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: September 30, 2022March 31, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 000-56010
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:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | None | None |
As of November 8, 2022,May 12, 2023, there were 12,250,88812,443,938 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
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | * | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 1,769,636 | $ | 2,978,525 | ||||
| Accounts receivable | 86,262 | 17,257 | ||||||
| Prepaid expenses | — | 24,245 | ||||||
| Total current assets | 1,855,898 | 3,020,027 | ||||||
| Property and equipment, net | 145,112 | 22,909 | ||||||
| Other assets | 5,568 | 5,568 | ||||||
| Intangible assets, net | 378,670 | 451,624 | ||||||
| Right of use asset, net | 41,408 | — | ||||||
| Goodwill | 5,805,438 | 5,805,438 | ||||||
| Total assets | $ | 8,232,094 | $ | 9,305,566 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 279,372 | $ | 250,755 | ||||
| Accrued interest | 4,189,504 | 2,129,395 | ||||||
| Customer advances | 33,990 | 18,215 | ||||||
| Stock payable – related party | — | 251,536 | ||||||
| Stock payable | — | 20,000 | ||||||
| Derivative liability | 9,960 | 20,442 | ||||||
| Lease liability, current portion | 32,568 | — | ||||||
| Notes payable, net | 1,531,519 | 1,527,711 | ||||||
| Total current liabilities | 6,076,913 | 4,218,054 | ||||||
| Long term liabilities | ||||||||
| Lease liability, net of current portion | 8,840 | — | ||||||
| Convertible notes payable, net of discount | 38,110 | 33,982 | ||||||
| Notes payable – related parties | 7,800 | 7,800 | ||||||
| Notes payable, net of discount | 13,100,313 | 11,802,736 | ||||||
| Total liabilities | $ | 19,231,976 | $ | 16,062,572 | ||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $0.001 par value 1,050,000 shares authorized as Series AA; 1,050,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 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 as of September 30, 2022 and December 31, 2021, respectively | 10 | 10 | ||||||
| Common stock, $0.001 par value; 6,500,000,000 shares authorized; 13,853,202 and 13,687,439 shares issued and issuable and 12,250,888 and 12,085,125 shares outstanding as of September 30, 2022 and December 31, 2021, respectively | 12,251 | 12,086 | ||||||
| Additional paid in capital | 40,170,862 | 39,899,491 | ||||||
| Accumulated deficit | (51,184,055 | ) | (46,669,643 | ) | ||||
| Total stockholders’ deficit | (10,999,882 | ) | (6,757,006 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 8,232,094 | $ | 9,305,566 | ||||
MESO NUMISMATICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2023 | December 31, 2022 | |||||||
| (Unaudited) | * | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 1,636,624 | $ | 1,645,185 | ||||
| Accounts receivable | 102,761 | 49,766 | ||||||
| Total current assets | 1,739,385 | 1,694,951 | ||||||
| Property and equipment, net | 159,512 | 186,269 | ||||||
| Other assets | 5,568 | 5,568 | ||||||
| Intangible assets, net | 329,699 | 354,084 | ||||||
| Right of use asset, net | 26,374 | 33,963 | ||||||
| Goodwill | 5,805,438 | 5,805,438 | ||||||
| Total assets | $ | 8,065,976 | $ | 8,080,273 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 374,007 | $ | 245,463 | ||||
| Accrued interest | 5,430,744 | 4,657,530 | ||||||
| Customer advances | 20,508 | 10,450 | ||||||
| Derivative liability | 5,017 | 6,944 | ||||||
| Lease liability, current portion | 26,374 | 32,568 | ||||||
| Notes payable, net | 7,070,172 | 7,046,666 | ||||||
| Total current liabilities | 12,926,822 | 11,999,621 | ||||||
| Long term liabilities | ||||||||
| Lease liability, net of current portion | — | 1,395 | ||||||
| Convertible notes payable, net of discount | 28,308 | 37,419 | ||||||
| Notes payable – related parties | 7,800 | 7,800 | ||||||
| Notes payable, net of discount | 8,755,585 | 8,016,330 | ||||||
| Total liabilities | 21,718,515 | 20,062,565 | ||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $0.001 par value 1,050,000 shares authorized as Series AA; 1,050,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 1,050 | 1,050 | ||||||
| Preferred stock, $0.001 par value; 10,000 shares authorized as Series DD; 9,870 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 10 | 10 | ||||||
| Common stock, $0.001 par value; 6,500,000,000 shares authorized; 14,046,252 shares issued and 12,443,938 shares outstanding as of March 31, 2023 and December 31, 2022, respectively | 12,444 | 12,444 | ||||||
| Additional paid in capital | 40,180,669 | 40,180,669 | ||||||
| Accumulated deficit | (53,846,712 | ) | (52,176,465 | ) | ||||
| Total stockholders’ deficit | (13,652,539 | ) | (11,982,292 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 8,065,976 | $ | 8,080,273 | ||||
| * | Derived from audited information |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Page 1 of 4233
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | 374,359 | $ | 165,042 | $ | 988,958 | $ | 185,254 | ||||||||
| Cost of revenue | 109,364 | 88,520 | 468,838 | 115,170 | ||||||||||||
| Gross profit (loss) | 264,995 | 76,522 | 520,120 | 70,084 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Advertising and marketing | 80,931 | 22,351 | 216,506 | 22,732 | ||||||||||||
| Professional fees | 143,118 | 336,299 | 735,186 | 665,544 | ||||||||||||
