTE 11 – INTELLECTUAL PROPERTY
OnA third party independent valuation specialist was asked to determine the value of Global Stem Cell Group, Inc., tangible and intangible assets assuming the offering price was at fair value. In order to perform the purchase price allocation, the tangible and intangible assets were valued as of August 18, 2021.
The Fair Value of the intangible assets as of the Valuation Date is reasonably represented as:
| March 31, 2022 | December 31, 2021 | |||||||
| Tradename - Trademarks | $ | 87,700 | $ | 87,700 | ||||
| Intellectual Property / Licenses | 363,000 | 363,000 | ||||||
| Customer Base | 37,000 | 37,000 | ||||||
| Intangible assets | 487,700 | 487,700 | ||||||
| Less: accumulated amortization | (60,127 | ) | (36,076 | ) | ||||
| Total intangible assets, net | $ | 427,573 | $ | 451,624 | ||||
Amortization is computed on straight-line method based on estimated useful lives of 5 years. During the three months ended March 31, 2022 and March 31, 2021, the Company recorded amortization expense of the intellectual property of $24,051 and $0, respectively.
NOTE 12 2021, Meso Numismatics– OPERATING LEASES
Global Stem Cell Group, Inc. entered into the Cancun lease with HELLIMEX, S.A. DE CV beginning January 16 2022 and ending on January 15, 2024. The property is located in the Tulum Trade Center, consisting of 1,647 square feet with a Fourth Post Closing Amendment tomonthly rent of $2,714 and security deposit of $5,588. In January 2022, the Assignment and Assumption Agreement originally entered into on November 27, 2019 with Global Stem Cells Group Inc., Benito Novas, and Lans Holdings Inc., which Assignment was first amended pursuant toCompany began the Post Closing Amendment to the Assignment and Assumption Agreement entered into on December 23, 2019. The Original Agreement is amended to extend the deadline to enter into the New LOI to 90 days from the executionbuildout of the Fourth Amendmentclinic and optionorder equipment. The Cancun facility is to receive Series CC Convertible Preferred Stock granted to Lans Holdings Inc. has been extended to 90 days frombe inaugurated in May 2022 is accredited both by the execution of the Fourth Amendment.Mexican General Health Council and Cofepris (Mexican FDA).
On May 7, 2020, July 24, 2020The following table summarizes the Company’s undiscounted cash payment obligations for its non-cancelable lease liabilities through the end of the expected term of the lease:
| 2022 | $ | 32,568 | ||
| 2023 | 27,140 | |||
| 2024 | — | |||
| 2025 | — | |||
| 2026 | — | |||
| Total undiscounted cash payments | 59,708 | |||
| Less interest | (3,832 | ) | ||
| Present value of payments | $ | 55,876 |
NOTE 13 – OTHER ASSETS
During the period ending December 31, 2021, Global Stem Cell Group, Inc. entered into the Cancun lease with HELLIMEX, S.A. DE CV beginning January 16 2022 and September 17, 2020,ending on January 15, 2024. The property is located in the CompanyTulum Trade Center, consisting of 1,647 square feet with a monthly rent of $2,714 and security deposit of $5,588.
NOTE 14 – PREPAID EXPENSES
During the period ending March 31, 2022, Global Stem Cell Group, Inc. had made advance paymentsprepayments towards the buildout of the clinic at the Tulum Trade Center and purchase of equipment in the amount of $175,000$121332. The Cancun facility is to Global Stem Cells Group Inc, which was recorded as other asset as of June 30, 2021be inaugurated in May 2022 is accredited both by the Mexican General Health Council and December 31, 2020.Cofepris (Mexican FDA).
NOTE 11 – NOTE RECEIVABLE
On June 29, 2021, the Company entered into a Promissory Note with Global Stem Cells Group Inc. in the amount of $250,000 which bear interest at ten (10%) percent in the event of default and have a one (1) year maturity date.
NOTE 1215 – SUBSEQUENT EVENTS
NONEIn accordance with ASC 855-10, we have analyzed events and transactions that occurred subsequent to March 31, 2022 through the date these financial statements were issued and have determined that we do not have any other material subsequent events to disclose or recognize in these financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Statements
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, cybersecurity, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further, information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview
Global Stem Cell Group Operations
Global Stem Cells Group’s operations are dedicated to the regenerative medicine industry. We intend for this discussionwork with doctors and their staff to provide informationproducts, solutions, equipment, services, and training to help them be successful in the application of Stem Cell Therapies. Our team combines solutions from extensive clinical research with the manufacturing and commercialization of viable cell therapy and immune support related products that we believe will assist in understandingchange the course of traditional medicine around the world forever. Our strategy allows us the ability to create immediate revenue streams through product sales, distribution, and clinical applications, driven by our financial statements,extensive education platform. Our revenue comes directly from the changes in certain key items in those financial statements,training and the primary factorsseminars, from the resale of these kits, products, and equipment, services, and from the reoccurring application of our process using the kits and solutions we provide.
Global Stem Cells Group is a leader in the Stem Cell and Regenerative Medicine fields, covering clinical research, patient applications, along with physician training through our state-of-the-art global network of companies. The Company’s mission is to enable physicians to make the benefits of stem cell medicine a reality for patients around the world. They have been educating doctors on the science and application of cell-based therapeutics for the past 10 years. Our professional trademarked association “ISCCA” INTERNATIONAL SOCIETY FOR STEM CELL APPLICATION is a global network of medical professionals that accountedleverages these multinational relationships to build best practices and further our mission.
The Company envisions the ability to improve “health-span” through the discovery and developments of new cellular therapy products, and cutting-edge technology.
Global Stem Cells Group, as almost everyone else in the world, was severely affected by the covid 19 pandemic. As we look to recover in 2022, we are integrating every aspect of the regenerative medicine industry. During 2022, we plan to add manufacturing and commercialization of viable cell therapy and immune support related products that we believe will change the course of traditional medicine around the world forever.
We believe this strategy will allow us the ability to increase our current revenues and create immediate revenue streams through product sales, distribution, and clinical applications, driven by our extensive education platform here are our main projects and revenue generators for 2022 and beyond.
Manufacturing Facilities
Permanent Treatment Center of Excellence and Physician Training in Istanbul, Turkey
Our Flagship Operation in “Istanbul Center” deploys well-targeted combinations of Exosomes, allogeneic human Mesenchymal cells, autologous bone marrow, and Adipose derived stem cells to treat a wide array of diseases and debilitating medical conditions.
Since 2018, we have completed over 7 industry seminars and training sessions in Istanbul. Through our joint venture/partnership with Biotrend Technology that was completed in February this year, our treatment plans are focused mostly on a systemic and/or whole-body approach. This new processing facility works with our local partner to provide the latest in Stem Cell Therapies to many of those changes,in this region who have no access to these kinds of cutting-edge medical solutions. Our physician training services will help educate and generate demand for our solutions, services, and products.