| Officer compensation | 22,500 | 518,833 | 67,500 | 552,932 | ||||||||||||
| Depreciation and amortization expense | 39,882 | 12,947 | 102,184 | 13,347 | ||||||||||||
| Investor relations | 32,749 | 32,574 | 127,633 | 53,046 | ||||||||||||
| General and administrative- related party | — | 8,116,269 | — | 8,116,269 | ||||||||||||
| General and administrative | 107,907 | 52,651 | 341,131 | 69,206 | ||||||||||||
| Total operating expenses | 427,087 | 9,091,924 | 1,590,140 | 9,493,076 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (1,183,166 | ) | (900,039 | ) | (3,454,874 | ) | (1,659,724 | ) | ||||||||
| Gain on change in fair value of derivative financial instruments | 876 | — | 10,482 | — | ||||||||||||
| Other expense | — | — | — | (231,109 | ) | |||||||||||
| Net loss | $ | (1,344,383 | ) | $ | (9,915,441 | ) | $ | (4,514,412 | ) | $ | (11,313,825 | ) | ||||
| Net loss per common share, basic and diluted | $ | (0.11 | ) | $ | (0.82 | ) | $ | (0.37 | ) | $ | (1.00 | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | 12,250,888 | 12,032,466 | 12,187,004 | 11,295,486 | ||||||||||||
| For the Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | 786,198 | $ | 298,748 | ||||
| Cost of revenue | 249,397 | 192,484 | ||||||
| Gross profit | 536,801 | 106,264 | ||||||
| Operating expenses | ||||||||
| Advertising and marketing | 141,637 | 54,541 | ||||||
| Professional fees | 209,371 | 395,739 | ||||||
| Officer compensation | 22,500 | 22,500 | ||||||
| Depreciation and amortization expense | 56,628 | 26,777 | ||||||
| Investor relations | 2,250 | 47,250 | ||||||
| General and administrative | 178,626 | 101,847 | ||||||
| Total operating expenses | 611,012 | 648,654 | ||||||
| Other income (expense) | ||||||||
| Interest expense | (1,600,426 | ) | (1,140,529 | ) | ||||
| Gain on derivative financial instruments | 1,927 | 6,079 | ||||||
| Gain on settlement of debt | 2,463 | - | ||||||
| Loss from continuing operations | (1,670,247 | ) | (1,676,840 | ) | ||||
| Discontinued operations: | ||||||||
| Loss on sale of discontinued operations | - | (124 | ) | |||||
| Loss from discontinued operations | - | (124 | ) | |||||
| Net loss | $ | (1,670,247 | ) | $ | (1,676,964 | ) | ||
| Basic and diluted earnings (loss)per share from: | ||||||||
| Continuing operations | $ | (0.13 | ) | $ | (0.14 | ) | ||
| Discontinued operations | - | - | ||||||
| Net loss per common share, basic and diluted | $ | (0.13 | ) | $ | (0.14 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 12,443,938 | 12,091,905 | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Page 2 of 4233
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
For the Nine Months Ended September 30, 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 | ) | $ | (6,757,006 | ) | ||||||||||||||||||||||||
| Issuance of stock for services | — | — | — | — | — | — | 165,763 | 165 | 19,835 | — | 20,000 | |||||||||||||||||||||||||||||||||
| Issuance of preferred series DD for services | — | — | — | — | 448 | — | — | — | 251,536 | — | 251,536 | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | (4,514,412 | ) | (4,514,412 | ) | |||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | — | $ | — | 1,050,000 | $ | 1,050 | 9,870 | $ | 10 | 12,250,888 | $ | 12,251 | $ | 40,170,862 | $ | (51,184,055 | ) | $ | (10,999,882 | ) | ||||||||||||||||||||||||
For the Three Months Ended September 30, 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, July 1, 2022 | — | $ | — | 1,050,000 | $ | 1,050 | 9,870 | $ | 10 | 12,250,888 | $ | 12,251 | $ | 40,170,862 | $ | (49,839,672 | ) | $ | (9,655,499 | ) | ||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | (1,344,383 | ) | (1,344,383 | ) | |||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | — | $ | — | 1,050,000 | $ | 1,050 | 9,870 | $ | 10 | 12,250,888 | $ | 12,251 | $ | 40,170,862 | $ | (51,184,055 | ) | $ | (10,999,882 | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
Page 3 of 42
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the Nine Months Ended September 30, 2021March 31, 2023
(Unaudited)
| Series AA Preferred Stock | Series DD Preferred Stock | Common Stock | Additional Paid In | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 1,050,000 | $ | 1,050 | 9,870 | $ | 10 | 12,443,938 | $ | 12,444 | $ | 40,180,669 | $ | (52,176,465 | ) | $ | (11,982,292 | ) | |||||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,670,247 | ) | (1,670,247 | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2023 | 1,050,000 | $ | 1,050 | 9,870 | $ | 10 | 12,443,938 | $ | 12,444 | $ | 40,180,669 | $ | (53,846,712 | $ | (13,652,539 | ) | ||||||||||||||||||||
| Series CC Preferred Stock | Series AA Preferred Stock | Series BB Preferred Stock | Series DD Preferred Stock | Common Stock | Additional Paid In | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | 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 common stock for services | - | - | - | - | - | - | - | - | 70,004 | 70 | 19,930 | - | 20,000 | |||||||||||||||||||||||||||||||||||||||
| Issuance of preferred series DD for services-related party | - | - | - | - | - | - | 448 | 1 | - | - | 251,535 | - | 251,536 | |||||||||||||||||||||||||||||||||||||||
| Cancellation of preferred series BB | - | - | - | - | (279,146 | ) | (279 | ) | - | - | - | - | 279 | - | - | |||||||||||||||||||||||||||||||||||||
| Cancellation of preferred series CC-related party | (1,000 | ) | (83,731 | ) | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Issuance of preferred series AA for acquisition of Global Stem Cell Group, Inc. | - | - | 1,000,000 | 1,000 | - | - | - | - | - | - | 962,866 | - | 963,866 | |||||||||||||||||||||||||||||||||||||||
| Issuance of preferred series DD for acquisition of Global Stem Cell Group, Inc. | - | - | - | - | - | - | 8,974 | 9 | - | - | 5,038,567 | - | 5,038,576 | |||||||||||||||||||||||||||||||||||||||
| Imputed interest on debt | - | - | - | - | - | - | - | - | - | - | 24,192 | - | 24,192 | |||||||||||||||||||||||||||||||||||||||
| Fair value of warrants | - | - | - | - | - | - | - | - | - | - | 5,703,537 | - | 5,703,537 | |||||||||||||||||||||||||||||||||||||||
| Net income (Loss) | - | - | - | - | - | - | - | - | - | - | (11,313,825 | ) | (11,313,825 | ) | ||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | - | $ | - | 1,050,000 | $ | 1,050 | - | $ | - | 9,422 | $ | 10 | 12,032,466 | $ | 12,033 | $ | 39,577,315 | $ | (45,098,988 | ) | $ | (5,508,580 | ) | |||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2022
| Series AA Preferred Stock | Series DD Preferred Stock | Common Stock | Additional Paid In | Accumulated | ||||||||||||||||||||||||||||||||
| 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 common stock for services | - | - | - | - | 76,278 | 76 | 9,924 | - | 10,000 | |||||||||||||||||||||||||||
| Issuance of preferred series DD for services-related party | - | - | 448 | - | - | - | 251,536 | - | 251,536 | |||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | (1,676,964 | ) | (1,676,964 | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2022 | 1,050,000 | $ | 1,050 | 9,870 | $ | 10 | 12,161,403 | $ | 12,162 | $ | 40,160,951 | $ | (48,346,608 | ) | $ | (8,172,435 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensedaudited consolidated financial statements
Page 43 of 42
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the Three Months Ended September 30, 2021
(Unaudited)
| Series CC Preferred Stock | Series AA Preferred Stock | Series BB Preferred Stock | Series DD Preferred Stock | Common Stock | Additional Paid In | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance, July 1, 2021 | 1,000 | $ | 83,731 | 50,000 | $ | 50 | - | $ | - | 12,032,466 | $ | 12,033 | $ | 33,316,195 | $ | (35,183,547 | ) | $ | (1,855,269 | ) | ||||||||||||||||||||||||||||||||
| Issuance of preferred series DD for services-related party | - | - | - | - | - | - | 448 | 1 | - | - | 251,535 | - | 251,536 | |||||||||||||||||||||||||||||||||||||||
| Cancellation of preferred series CC-related party | (1,000 | ) | (83,731 | ) | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Issuance of preferred series AA for acquisition of Global Stem Cell Group, Inc. | - | - | 1,000,000 | 1,000 | - | - | - | - | - | - | 962,866 | - | 963,866 | |||||||||||||||||||||||||||||||||||||||
| Issuance of preferred series DD for acquisition of Global Stem Cell Group, Inc. | - | - | - | - | - | - | 8,974 | 9 | - | - | 5,038,567 | - | 5,038,576 | |||||||||||||||||||||||||||||||||||||||
| Imputed interest on debt | - | - | - | - | - | - | - | - | - | - | 8,152 | - | 8,152 | |||||||||||||||||||||||||||||||||||||||
| Net income (Loss) | - | - | - | - | - | - | - | - | - | - | - | (9,915,441 | ) | (9,915,441 | ) | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | - | $ | - | 1,050,000 | $ | 1,050 | - | $ | - | 9,422 | 10 | 12,032,466 | $ | 12,033 | $ | 39,577,315 | $ | (45,098,988 | ) | $ | (5,508,580 | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
Page 5 of 4233
MESO NUMISMATICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (4,514,412 | ) | $ | (11,313,825 | ) | ||
| Non-cash adjustments to reconcile net loss to net cash: | ||||||||
| Amortization of debt discount | 1,319,796 | 500,338 | ||||||
| Depreciation and amortization expense | 102,184 | 13,347 | ||||||
| Change in derivative liabilities | (10,482 | ) | — | |||||
| Loss on legal settlement | — | 213,109 | ||||||
| Common shares issued for services | — | 20,000 | ||||||
| Preferred shares issued for services | — | 251,536 | ||||||
| Imputed interest on debt | — | 24,192 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (69,007 | ) | (5,804 | ) | ||||
| Prepaid expense | 2,714 | (7,000 | ) | |||||
| Stock payable | — | 251,536 | ||||||
| Due to related party | — | 8,116,269 | ||||||
| Accounts payable and accrued liabilities | 2,104,501 | 806,467 | ||||||
| CASH USED IN OPERATING ACTIVITIES | (1,064,706 | ) | (1,129,835 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash acquired in business combination, net of cash paid | — | 666,647 | ||||||
| Purchase of property and equipment | (129,901 | ) | — | |||||
| CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (129,901 | ) | 666,647 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of debt | — | 11,400,000 | ||||||
| Proceeds from note receivable | — | (250,000 | ) | |||||
| Principal payment of debt | (14,282 | ) | (454 | ) | ||||
| CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES | (14,282 | ) | 11,149,546 | |||||
| Net increase (decrease) in cash | (1,208,889 | ) | 10,686,358 | |||||
| Cash, beginning of year | 2,978,525 | 42,534 | ||||||
| Cash, end of year | $ | 1,769,636 | $ | 10,728,892 | ||||
| Cash paid for income tax | $ | — | $ | — | ||||
| Cash paid for interest | $ | 265 | $ | — | ||||
| NON-CASH FINANCING ACTIVITIES: | ||||||||