Biotrend Technology’s CEO, Dr Salih Yildrim, is the acting ISSCA Director and this center operates under our brand Global Stem Cell Group name. Biotrend Technology is a fully staffed facility that operates also in other forms or regenerative health procedures that we do not participate in. This Joint Venture operates as a pure revenue sharing agreement whereas we do not own the lease, employees, or any other P&L expenses. They operate under the GSCG name, utilizing our products, services, training, and procedures. Dr. Salih Yildirim sits on our GSCG staff and is the Director of Overseas Operations. He functions as the International Relations Program Manager at Cleveland Clinic Turkey and is GSCG’s Managing Director over BioTrend Medical International. He is also engaged in consulting and identifying business development opportunities locally and regionally
Cell Therapy Product Manufacturing Facility in Cancun Mexico
The Cancun facility that is to begin operations in July of 2022 has been accredited both by the Mexican General Health Council and Cofepris (Mexican FDA). GSCG’s processing operation is in the well-known HELLIMEX, S.A. DE CV building, a high-rise office of leased suites that provide a multitude of other professional services.
We have assembled a highly qualified team of medical professionals and technicians that specialize in GSCG’s processes, solutions, and services. Our processing facilities in Cancun is top-notch, and include a laboratory to culture-expand cells, a process that yields better patient results, and a cryopreservation unit to keep these extracted samples stored safely until they are needed. This Laboratory/ Treatment Center will have the latest technologies available including NK Cell Therapy CAR T-cell for cancer treatment and produce full Lines of Msc and Exosomes. Our model is to work hand-in-hand with the patients’ physicians to provide a total quality experience in this innovative industry. Our revenue is derived from training doctors, providing services to each patient that these doctors bring to us for treatments, and the solutions and products they utilize.
Cell Therapy Product manufacturing facility in Dubai UAE
Similar to Cancun, we are in the process of building out a leased suite and equipping this facility in the well-known healthcare city DUBAI UAE. This facility will serve patients and physicians from the Middle East and Asia and will have the same capabilities as our Cancun counterpart.
Products
Solidifying and increasing our Presence worldwide www.cellgenic.com, we are completing our new catalog of Cell Therapy products manufactured completely in house as opposed of our previous re seller model. This new series of products include:
| ● | CELLGENIC FLOW EXOSOMES This is the company’s flagship product, which stands ready to revolutionize the practice of regenerative medicine as we know it today. Exosomes are extracellular vesicles that float freely within the blood, very much like platelets. These are cell-derived non-particles that play a pivotal role in cell-to-cell communication that are involved in a wide range of physiological processes. Exosomes play an important role in the transfer of proteins and other bioactive molecules between cells and regulate gene expression in recipient cells, thus influencing various molecular pathways and have a wide range of therapeutic implications, including hair loss and pain management. |
| ● | CELLGENIC MSC (Mesenchymal Stem Cell) This product excretes growth factors, cytokines, and proteins, which all play a key role in the regeneration of tissue. Their anti-inflammatory and immunomodulatory properties mean that it is difficult for them to be rejected by the body. Additionally, they increase blood flow to the vital organs that need it the most. MSC has immunomodulatory effects that have an effect on macrophages, neutrophils, NK cells, mast cells and dendritic cells in innate immunity with known anti-inflammatory benefits. |
| ● | CELLGENIC LUMA (Lyophilized Exosomes) is derived from human umbilical cord mesenchymal stem cells and includes potent growth factors, peptides, coenzymes, minerals, amino acids, vitamins and UV radiation reducing agents for skin revitalization. Exosomes are extracellular vesicles, which is the medical term for tiny bubbles that are released from stem cells. Exosomes carry genetic information and proteins to cells throughout your body, and they create paths for communication between cells to help combat aging skin, environmental damage and loss of elasticity and tone. |
| ● | VITANOVAS is a mobile IV infusion company that provides in-home treatments to patients in need of immune modulation to help fight infections, viruses, and diseases. |
| ● | GCELL RESTORE GCell technology is a closed-system medical device that harnesses the natural and powerful restorative capabilities of adipose tissue. It is a cutting-edge tool that utilizes micrograft technology to harness the natural and powerful restorative capabilities of adipose tissues. This is a precise system that is able to process a stem cell sample from adipose tissue in less than half of the time that it would take a physician to do so through traditional means. This allows the patient to be more comfortable throughout the shorter procedure, as less anesthesia is also required than when operating under traditional means. The GCell is a minimally invasive, portable machine that allows physicians to fully unlock the potential of regenerative medicine as a component in their practice. |
| ● | CELLGENIC SVF is an isolation kit system that has all the ingredients and consumables for the extraction of adipose-Derived Stem cells from fat. This complete kit it is currently being used in clinical procedures for lung disease, intra-articular injections for osteoarthritis of the knee and hip, cosmetic surgery, dermal injection, stem cell enriched fat transfer, wounds chronic ulcers among other chronic conditions. |
| ● | CELLGENIC BONE MARROW Cell isolation protocols usually include density gradient centrifugation. With careful attention to detail the BMC system gently and precisely processes bone marrow aspirate for the purest concentration of these cells at the point of care. BMC is part of a developmental effort to provide an effective therapy that is low risk. It recovers a large percentage of platelet rich plasma and other total nucleated cells in a treatment sample. It is a closed system with strong performance outcomes and outstanding product stability. |
| ● | CELLGENIC PRP (Platelet Rich Plasma) is used to encourage healing and reduce inflammation. As a concentrated source of autologous platelets, PRP contains several growth factors and other cytokines that can stimulate the healing of soft tissues. |
Global Stem Cells Group’s future is looking bright as we look to bounce back from the pandemic effect on our operations. We are uniquely positioned to reach our revenue goals due to our global presence and network of independent businesses. We stand positioned to give the world access to the full spectrum of everything regenerative medicine can offer-- from being a source for products themselves, to sourcing equipment, to treating patients. We are able to do this because of our decade of experience in the field, and because of the world-class leadership and organization of the Group.
Leaders in stem cell medicine trust the high quality of Global Stem Cells Group’s world-class stem cell therapies, and physicians all over the world have come to value it as a trusted source for the newest ground-breaking research and development in the field of regenerative Medicine.
Patents and Proprietary Rights
We are committed to the protection of our intellectual property of proprietary products and process as well as how certain accounting principles affect our financial statements.trademarks and other methods described below.