| Issuance of preferred series DD | $ | 251,536 | $ | — | ||||
| Issuance of common shares for services | $ | 20,000 | $ | — | ||||
| Warrants discount issued on debt | $ | — | $ | 5,703,537 | ||||
| Cancellation of preferred series BB | $ | — | $ | 279 | ||||
| Shares issued for legal settlement | $ | — | $ | 213,109 | ||||
| Cancellation of preferred series CC | $ | — | $ | 83,731 | ||||
| Issuance of preferred series AA for acquisition | $ | — | $ | 963,866 | ||||
| Issuance of preferred series DD for acquisition | $ | — | $ | 5,038,576 | ||||
| Deposit on acquisition | $ | — | $ | 175,000 | ||||
| Original issue discount on convertible debt and promissory notes | $ | — | $ | 1,200,000 | ||||
| For the Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss from continuing operations | $ | (1,670,247 | ) | $ | (1,676,840 | ) | ||
| Non-cash adjustments to reconcile net loss to net cash: | ||||||||
| Amortization of debt discount | 765,963 | 445,328 | ||||||
| Depreciation and amortization expense | 56,628 | 26,777 | ||||||
| Gain from changes in derivative liability fair values | (1,927 | ) | (6,079 | ) | ||||
| Gain from settlement of debt | (2,463 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (52,995 | ) | (42,928 | ) | ||||
| Prepaid expenses | - | (97,087 | ) | |||||
| Accounts payable and accrued liabilities | 911,816 | 834,647 | ||||||
| Cash provided (used) for operating activities-continuing operations | 6,775 | (516,182 | ) | |||||
| Depreciation on discontinued operations | - | 200 | ||||||
| Loss on discontinued operations | - | (124 | ) | |||||
| Cash provided for operating activities-discontinuing operations | - | 76 | ||||||
| CASH PROVIDED (USED) BY OPERATING ACTIVITIES | 6,775 | (516,106 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | (5,486 | ) | - | |||||
| CASH USED BY INVESTING ACTIVITIES | (5,486 | ) | - | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Principle payment on debt | (9,850 | ) | (1,396 | ) | ||||
| CASH USED BY FINANCING ACTIVITIES | (9,850 | ) | (1,396 | ) | ||||
| Net decrease in cash | (8,561 | ) | (517,502 | ) | ||||
| Cash, beginning of year | 1,645,185 | 2,978,525 | ||||||
| Cash, end of year | $ | 1,636,624 | $ | 2,461,023 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | 118 | ||||
| NON-CASH FINANCING ACTIVITIES: | ||||||||
| Issuance of preferred series DD | $ | - | $ | 251,536 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
Page 64 of 4233
MESO NUMISMATICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022March 31, 2023
(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 lowlow-cost 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, 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.:
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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 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 Lans Holdings Inc., to serve as director and president of the Company.
On December 23, 2019, the Company 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, the Company 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, 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.
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,August 18, 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.
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:
The closing of the stock purchase agreement occurred August 18, 2021.
On June 22, 2021, Meso Numismatics, Inc. entered into a Secured Loan Agreement with an otherwise unaffiliated third-party investor, pursuant to which Meso Numismatics, Inc. 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.
On August 18, 2021, the Company 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).
On October 28, 2022, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiary with our prior officer and director, Mr. Melvin Pereira, pursuant to which we agreed to sell Mr. Pereira 100% of our interest in Meso Numismatics Corp., a Florida corporation. In exchange, Mr. Pereira has agreed to assume all of the liabilities of Meso Numismatics, provide whatever financial and other materials needed by us to prepare and complete our financial statements for reporting purposes, and to not disparage our company. The Company reclassified $68,313 of liabilities outstanding resulting in a gain on discontinued operations at December 31, 2022.
As a result of this transaction, we are no longer engaged in the sale of coins, paper currency, bullion and medals and we have moved into what we believe is a more lucrative opportunity for our company, the operations of Global Stem Cell Group.
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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 accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Pure Hospitality Solutions, Inc., Meso Numismatics, Corp., and Global Stem Cells Group Inc. (since August 18, 2021). and Cellular Hope Institute, wholly-owned subsidiary of Global Stem Cells Group Inc. 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 and nine months ended September 30, 2022March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022.2023. 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, 2021,2022, filed on May 5, 2022,April 14, 2023, which can be found at www.sec.gov. All significant intercompany transactions have been 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 goodwill, 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.
Cash and Cash Equivalents
The Company considers all highly liquid accounts with original maturities of three months or less to be cash equivalents. At September 30, 2022March 31, 2023 and December 31, 2021,2022, all of the Company’s cash was deposited in major banking institutions. There were no cash equivalents as of September 30, 2022March 31, 2023 and December 31, 2021.2022. 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 September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively.
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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 quarterthree months ended September 30,March 31, 2023 and the year ended December 31, 2022.
Lease Accounting
The Company 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 twelve 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 other common area costs.
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 initially 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 the 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 aWe test our 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 ofannually at year end or more frequently if events or circumstances lead to a determination thatindicate 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 valuecarrying amount of a reporting unit is less thanexceeds its estimated fair value, we record an impairment loss based on the difference between fair value and 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 atof the reporting unit, level by comparingnot to exceed to the estimated fair value of a reporting unit with its respectiveassociated 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 goodwill. No impairment if any, by comparingwas recognized for the implied fair value ofthree months ended March 31, 2023 and the reporting unit’s goodwill to the carrying value of the reporting unit’s goodwill.year ended December 31, 2022.
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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 BinomialMonte Carlo option pricing model to value the derivative instruments.
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Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, theThe Company recognizes revenue from the sale of products under ASC 606 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.
The Company’s main sources of revenue are comprised of the following:
| ● | Training-GSCG offers a Stem Cell & Exosomes Certification Program where physicians attending |
| ● | 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 a third party directly to physicians. |
| ● | Equipment- Physicians can order equipment through GSCG which includes a warranty from manufacture of equipment. Equipment is paid for upfront and shipped from manufacture directly to physicians. | |
| ● |
The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer.customer or services are provided. Revenue is measured based on the consideration the Company receives in exchange for those products or services.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.
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Net Earnings (Losses) Per Common Share
The Company accounts 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 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 loss by the weighted average number of shares of common stock outstanding during each period. It excludes the dilutive effects of any potentially issuable common shares. The effect of common stock equivalents is anti-dilutive with respect to losses and therefore basic and dilutive is the samesame.
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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 September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, because their inclusion would have been anti-dilutive.
| September 30, | December 31, | March 31, | December 31, | |||||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||||||
| Convertible notes outstanding | 296,864 | 75,710 | 244,851 | 365,463 | ||||||||||||
| Convertible preferred stock outstanding | 37,647,060 | 37,647,060 | 39,447,283 | 39,447,283 | ||||||||||||
| Shares underlying warrants outstanding | 103,500,000 | 103,500,000 | 103,500,000 | 103,500,000 | ||||||||||||
| 141,443,924 | 141,222,770 | 143,192,134 | 143,312,746 | |||||||||||||
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 September 30, 2022March 31, 2023 and December 31, 2021,2022, 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 September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company does not have any assets or liabilities except for derivative liabilities related to 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 as of September 30, 2022March 31, 2023 and December 31, 2021:2022:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| March 31, 2023 | ||||||||||||||||
| Derivative liability | - | - | 5,017 | 5,017 | ||||||||||||
| Total | $ | - | $ | - | $ | 5.017 | $ | 5,017 | ||||||||
| December 31, 2022 | ||||||||||||||||
| Derivative liability | - | - | 6,944 | 6,944 | ||||||||||||
| Total | $ | - | $ | - | $ | 6,944 | $ | 6,944 | ||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| September 30, 2022 | ||||||||||||||||
| Derivative liability | - | - | 9,960 | 9,960 | ||||||||||||
| Total | $ | - | $ | - | $ | 9,960 | $ | 9,960 | ||||||||
| December 31, 2021 | ||||||||||||||||
| Derivative liability | - | - | 20,442 | 20,442 | ||||||||||||
| Total | $ | - | $ | - | $ | 20,442 | $ | 20,442 | ||||||||
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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 September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had no items that represent comprehensive income or loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
Stock Based Compensation
Share-based compensation issued to employees is measured at the grant date, based on the fair value of the 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 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 March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden in accounting for (or recognizing the effects of)associated with transitioning away from 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 transactionsrates that reference the London Interbank Offered Rate (LIBOR) or another reference rateare expected to be discontinued becausediscontinued. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform—Scope, which clarified the scope and application 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, the original guidance. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform—Deferral of the Sunset Date of Topic 848. This update extends the sunset provision of ASU 2020 through -04 to 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. 2024. The Company has amended certain agreementsnot yet adopted this ASU 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 resulteffect of reference rate reform.adopting this new accounting guidance.
In October 2021, June 2016, the FASB issued amended guidanceASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires acquiring entitiesa consideration of a broader range of reasonable and supportable information to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance inform credit loss estimates. For companies that qualified as Smaller Reporting Companies as defined by the SEC as of November 19, 2019, ASU 2016-13 is effective for fiscal years beginning after December 15, 2023, including interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of thewithin those fiscal year of adoption. The adoption of this 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 contract liabilities acquired in future business combinations.
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In November 2021, the FASB issued new 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 of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis.years. The Company is currently evaluating the impact of adoptionthe guidance 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
Goodwill
Goodwill represents the excess of fair value over identifiable tangible and intangible net assets acquired in business combinations. Goodwill is not amortized, instead goodwill is reviewed for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value.
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 $51 million$53,846,712 and a working capital deficit of $4,221,016$11,187,438 as of September 30, 2022March 31, 2023 and future losses are anticipated. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
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.
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 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.