The Company was originally founded in 1999Our business includes the development of proprietary cell therapy products as Spectrum Ventures LLC, a private company, registered in Tacoma, WA, for the purpose of developing, marketingwell as revenue generating physician and selling voice over IP products and services. In 2002, the Company changed its name to Nxtech Wireless Cable Systems, Inc. In August 2007, the Company changed its name to Oriens Travel & Hotel Management Corp. In November 2014, the Company changed its name to Pure Hospitality Solutions, Inc. During 2014, the Board of Directors of the Company deemed it in the best interests of the Company and its shareholders to switch directions and become involved in the business of numismatics, specifically thepatient based regenerative medicine / cell therapy training services, cell collection and ultimatelycell storage services, the sale of coins, paper currency, bullioncell collection and medals.treatment kits for humans and animals, and the operation of a cell therapy clinic.
On February 19, 2019, the U.S. Patent and Trademark Office (“USPTO”) filed US service trademark, 5,682,488 which claims exclusive us of “ISCCA” as INTERNATIONAL SOCIETY FOR STEM CELL APPLICATION to Stem Cell Training Inc a Florida Corporation.
On April 30, 2019, the U.S. Patent and Trademark Office (“USPTO”) granted US service trademark, 5,739,089 which claims exclusive us of “ISCCA” as INTERNATIONAL SOCIETY FOR STEM CELL APPLICATION to Stem Cell Training Inc a Florida Corporation.
We own proprietary protocols for the harvesting and isolation of Stem Cells Derived from the adipose tissue and Bone marrow.
We also own proprietary standard operating procedures for the manufacturing of allogeneic cellular therapy products derived from perinatal tissue.
None of these protocols or IP have been patented.. However, we rely on our own trade secrets and proprietary know-how to protect our technology and maintain our competitive position, since patent protection may not be available or applicable to our technology.
Competition
We face competitors in many different segments of our business models. We face intense competition from companies with much larger capital resources than us, and, as a result, we could struggle to attract customers and gain market share. Many of our existing or future competitors have greater financial resources and greater brand name recognition than we do and, as a result, may be better positioned to adapt to changes in the industry or the economy as a whole. We will strive to advance our products and technology in each of these sectors ahead of our competitors to gain market share. We also face intense competition in attracting and retaining qualified employees. Our ability to continue to compete effectively will depend upon our ability to attract new employees, retain and motivate our existing employees and to compensate employees competitively. We face significant competition in several aspects of our business, and such competition might increase, particularly in the market for regenerative therapies.
Our competitors may announce new products, services or enhancements that better address changing industry standards on regenerative care. Any such increased competition could cause pricing pressure, loss of business or decreased customer purchases, any of which could adversely affect our business and operating results.
We believe that we have competitive strengths and protection via our depth of services and products that we offer in the regenerative medicine field, including, but without limitation to, cell therapy products, isolation systems, physician training, laboratory build outs, medical tourism, and more.
While there are particular or specific competitors in any one of these areas, no one is currently providing the full service one stop solution for such a complete range of offerings in this industry as we are.
Furthermore, we compete by becoming a resource, creating standards of practice, advancing the Stem Cell field in general, and by connecting associates and partners in many different aspects of the business.
Government Regulations
Although Stem Cell therapy is heavily regulated in the US by the Food and Drug administrator, Global Stem Cells group does not focus its business portfolio in US markets, to this end, we have suspended operations in the US. As such, we are not constrained by FDA regulatory jurisdictions. We now operate exclusively in countries where clear regulatory pathways to manufacturing and practice exist.
Marketing
Global Stem Cell Group uses its vast network of professionals in the regenerative and therapeutic industries to market and grow our business. Training seminars held on location in more than a dozen international locations have helped drive the attraction that is bringing new business to our group. The ISCCA is our professional association and is a global network of medical professionals that leverages these multinational relationships to build best practices and further our mission. Our physician training services educate and generate continued reoccurring demand for our solutions, services, and products.
The more we educate physicians about our products and services, the more physician referrals we have received. It has been a difficult task to introduce new methodologies to physicians with more traditional views, but word of mouth has played a crucial role in the growth of our company and our reputation in the industry. We believe our website will further expand our growth as new physicians have an easy to understand synopses of our how our products and services may assist with and benefit their patients. We believe that as our network of physicians widens we will experience significant growth from repeat business from existing clients and with new business from patient referrals.
Numismatics Operations
Meso Numismatics, Inc., has established a growing numismatics operation Meso Numismatics focuses on the Central American Caribbean region with a concentration of products surrounding Mesoamerica (Mexico to Panama).
Having locations in Costa Rica and Florida for the purposes of conveniently shipping products, the Company has the ability to export its inventory of coins, paper currency, bullion and medals from Costa Rica, to be sold in the U.S. and around the world. Likewise, the Company also imports such products back to Costa Rica, to be sold throughout the local markets.
The Company adheres to strict processes related to acquisition and sale of its products. It begins by selecting the best inventory, be it a rare coin from Latin America, or a banknote with an error from the United States. InventoryAll inventory is carefully screened by management, is then sent to be graded by the proper grading authority. For all coins, medals and bullion, the Company’s inventory is sent to the Numismatic Guaranty Company for authentication and grading. For all banknotes, the Company utilizes the services of Paper Money Guaranty, LLC for authentication and grading, both Florida-based companies. Once graded, the inventory is sent to the Company’s Florida-based location prior to being sent to one of the Company’s many customers around the world.
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We maintain an online store with eBay (www.mesocoins.com) and participate in live auctions with major companies such as Heritage Auctions, Stacks Bowers Auctions, Lyn Knight Auctions and Sedwick Coins for the sale of its coins, paper currency, bullion and medals. The Company also launched a new application technology available on the Google Play Store, as well as the Apple App Store. The Application is a banknote scanner which instantly identifies key characteristics of a banknote. This includes the catalog reference number of the note, the value, which entity it was issued by, the country of origin and the printer that printed the note. A picture of each note from our database of more than 61,000 banknotes from a combined 750 countries and regions will also be included with the information. For the numismatic industry in particular, this application eliminates the need for reference books, as well as the hours of time it takes to reference all the information about banknotes. With a simple snap of a picture, information is provided to the end-user almost instantaneously.
Meso continuesexpects to continue to acquire rare inventory at market rates, from throughout the Meso Region (including Central America and the Caribbean). The inventory is then sent for authentication and grading, followed by said items being sold throughout Meso’s sales outlets. This includes an eBay store with up to, but not limited to, $50,000 in items for sale at any one time. For some of the Company’s rarer inventory, items are sent to major auction houses around the world for sale.
ResultsAs of OperationsDecember 31, 2021, the Company is working on an inventory tracking system by serial number. Until such time the inventory costs cannot be properly confirmed, therefore any inventory balances are expensed during each reporting period.
ResultsLicense Agreements
Coins / Medals
The Company’s inventory is comprised of Operationsroughly 50% coins / medals and 50% paper money. The Company has a meticulous process for the Three Months Ended June 30, 2021acquisition and 2020.sales process for each coin item. The Company specializes in coins from the Meso region, but also acquires coins and medals from elsewhere around the world.
BelowThe process starts by visiting local shops and establishments throughout the Meso region to gather information about the coins that Company’s management is a summary of the results of operationsconsidering for the three months ended June 30, 2021 and 2020.
| For the Three Months Ended June 30, | ||||||||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||||||
| Revenue | $ | 15,769 | $ | 28,787 | $ | (13,018 | ) | -45.22 | % | |||||||
| Cost of revenue | 11,860 | 18,904 | (7,044 | ) | -37.26 | % | ||||||||||
| Gross profit | 3,909 | 9,883 | (5,974 | ) | -60.45 | % | ||||||||||
| Operating expenses | ||||||||||||||||
| Advertising and marketing | 144 | 38 | 106 | 278.95 | % | |||||||||||
| Professional fees | 215,458 | 17,258 | 198,200 | 1148.45 | % | |||||||||||
| Officer compensation | 19,099 | 201,852 | (182,753 | ) | -90.54 | % | ||||||||||
| Depreciation expense | 200 | 200 | - | 0.00 | % | |||||||||||
| Investor relations | 17,574 | 743 | 16,831 | 2265.28 | % | |||||||||||
| General and administrative | 5,945 | 2,585 | 3,360 | 129.98 | % | |||||||||||
| Total operating expenses | 258,420 | 222,676 | 35,744 | 16.05 | % | |||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (440,457 | ) | (473,867 | ) | 33,410 | -7.05 | % | |||||||||
| Loss on conversion of debt | - | (3,378 | ) | 3,378 | -100.00 | % | ||||||||||
| Derivative financial instruments | - | (2,700,486 | ) | 2,700,486 | -100.00 | % | ||||||||||
| Other expense | (231,109 | ) | - | (231,109 | ) | 0.00 | % | |||||||||
| Net income (loss) | $ | (926,077 | ) | $ | (3,390,524 | ) | $ | 2,464,447 | -72.69 | % | ||||||
Revenue is affected by the grade assigned to each coin or banknote.acquisition. Once an item has been acquiredselected, it is paid for, then packaged and sent from Meso’s Costa Rica location to the Company’s Florida location. From there, the merchandise is once again examined, then sent to NGC (the Numismatic Guaranty Company) for grading and authentication. Grading isAfter approximately three weeks, the process of determining the grade or condition of the coinitems are sent back to Meso’s Florida location for storage, safekeeping and banknote, which is the key factor in determiningsubsequent distribution to its value. respective destinations.
Management carefully evaluates the grades assigned to each piece of merchandise and then decides which items will be sold through its eBay store, which items will be sold at live auction and which items will be traded for other items. Grade assignedSome pieces are also sent back to Costa Rica for trading, some are sold on eBay and some go to auction powerhouses around the globe.
Meso also acquires ungraded coins / medals from eBay, as well as at specialty shops throughout the Meso region and during certain U.S. shows. Those items are taken through the same aforementioned process.
Paper Money
As indicated above, paper money makes up approximately 50% of Meso’s inventory. The process of acquiring paper money almost mirrors that of coins / medals.
Meso’s management often visits local banks and central banks throughout the Meso region. Management selects banknotes within bundles, aiming to acquire rare and exceptional notes. This includes RADARS (the same serial number back-and-forth), errors and uncirculated rarities.
The note is then sent from Costa Rica to Florida for grading and authentication. For this service, the Company utilizes the Paper Money Guaranty, which is expected to examine the note in great detail, then offers a grade for its condition. The note is encased, then sent back to Meso’s Florida location for distribution to its final destination. Similarly to coins, management inspects each note, then decides whether it will ultimately determinebe sold on eBay, at a specialty auction, or traded for other merchandise in the sales priceMeso Region.
Similar to coins, Meso also purchases ungraded notes on eBay or at other stores, has them graded through the same process, then decides where to sell it at the end.
Industry Overview
Numismatics itself is the study or collecting of currency, including but not limited to paper money, coins, medals, tokens and other objects. Numismatics is often associated with stamp collecting, philately, and is equally as popular when it comes to hobbies around the world.
The numismatic industry is a multi-billion-dollar market that continues to grow year-over-year. Estimates provided by PNG (The Professional Numismatists Guild) placed the U.S. rare coin market at between $3.4 and $4 billion in 2018.
At the forefront of the coin or banknote.numismatic industry is NGC (The Numismatics Guaranty Company) and PMG (The Paper Money Guaranty). These two organizations, with locations around the world, are responsible for the majority of authenticating and grading various forms of currency. Since its inception in 1987, NGC has graded more than 42 million coins, with 61% representing the US, 16% representing Asia, $13% representing Europe, and, a combined 8% representing Africa, South America and Australia.
As of June 30, 2021, the Company is working on an inventory tracking system by serial number. Until such time as an inventory tracking system exists, the inventory costs cannot be properly confirmed and written-off to cost of revenue along with the cost of grading.
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Gross profitGrowth Strategy
RevenueAccording to an article published in a May 2017 edition of The Economist, the global numismatic market has a value between $5 Billion and $8 Billion per year. It has been noted that out of all the global numismatic sales around the world, the United States is responsible for roughly 85% of the market, further depicted in the chart below. We believe we can capture market share in the U.S. market and we believe we are well positioned to take advantage of, As indicated by the following chart, the Company has the opportunity for growth within the U.S. and the Latin American region as well. The Company has the opportunity for growth within the Latin American region as well. The Company also expects to perform outreach and educate Latin America and Australia about the value of numismatics.
Many Latin American countries postal services are difficult to navigate due to political unrest and corruption. We believe we have an advantage by having boots on the ground in Costa Rica, and associates throughout all of Latin America, which affords us the opportunity to procure almost any type of item and safely have it graded and then sold.
Successful importation and exportation of merchandise between Central America and the United States is crucial for the Company. Being able to acquire inventory at reduced costs, then selling the items for healthy profits, once graded, continues to be the key to growth.
The Company anticipates organic growth as well growth through acquisitions, as the right opportunities present themselves. The Company has and will continue to reinvest capital in new inventory, further supporting its long-term goal of becoming a recognized, global numismatic brand. Possible future acquisitions include websites / social media pages, in addition to physical numismatic businesses that could become available. These acquisitions could be solely of a company’s inventory, or their physical location and assets as well.
Competitive Strengths
Technology
To our knowledge, Meso Numismatics has the only banknote scanner on the market. The technology, mostly utilized by numismatists, quickly assesses all the information about a banknote and almost instantly displays the information, along with a replica banknote from the saledatabase.
The Meso App, available on the Google Play Store and the Apple App Store, is expected to eventually be transitioned into a platform to buy, sell, and trade banknotes. Monetization is expected come from advertisers displaying banner ads, as well as transactional fees from the sales of coins, metalsitems. The Company also has the ability, although it does not do so yet, to charge the user for general use of the App.