Page 10 of 33
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”), theThe Company recognizes revenue from the sales of products under ASC 606 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 |
The Company’s main source of revenue is comprised of the following:
Page 15 of 42
| ● | Training-GSCG offers a Stem Cell & Exosomes Certification Program where physicians attending these 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 they can be applied in a clinic setting. The physicians will pay for the training sessions upfront and receives all the material and certificate upon completion of seminar. Completion of the seminar is when control is transferred and when revenue is recognized. |
| ● | 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 a third party directly to physicians. Transfer of control is when the product is shipped which is when revenue is recognized. |
| ● | Equipment- Physicians can order equipment through GSCG which includes a warranty from manufacture of equipment. Equipment is paid for upfront and shipped from manufacture directly to physicians. Transfer of control is when the equipment is shipped which is when revenue is recognized. |
| ● | Patient procedures are the treatments GSCG is offering at its Cancun clinic. The transfer of control is when the procedures are completed which is when revenue is recognized. |
The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer.customer or as services are rendered. Revenue is measured based on the consideration the Company receives in exchange for those products or services.products.
The following table presents the Company’s revenue by product category for the ninethree months ended September 30, 2022March 31, 2023 and 2021:2022:
| For the Nine Months Ended September 30, | For the Three Months Ended March 31, | |||||||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||||||
| Coins and banknotes | $ | 24,991 | $ | 31,671 | ||||||||||||
| Training | 199,672 | 75,424 | $ | 181,320 | $ | 53,394 | ||||||||||
| Product supplies | 552,634 | 15,278 | 433,673 | 154,817 | ||||||||||||
| Equipment | 211,661 | 62,881 | 93,690 | 90,537 | ||||||||||||
| Patient procedures | 77,515 | - | ||||||||||||||
| Total revenue | $ | 988,958 | $ | 185,254 | $ | 786,198 | $ | 298,748 | ||||||||
Page 11 of 33
Listed below are the revenues, cost of revenues, gross profits, assets and net loss by Company:
| For the Nine Months Ended | For the Three Months Ended | |||||||||||||||||||||||
| September 30, 2022 | March 31, 2023 | |||||||||||||||||||||||
| Global Stem | Meso | Global Stem | Meso | |||||||||||||||||||||
| Cells Group | Numismatics | Total | Cells Group | Numismatics | Total | |||||||||||||||||||
| Revenue | $ | 963,967 | $ | 24,991 | $ | 988,958 | $ | 786,198 | $ | - | $ | 786,198 | ||||||||||||
| Cost of revenue | 445,814 | 23,024 | 468,838 | 249,397 | - | 249,397 | ||||||||||||||||||
| Gross profit | $ | 518,153 | $ | 1,967 | $ | 520,120 | $ | 536,801 | $ | - | $ | 536,802 | ||||||||||||
| Gross Profit % | 53.75 | % | 7.87 | % | 52.59 | % | 68.28 | % | 0.00 | % | 68.28 | % | ||||||||||||
| Assets | $ | 982,478 | $ | 7,249,616 | $ | 8,232,094 | $ | 1,155,952 | $ | 6,910,024 | $ | 8,065,976 | ||||||||||||
| Net loss | $ | (436,472 | ) | $ | (4,077,940 | ) | $ | (4,514,412 | ) | $ | (3,262 | ) | $ | (1,666,985 | ) | $ | (1,670,247 | ) | ||||||
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 significant 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 international travel along with in person meetings limited our training of new customers along with selling them products and equipment.equipment which adversely affecting our results of operations and financial condition during 2021 and the first six months of 2022,
During the fourth quarter of 2022 and into 2023 we started recovering from the COVID-19 pandemic with restrictions in international travel removed along with the opening of the Cancun facility in the second half of 2022, which provided a facility for physicians to come for training and preform patient procedures.
Page 1612 of 4233
NOTE 4 – NOTES PAYABLE
Convertible Notes Payable
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 had 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. If the shareholder did not give the Meso Numismatics, Inc. notice the Indebtedness shall automatically was 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 periods ending September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company made $10,000payments of $9,850 and $25,000,$15,000, respectively, payments on the outstanding convertible notes.
The balance of the convertible notes as of September 30, 2022March 31, 2023 and December 31, 20212022 is as follows:
| September 30, | December 31, | March 31, | December 31, | |||||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||||||
| Convertible notes payable | $ | 62,252 | $ | 72,252 | $ | 44,939 | $ | 57,252 | ||||||||
| Less: Discount | (24,142 | ) | (38,270 | ) | (16,631 | ) | (19,833 | ) | ||||||||
| Convertible notes payable, net | $ | 38,110 | $ | 33,982 | $ | 28,308 | $ | 37,419 | ||||||||
As of September 30, 2022During the periods ending March 31, 2023 and December 31, 2021,2022, the Company incurred $3,202 and $18,437, respectively of debt discount amortization expense and made payments of $9,850 and $15,000, respectively, on the outstanding convertible notes. As of March 31, 2023 and December 31, 2022, the Company had approximately $251,144 ofno accrued interest.
As of September 30, 2022 and December 31, 2021, the principal balance of outstanding convertible notes payable was $62,252 and $72,252, respectively.
Promissory Notes Payable
During 2015, the Company entered into line of credit with Digital Arts Media Network treated as a promissory note. The promissory note bear interest at 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. As of September 30,March 31, 2023 and December 31, 2022, the principal balance of the outstanding loan was $130,025 and $130,025, respectively, and accrued interest of $89,323.$95,806 and $92,600, respectively.