Location
Meso Numismatics has office locations in San Jose, Costa Rica and paper moneyBoca Raton, Florida. Having dual locations, especially in these two areas in particular, is extremely advantageous to the Company.
The Costa Rican location of Meso is pivotal for the three months ended June 30, 2021 was $15,769, comparedCompany. Management in this location is able to $28,787 of revenueobtain some items, below-market prices due to relationships made within the industry. While a US collector must pay for an item (usually with a premium) plus shipping and handling, having management on the same period in 2020. As a resultground allows the Company to acquire items without the extra costs. Management also has relationships with dealers throughout the region and trades / exchanges merchandise for better items. The majority of the write-offCompany’s inventory originates in Costa Rica, then is shipped to Florida for grading and authentication.
The Boca Raton location of Meso is almost as pivotal as the Costa Rican location, as the leading grader and authenticator of merchandise (PMG and NGC) also has locations in Florida. Merchandise is sent from Costa Rica to Boca Raton. Once inventoried, merchandise is sent to PMG or NGC for grading and authenticating. Once complete, the inventory is returned to the company generated a 25% gross profitBoca Raton location where it is safely housed and distributed to its final location. Having this location allows the Company to ship items globally at significantly lower rates than shipping from Costa Rica.
Strategic Partnerships
Meso has strategically partnered with Softon Digital (“Softon”) of $3,909 forCosta Rica, in addition to the three months ended June 30, 2021 compared to a 34% gross profit of 9,883 forabove relationships with PMG and NGC. Softon assisted in the same period in 2020. The key reason for the decrease in gross profit was a resultdevelopment and creation of the amountMeso App and it is expected that Softon will continue to help the Company evolve the technological portion of inventory written-off in 2021 vs 2020.the business, with their team of programmers and engineers.
Operating expensesCompetition
Operating expenses increased by 16.05% inIn the amountcoins and other collectibles business, we will compete with a number of $35,744 forcomparably sized and smaller firms, as well as a number of larger firms throughout the three months ended June 30, 2021, comparedUnited States. Our primary competitors are American Numismatic Rarities, a comparably-sized coin auctioneer. Many of our competitors have the ability to the same period in 2020. Listed below are the major changes to operating expenses:
Professional fees increased by $198,200 for the three months ended June 30, 2021, compared to the same period in 2020, primarily due to $95,000 in legal, $66,000 in consulting and $37,000 in audit and accounting expenses.
Officer compensation decreased by $182,753 for the three months ended June 30, 2021, compared to the same period in 2020, primarily due to the resignation of Melvin Pereira as Chief Executive Officer, Chief Financial Officer, Secretary and Director of Meso Numismatics Inc. in 2020 and the issuance of 50,000 shares of Preferred Series AA shares to Dave Christensen in 2020.
Other expense
Other expense decreased by $2,506,165 for the three months ended June 30, 2021, compared to the same period in 2020, primarilyattract customers as a result of their reputation and the changequality collectibles they obtain through their industry connections. Additionally, other reputable companies that sell rare coins and other collectibles may decide to enter our markets to compete with us. These companies have greater name recognition and have greater financial and marketing resources than we do. If these auction companies are successful in fairentering the specialized market value of the convertible notesfor premium collectibles in 2020 along with amortization of discounts offset by settlement of lawsuitwhich we participate or if dealers and sellers participate less in 2021.our auctions, we may attract fewer buyers and our revenue could decrease.
Net LossResults of Operations
We recorded a net loss of $926,077 for the three months ended June 30, 2021, as compared with a net loss of $3,390,524 for the same period ended June 30, 2020.
Results of Operations for the SixThree Months Ended June 30, 2021March 31, 2022 and 2020.2021.
Below is a summary of the results of operations for the sixthree months ended June 30, 2021March 31, 2022 and 2020.2021.
| For the Six Months Ended June 30, | For the Three Months Ended March 31, | |||||||||||||||||||||||||||||||
| 2021 | 2020 | $ Change | % Change | 2022 | 2021 | $ Change | % Change | |||||||||||||||||||||||||
| Revenue | $ | 20,212 | $ | 40,107 | $ | (19,895 | ) | -49.60 | % | $ | 310,078 | $ | 4,443 | $ | 305,635 | 6,879 | % | |||||||||||||||
| Cost of revenue | 26,650 | 31,023 | (4,373 | ) | -14.10 | % | 203,593 | 14,790 | 188,803 | 1,277 | % | |||||||||||||||||||||
| Gross profit | (6,438 | ) | 9,084 | (15,522 | ) | -170.87 | % | 106,485 | (10,347 | ) | 116,832 | 1,129 | % | |||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||
| Advertising and marketing | 381 | 82 | 299 | 364.63 | % | 54,614 | 237 | 54,377 | 22,944 | % | ||||||||||||||||||||||
| Professional fees | 329,245 | 29,987 | 299,258 | 997.96 | % | 395,739 | 113,787 | 281,952 | 248 | % | ||||||||||||||||||||||
| Officer compensation | 34,099 | 247,336 | (213,237 | ) | -86.21 | % | 22,500 | 15,000 | 7,500 | 50 | % | |||||||||||||||||||||
| Depreciation expense | 400 | 400 | - | 0.00 | % | |||||||||||||||||||||||||||
| Depreciation and amortization expense | 26,977 | 200 | 26,777 | 13,388 | % | |||||||||||||||||||||||||||
| Investor relations | 20,472 | 4,243 | 16,229 | 382.49 | % | 47,250 | 2,898 | 44,352 | 1,530 | % | ||||||||||||||||||||||
| General and administrative | 16,555 | 17,861 | (1,306 | ) | -7.31 | % | 101,918 | 10,610 | 91,308 | 861 | % | |||||||||||||||||||||
| Total operating expenses | 401,152 | 299,909 | 101,243 | 33.76 | % | 648,998 | 142,732 | 506,266 | 355 | % | ||||||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||||||||||
| Interest expense | (759,685 | ) | (912,549 | ) | 152,864 | -16.75 | % | (1,140,529 | ) | (319,228 | ) | (821,301 | ) | 257 | % | |||||||||||||||||
| Loss on conversion of debt | - | (7,629 | ) | 7,629 | -100.00 | % | ||||||||||||||||||||||||||
| Derivative financial instruments | - | (3,025,794 | ) | 3,025,794 | -100.00 | % | 6,079 | — | 6,079 | 100 | % | |||||||||||||||||||||
| Other expense | (231,109 | ) | - | (231,109 | ) | 0.00 | % | |||||||||||||||||||||||||
| Net income (loss) | $ | (1,398,384 | ) | $ | (4,236,797 | ) | $ | 2,838,413 | -66.99 | % | ||||||||||||||||||||||
| Net loss | $ | (1,676,963 | ) | $ | (472,307 | ) | $ | (1,204,656 | ) | 255 | % | |||||||||||||||||||||
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Revenue
Revenue is affectedincreased by 6,879% in the grade assignedamount of $305,635 for the three months ended March 31, 2022, compared to each coin or banknote. Once an item has been acquired it is sentthe same period in 2021. The key reason for grading and authentication. Grading is the process of determining the grade or conditionincrease in revenue was a result of the coinacquisition of Global Stem Cells Group, Inc. on August 18, 2021. Revenue from viable cell therapy and banknote, which is the key factor in determining its value. Management carefully evaluates the grades assigned to each piece of merchandise and then decides which items will be sold through its eBay store, which items will be sold at live auction and which items will be traded for other items. Grade assigned will ultimately determine the sales price of the coin or banknote.
As of June 30, 2021, the Company is working on an inventory tracking system by serial number. Until such time as an inventory tracking system exists, the inventory costs cannot be properly confirmed and written-off to cost of revenueimmune support related products along with the cost of grading.
Gross profit
Revenue from thephysician training was $298,748 and an increase in sale of coins, metals and paper money of $6,887 for the sixthree months ended June 30, 2021 was $20,212, compared to $40,107 of revenue for the same period in 2020. As a result of the write-off of inventory the company generated a 32% negative gross profit of $6,438 for the six months ended June 30, 2021 compared to a 23% gross profit of 9,084 for the same period in 2020. The key reason for the decrease in gross profit was a result of the amount of inventory written-off in 2021 vs 2020.
Operating expenses
Operating expenses increased by 33.76% in the amount of $101,243 for the six months ended June 30, 2021,March 31, 2022, compared to the same period in 2020.2021.
Listed below are the revenues, cost of revenues and gross profits by Company for the three months ended March 31, 2022:
| For the Three Months Ended March 31, 2022 | ||||||||||||
| Global Stem Cells Group | Meso Numismatics | Total | ||||||||||
| Revenue | $ | 298,749 | $ | 11,329 | $ | 310,078 | ||||||
| Cost of revenue | 192,484 | 11,109 | 203,593 | |||||||||
| Gross profit | $ | 106,265 | $ | 220 | $ | 106,485 | ||||||
| Gross profit % | 35.57 | % | 1.95 | % | 34.34 | % | ||||||
Operating expenses
Operating expenses increased by 355% in the amount of $506,266 for the three months ended March 31, 2022, compared to the same period in 2021. Listed below are the major changes to operating expenses:
Professional fees increased by $329,245$281,952 for the sixthree months ended June 30, 2021,March 31, 2022, compared to the same period in 2020,2021, primarily due to $103,000 in legal, $107,000$55,800 in consulting and $85,000$193,000 in audit and accounting expenses.
Officer compensation decreasedincreased by $213,237$7,500 for the sixthree months ended June 30, 2021,March 31, 2022, compared to the same period in 2020,2021, primarily due to the resignationa monthly based on annual rate of Melvin Pereira as Chief Executive Officer, Chief Financial Officer, Secretary and Director of Meso Numismatics Inc. in 2020 and the issuance of 50,000 shares of Preferred Series AA shares to Dave Christensen in 2020.$90k starting January 1, 2022
OtherGeneral and administrative expense
Other expense decreased increase by $2,955,178$91,308 for the sixthree months ended June 30, 2021,March 31, 2022, compared to the same period in 2020,2021, primarily due to the acquisition of Global Stem Cells Group, Inc. on August 18, 2021.
Other expense
Other expense increased by $815,222 for the three months ended March 31, 2022, compared to the same period in 2021, primarily as a result of the changeincrease in fair market value of the convertible notes in 2020 along with amortization of discounts offset by settlement of lawsuit in 2021.and interest on promissory notes.
Net Loss
We recorded a net loss of $1,398,384$1,676,964 for the sixthree months ended June 30, 2021,March 31, 2022, as compared with a net loss of $4,236,797$472,307 for the same period ended June 30, 2020.in 2021.
Liquidity and Capital Resources
Since inception, the Company has financed its operations through private placements and convertible notes. The following is a summary of the cash and cash equivalents as of June 30, 2021March 31, 2022 and December 31, 2020.2021.
| March 31, | December 31, | |||||||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||||||
| Cash and cash equivalents | $ | 10,493,363 | $ | 42,534 | $ | 10,450,829 | 24570.53 | % | ||||||||
| March 31, 2022 | December 31, 2021 | $ Change | % Change | |||||||||||||
| Cash and cash equivalents | $ | 2,461,023 | $ | 2,978,525 | $ | (517,502 | ) | -17 | % | |||||||
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Summary of Cash Flows
Below is a summary of the Company’s cash flows for the sixthree months ended June 30, 2021March 31, 2022 and 2020.2021.
For the June 30, | ||||||||
| 2021 | 2020 | |||||||
| Net cash used in operating activities | $ | (699,171 | ) | $ | (133,710 | ) | ||
| Net cash used by investing activities | (250,000 | ) | (50,000 | ) | ||||
| Net cash provided by financing activities | 11,400,000 | 171,900 | ||||||
| Net decrease in cash and cash equivalents | $ | 10,450,829 | $ | (11,810 | ) | |||
| For the Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net cash used in operating activities | $ | (516,106 | ) | $ | (154,860 | ) | ||
| Net cash provided by/ (used in) financing activities | (1,396 | ) | 900,000 | |||||
| Net increase (decrease) in cash and cash equivalents | $ | (517,502 | ) | $ | 745,140 | |||
Operating activities
Net cash used in operating activities was $699,171$516,106 during the sixthree months ended June 30, 2021March 31, 2022 and consisted of a net loss of $1,398,384,$1,676,964, which was offset by a net change in operating assets and liabilities of $229,834$694,632 and non-cash items of $469,378.$466,226. The primary non-cash items for the sixthree months ended June 30, 2021,March 31, 2022, consisted of depreciation and amortization expenses of $445,328 and amortization of debt discount of $219,829 and shares issued for services and settlement$26,977, partially offset by the change in derivative liabilities of debt of $233,109.$6,079. The significant change in operating assets and liabilities was an increase in accounts payable and accrued liabilities.liabilities, partially offset by the decrease in accounts receivable and prepaid expense.
Net cash used in operating activities was $133,710$154,860 during the sixthree months ended June 30, 2020March 31, 2021 and consisted of a net profitloss of $4,236,797,$472,307, which was offset by a net change in operating assets and liabilities of $125,152$233,213 and non-cash items of $3,977,935.$84,233. The primary non-cash items for the sixthree months ended June 30, 2020,March 31, 2021, consisted of amortization of debt discount of $760,192$66,058, common shares issued for services of $10,000, imputed interest on debt of $7,975 and change in derivative liabilitiesdepreciation and amortization expense of $3,025,794.$200. The significant change in operating assets and liabilities was an increase in accounts payable and accrued liabilities.liabilities
InvestingFinancing activities
Net cash provided by investingused in financing activities was $250,000$1,396 consisted of cash to Global Stem Cells Group Inc. duringprincipal payment of debt for the sixthree months ended June 30, 2021, as compared to net cash paid for deposit on acquisition of $50,000 during the same period in 2020.March 31, 2022.