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 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 September 30, 2022March 31, 2023 and December 31, 2021,2022, the principal balanceaggregate loan balances outstanding was $398,482 and $398,482, respectively, and unamortized discount of the promissory notes was $398,482.$14,098 and $16,083, respectively.
On December 3, 2019, Melvin Pereira, the prior 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.$7,800, which is shown as a related party note payable on the balance sheet on March 31, 2023 and December 31, 2022.
Page 1713 of 4233
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 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. As of March 31, 2023 and December 31, 2022, the aggregate loan balances outstanding was $5,379,624 and $5,379,624, respectively, and unamortized discount of $61,282 and $81,700, respectively.
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%fifteen (15%) 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. As of March 31, 2023 and December 31, 2022, the outstanding loan balance was $110,000 and $110,000, respectively, and unamortized discount of $6,420 and $8,611, respectively.
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 fifteen (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 $237,811 at the date of issuance as a discount. As of March 31, 2023 and December 31, 2022, the outstanding loan balance was $1,000,000 and $1,000,000, respectively, and unamortized discount of $0.00 and $0.00, respectively. This debt instrumentloan is currently in default as of January 6, 2022.default.
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 $5,465,726 at the 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. As of March 31, 2023 and December 31, 2022, the outstanding loan balance was $11,600,000 and $11,600,000, respectively, and unamortized discount of $4,012,842 and $4,707,853, respectively.
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 September 30,March 31, 2023 and December 31, 2022, the principal balance of the outstanding auto loan was $1,494.$0.00 and $0.00, respectively.
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 note.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 termshort-term investment balances on each respective fiscal quarter by more than twenty (20%) percent. As of September 30,March 31, 2023 and December 31, 2022, the principal balance of the outstanding loan was $400,000 and $400,000, respectively, and accrued interest totals $161,892.$266,710 and $205,779, respectively. This debt instrument is currently in default due to the non-payment of interest.
Page 1814 of 4233
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. As of March 31, 2023 and December 31, 2022, the outstanding loan balance was $1,100,000 and $1,100,000, respectively, and unamortized discount of $308,157 and $350,416, respectively.
On December 30, 2021, the 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 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. As of March 31, 2023 and December 31, 2022, the outstanding loan balance was $7,958 and $7,958, respectively, and unamortized discount of $80 and $139, respectively.
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. As of March 31, 2023 and December 31, 2022, the outstanding loan balance was $111,470 and $111,470, respectively, and unamortized discount of $1,122 and $1,950, respectively.
The balance of the promissory as of September 30, 2022March 31, 2023 and December 31, 20212022 is as follows:
| September 30, | December 31, | March 31, | December 31, | |||||||||||||
| 2022 | 2021 | 2023 | 2022 | |||||||||||||
| Promissory notes payable | $ | 20,239,053 | $ | 20,243,335 | $ | 20,237,559 | $ | 20,237,559 | ||||||||
| Less: Discount | (5,541,887 | ) | (6,822,622 | ) | (4,363,089 | ) | (5,117,631 | ) | ||||||||
| Less: Deferred finance costs | (57,534 | ) | (82,466 | ) | (40,913 | ) | (49,132 | ) | ||||||||
| Promissory notes payable, net | $ | 14,639,632 | $ | 13,338,247 | $ | 15,833,557 | $ | 15,070,796 | ||||||||
During the periods ending September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company made $14,282$0 and $1,812$5,776 payments, respectively on the outstanding promissory notes, and recorded $2,135,079$773,214 and $1,781,394,$2,898,155, respectively of interest expense and $1,280,736$762,761 and $874,476,$1,738,327, respectively of debt discount amortization expense. As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had approximately $3,938,360$5,430,743 and $1,878,251,$4,657,529, respectively, of accrued interest. As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the principal balance of outstanding promissory notes payable was $20,239,055$20,237,559 and $20,243,335, respectively.$20,237,559, respectively
Page 15 of 33
Derivatives Liabilities
The Company determined that the convertible notes outstanding as of September 30, 2022March 31, 2023 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 athe lattice valuation model with the following assumptions:
| September 30, | March 31, | |||||||
| 2022 | 2023 | |||||||
| Common stock issuable | 296,864 | 244,851 | ||||||
| Market value of common stock on measurement date | $ | 0.03 | $ | 0.0205 | ||||
| Adjusted exercise price | $ | 0.06 | $ | 0.06 | ||||
| Risk free interest rate | 3.79 | % | 4.33 | % | ||||
| Instrument lives in years | 2.25 Year | 1.75 Year | ||||||
| Expected volatility | 105 | % | 74 | % | ||||
| Expected dividend yields | None | 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.
Page 19 of 42
The balance of the fair value of the derivative liability as of September 30, 2022March 31, 2023 and December 31, 20212022 is as follows:
| Balance at December 31, 2020 | $ | - | ||||||
| Balance at December 31, 2021 | $ | 20,442 | ||||||
| Additions | 24,186 | - | ||||||
| Fair value loss | (3,744 | ) | (10,856 | ) | ||||
| Conversions | - | (2,642 | ) | |||||
| Balance at December 31, 2021 | 20,442 | |||||||
| Balance at December 31, 2022 | 6,944 | |||||||
| Additions | - | - | ||||||
| Fair value gain | (8,627 | ) | (579 | ) | ||||
| Conversions | (1,855 | ) | (1,348 | ) | ||||
| Balance at September 30, 2022 | $ | 9,960 | ||||||
| Balance at March 31, 2023 | $ | 5,017 | ||||||
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 therefore, 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.