Financing activities
Net cash provided by financing activities was $11,400,000 and consisted of proceeds received from the issuance of a secured promissory note for the six months ended June 30, 2021, as compared to net cash provided by financing activities of $171,900 during the same period in 2020, which$900,000 consisted of proceeds received from the issuance of promissory notes of $331,900 offset by $160,000 from repurchase of preferred stock.for the three months ended March 31, 2021.
On June 22, 2021, the Company entered into a Secured Loan Agreement with an otherwise unaffiliated third-party investor, pursuant to which the Company agreed to issue to the investor a $11,600,000 face value Senior Secured Promissory Note with a $1,100,000 original issue discount, and a three year Common Stock Purchase Warrant to acquire up to 70,000,000 shares of our common stock at an exercise price of $0.10 per share, subject to adjustments.Going Concern
The Senior Secured Promissory Note has a maturity date three years from the issuance date and the Company has agreed to pay interest on the unpaid principal balance of the Note at an annual compounded rate of 12% at maturity. The Senior Secured Promissory Note is secured by all of the Company’s assets.
Going Concern
The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since inception, resulting in an accumulated deficit of approximately $35,183,547$48,346,607 and negative working capital of $2,181,809 as of June 30, 2021March 31, 2022 and future losses are anticipated. These factors, among others, generally tend to raise substantial doubt as to its ability to obtain additional long-term debt or equity financing in order to have the necessary resources to further design, develop and launch the website and market the Company’s new service.
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The ability of the Company to continue its operations as a going concern is dependent on management’s plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements.
We currently do not see any need to raise additional capital at this time. Our current capital investors are on favorable terms, and we expect that we will be able to execute our business plan, grow the business and start generating greater revenue. We have no current plans to restrict our operations at this time. The Company willmay require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Off-Balance Sheet Arrangements
As of June 30, 2021,March 31, 2022, the Company had no off-balance sheet arrangements.
Critical Accounting Policies
Our critical accounting policies have not materially changed during the three months ended June 30, 2020.March 31, 2022. Furthermore, the preparation of our financial statements is in conformity with generally accepted accounting principles in the United States of America, or GAAP. The preparation of our financial statements requires management to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Our management believes that we consistently apply these judgments and estimates, and the financial statements fairly represent all periods presented. However, any differences between these judgments and estimates and actual results could have a material impact on our statements of income and financial position.
Derivative Instruments
The derivative instruments are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and is then re-valued at each reporting date, with changes in fair value recognized in operations for each reporting period. The Company uses the Binomial option pricing model to value the derivative instruments.
Stock Based Compensation
Stock basedShare-based compensation costs areissued to employees is measured at fair valuethe grant date, based on date of grant and recognition of compensation over the service period for awards expected to vest. The Company determines the fair value of awardsthe award, and is recognized as an expense over the requisite service period. The Company measures the fair value of the share-based compensation issued to non-employees at the grant date using the Black - Scholes valuation model.stock price observed in the trading market (for stock transactions) or the fair value of the award (for non-stock transactions), which were considered to be more reliably determinable measures of fair value than the value of the services being rendered.
New Accounting Pronouncements
In May 2014,March 2020, the Financial Accounting Standards Board (FASB)FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contractsoptional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements. The Company is progressing in its evaluation of LIBOR cessation exposures, including the review of debt-related contracts, leases, business development and licensing arrangements, royalty and other agreements. The Company has amended certain agreements and continues to review other agreements for potential impacts. With regard to debt-related exposures in particular, all existing interest rate swaps linked to LIBOR will mature in 2022. The Company is still evaluating the impact to its LIBOR-based debt. Based on its evaluation thus far, the Company does not anticipate a material impact to its consolidated financial statements as a result of reference rate reform.
In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract.guidance. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09amended guidance is effective for interim and annual periods beginning after December 15, 2017. The Company follows paragraph 606 of the FASB Accounting Standards Codification for revenue recognitionin 2023 and ASU 2014-09, adopting the pronouncements on January 1, 2018. The company considers revenue realized or realizable and earned when the products are delivered. Since the Company was already recognizing revenue in a manner consistent with paragraph 606 of the FASB Accounting Standards Codification, there was no material impact on prior year results.
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In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lesseeis to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018.be applied prospectively. Early adoption is permitted. A modifiedpermitted on a retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after,basis to the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has no physical office space only a month to month online virtual office lease that doesn’t required implementationfiscal year of ASU 842 in the year ended December 31, 2019 to assets and liabilities.
In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvement to Nonemployee Share-Based Payment Accounting, which is part of the FASB’s simplification initiative to maintain or improve the usefulness of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. This update provides consistency in the accounting for share-based payments to nonemployees with that of employees. The Company has adopted ASU 2018-07 in the first quarter of 2019.adoption. The adoption of ASU 2018-07 didthis guidance will not have a material impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and related disclosures.contract liabilities acquired in future business combinations.
In August 2018,November 2021, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which modifiesnew guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures on fair value measurements by removingof such transactions to include the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2nature of the fair value hierarchytransactions and the policy for timing of such transfers.significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). The ASUguidance is effective for public entities for fiscal yearsannual periods beginning after December 15, 2019.in 2022 and is to be applied on either a prospective or retrospective basis. The Company has not historically had any transfers between Level 1 and Level 2 or assets or liabilities measured at fair value under Level 3. The Company does not expectis currently evaluating the adoptionimpact of this ASU to have a material impactadoption on its consolidated financial statements.
Other accounting standards and amendments to existing accounting standards that have been issued and have future effective dates are not applicable or are not expected to have a significant impact on the Company’s consolidated financial statements
Revenue Recognition
OnEffective January 1, 2018, the Company adopted ASU 2014-09ASC 606 — Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”),Customers. Under ASC 606, the Company recognizes revenue from the salessale of products by applying the following steps:
| (1) | Identify the contract with a customer |
| (2) | Identify the performance obligations in the contract |
| (3) | Determine the transaction price |
| (4) | Allocate the transaction price to each performance obligation in the contract |
| (5) | Recognize revenue when each performance obligation is satisfied |
There was no impact onThe Company’s main sources of revenue are comprised of the Company’s financial statements as a result of adopting Topic 606 for the period ended June 30, 2021 and December 31, 2020.following:
| ● | Revenue is derived from activities in training, reselling equipment, products, and services. |
| ● | Training-GSCG offers a Stem Cell & Exosomes Certification Program where physicians attending this training sessions will take advantage of a full review of stem cell biology, characterization and regenerative properties of cells and cell products, cytokines and growth factors and how can be apply in the clinic. The physicians will pay for the training sessions upfront and receives all the material and certificate upon completion of seminar which is when revenue is recognized by GSCG. |
| ● | Products-Physicians can order SVF Kits through GSCG which includes EC Certificate from Institute for Testing and Certificating, Inc. SVT Kits are paid for upfront and shipped from third party directly to physicians. Revenue is recognized by GSCG when product is shipped. |
| ● | Equipment- Physicians can order equipment through GSCG which includes warranty from manufacture of equipment. Equipment is paid for upfront and shipped from manufacture directly to physicians. Revenue is recognized by GSCG when product is shipped. |
| ● | Rare coins and banknotes-MESO acquires rare coins and banknotes from Latin America at reduced costs and sales through its website and auctions. |
The Company’s only revenue stream is acquiring rare coins and banknotes from Latin America at reduced costs, which it then sends to Numismatic Guaranty Corporation and Paper Money Guaranty for authentication and grading. Once graded, the inventory is transferred to Meso’s Florida-based location and then sent around the world to the Company’s many customers, with sales recorded net of fees. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company receives in exchange for those products.
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Use of Estimates
The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates included in these financial statements are associated with accounting for the derivative liability valuations, valuation of preferred stock, fair value estimates, valuation of assets and liabilities in business combination and in its going concern analysis.
Fair Value of Financial Instruments
The fair value of financial instruments, which include cash, accounts payable and accrued expenses and advances from related parties were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from financial instruments.
Fair value is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the valuation methodologies, as follows:
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
At June 30, 2021March 31, 2022 and December 31, 2020,2021, the carrying amounts of the Company’s financial instruments, including cash, account payables, and accrued expenses, approximate their respective fair value due to the short-term nature of these instruments.
At June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company does not have any assets or liabilities except for derivative liabilities and convertible notes payable required to be measured at fair value in accordance with FASB ASC Topic 820, Fair Value Measurement.
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
We are not required to provide the information required by this Item because we are a smaller reporting company.
Item 4. Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.
| 1. | We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the |
| 2. |
| We have inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the lack of timely communication between non–financial personnel and financial personnel on our assessment of our reporting controls and procedures and has concluded that the control deficiency represented a material weakness. |
| The Company |
To address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. We have not remedied the material weaknesses as of June 30, 2021.March 31, 2022. The Company plans to take remedial action to address these weaknesses during the fiscal year ended 2021.2022.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2021March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except the implementation of the controls identified above.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings |
Other than described below, to the Company’s knowledge, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
On May 12, 2015, the Company issued a convertible promissory Note (the “Note”) in the principal amount of $25,000 to Tarpon Bay Partners, LLC (“Tarpon Bay”), whose principal at the time, is now known as a “Bad Actor” under SEC rules. On or about January 23, 2017, Tarpon Bay elected to convert principal and interest under the Note into shares of the Company’s common stock. On or about June 6, 2017 the Note was assigned to J.P. Carey Enterprises, Inc. (“J.P.”). On or about June 7, 2017, J.P. elected to convert principal and interest under the Note into shares of the Company’s common stock. Joseph Canouse, a principal at J.P. initiated a lawsuit against the Company in Fulton County Court, in Georgia for, amongst other things, breach of contract. A default judgment was entered into against the Company for failure to response to these claims. The court then issued an Order of Judgement against the Company in the amount of $282,500 which was recorded in accounts payable as of December 31, 2017. The Company appealed the Courts’ decision and in November 2018, while the Court of Appeals affirmed liability under the judgment, the Court of Appeals vacated the award of the entire judgment amount and remanded the case back to the trial court with instructions. The case is awaiting a trial date.
On June 23, 2021, the Company entered into settlement agreement of the Joseph Canouse lawsuit for consideration of $300,000 in cash and 1,092,866 shares of common stock in the amount of $213,109. The $513,109 settlement was offset by the $282,500 which was recorded in accounts payable as of December 31, 2017 resulting in expense of $231,109 during the six months ended June 30, 2021.
Item 1A. | Risk Factors |
See risk factors included in our Annual Report on Form 10-K for 2020.2021, filed with the SEC on May 5, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
On January 8, 2020,March 23, 2022, the Company issued 410,000 shares of common stock in conversion of $2,583 convertible notes payable at conversion price of $0.0063: a loss of $4,251 was recorded.
On May 19, 2020, the Company issued 802,525 shares of common stock in conversion of $3,290 convertible notes payable at conversion price of $0.0041: a loss of $3,378 was recorded.
On June 26, 2020, the Company completed the repurchase of 1,000,000 shares of its Series AA (“Series AA”) Super Voting Preferred Stock, representing all of the Series AA shares held by E-Network de Costa Rica S.A. and S&M Chuah Enterprises Ltd., respectively. The Company has cancelled said shares (“Cancellation”). Following such Cancellation, the Company has 50,000 shares of Series AA remaining issued and outstanding, which shares are held by Mr. David Christensen.
On July 15, 2020, the Company issued 905,929 shares of common stock in conversion of $4,122 convertible notes payable at conversion price of $0.00455: no loss was recorded.
On November 30, 2020, the Company issued 791,104 shares of common stock in conversion of $4,747 convertible notes payable at conversion price of $0.0070: a loss of $2,034 was recorded.
On February 24, 2021, the Company issued 36,23276,278 shares of common stock for consulting services which were valued in the amount of $10,000.
On April 16, 2021, the Company issued 33,772 shares of common stock for consulting services in the amount of $10,000.
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On June 28, 2021, the Company issued 1,092,866 shares of common stock as settlement of the lawsuit with Joseph Canouse, in the amount of $213,109.
During the year ended December 31, 2020, the Company issued warrants to purchase 16,000,000 shares of common stock, at exercise prices of $0.03 per share. These warrants expire three years from issuance date.
During the six months ended June 30, 2021, the Company issued warrants to purchase 80,000,000 shares of common stock, at weighted average exercise prices of $0.092 per share. These warrants expire three years from issuance date.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
Item 3.Defaults Upon Senior Securities |
None.
None.
Item 4.Mine Safety Disclosures |
N/A
N/A
Item 5. Other Information |
None.
None.
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Item 6. Exhibits
| Exhibit Number | Description of Exhibit | |
| Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
| Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
| Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
| 101** | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended | |
| Inline XBRL Instance Document. | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| ** | Provided herewith |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated | MESO NUMISMATICS, INC. | |
| By: | /s/ David Christensen | |
| David Christensen | ||
President, Chief Executive Officer, | ||
(Principal Executive Officer) | ||
(Principal Financial Officer) | ||
(Principal Accounting Officer) | ||
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