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 Lans 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.
Page 20 of 42
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 September 30, 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.
NOTE 65 – STOCKHOLDERS EQUITY
Common Shares
The Board of Directors and 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.
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, 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.
On May 5, 2022, the Company issued 89,485 shares of common stock for consulting services which were valued in the amount of $10,000.
Page 16 of 33
As of SeptemberMarch 31, 2023 and December 31, 2022, the Company has 12,443,938 and 12,443,938 common shares issued and outstanding, respectively.
On November 30, 2022, the Company issued 193,050 shares of common stock for consulting services which were valued in the amount of $10,000.
As of December 31, 2022 and December 31, 2021, the Company has 12,250,88812,443,938 and 12,085,125 common shares issued and outstanding, respectively.
Warrants
Page 21During the year ended December 31, 2020, the Company issued warrants to purchase 16,000,000 shares of 42
Warrantscommon 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 $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 were amended on August 18, 2021 to expire fivethree years from initial exerciseissuance date. The Company recorded the fair value of the 70,000,000 warrants issued with debt at approximately $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.
The following table summarizes the Company’s warrant transactions during the periodsthree months ended September 30, 2022March 31, 2023 and the year ended December 2021:31, 2022:
| Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | |||||||||||||
| Outstanding at year ended December 31, 2020 | 16,000,000 | $ | 0.030 | |||||||||||||
| Granted | 87,500,000 | 0.091 | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding at year ended December 31, 2021 | 103,500,000 | $ | 0.082 | 103,500,000 | $ | 0.082 | ||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Expired | - | - | - | - | ||||||||||||
| Outstanding at quarter ended September 30, 2022 | 103,500,000 | $ | 0.082 | |||||||||||||
| Outstanding at year ended December 31, 2022 | 103,500,000 | $ | 0.082 | |||||||||||||
| Granted | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding at quarter ended March 31, 2023 | 103,500,000 | $ | 0.082 | |||||||||||||
Warrants granted in the year ended December 31, 2020 were valued using the Black Scholes Merton 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 year ended December 31, 2021 were valued using the Black Scholes Merton Model with the risk-free interest rate within ranges between 0.20% to 0.45%, term of 3 years, dividend rate of 0% and historical volatility within rangesranging between, 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.
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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, 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.
All of the Holders of the Series AA Super Voting Preferred Stock together, voting separately as a class, shall have an aggregate vote equal to sixty-seven (67%) percent of the total vote on all matters submitted to the stockholders that each stockholder of the Corporation’s Common Stock is entitled to vote at each meeting of stockholders of the 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.
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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.
On November 26, 2019, the Company filed with the Secretary of State with Nevada an amendment to the Company’s 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 September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company has 1,050,000 and 1,050,000 preferred shares of Series AA Preferred Stock issued and outstanding, respectively. During the period of these financial statements, no dividend was declared or paid on the Series AA preferred shares.
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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.
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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 exchanged for an aggregate of $97,252 convertible notes and 276,723 Preferred Series BB shares were exchanged 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 September 30,December 31, 2022 and December 31, 2021, the Company had no 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.outstanding
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, 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.
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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 includedincludes 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.
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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 to be issued February 18, 2022 was recorded as stock payable.payable at December 31, 2021 and issued on February 18, 2022. 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 September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had 9,870 and 9,4229,870 preferred shares of Series DD Convertible Preferred Stock issued and outstanding, respectively. During the period of these financial statements, no dividend was declared or paid on the Series DD preferred shares.
NOTE 76 – RELATED PARTY TRANSACTIONS
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 an annual rate of $90k$90,000 starting January 1, 2022. Additionally, the agreement includes 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 on February 18, 2022. Amounts paid to Enterprise Technology Consulting, a Company 100% owned by Dave Christensen, CEO, for consulting services during the ninethree months ended September 30,March 31, 2023 and the year ended December 31, 2022 was $22,500.
The Company paid Lans Holdings Inc., by delivery in escrow on November 3, 2021, an amount equal to USD $8,200,000.were $22,500 and $90,000, respectively.
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 September 30,March 31, 2023 and December 31, 2022, the principal balance of the outstanding auto loan was $1,494.
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.$0.00.
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 September 30, 2022three months ended March 31, 2023 in aggregate $101,158 and the year ended December 31, 20212022 in aggregate of $119,143 and $101,175, respectively.$200,390.
NOTE 87 – 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.
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On June 23, 2021, the Company entered into a settlement agreement for 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 Rightperpetual right of a percentage of Global revenues 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 FVfair market value of the Assets. As part of
During the agreement, should theperiod ending December 31, 2021, Global Stem Cell Group, consummate its acquisition agreementInc. entered into the Cancun lease with Meso Numismatics, Inc., so long as Meso Numismatics, Inc. agrees to be bound byHELLIMEX, S.A. DE CV beginning January 16 2022 and ending on January 15, 2024. The property is located in the provision afterTulum Trade Center, consisting of 1,647 square feet with a monthly rent of $2,714 and security deposit of $5,588. During the acquisition, then that provision will not trigger atthree months ended March 31, 2023 and the time of sale ofyear ended December 31, 2022 the Global Stem Cell Group to Meso Numismatics, Inc.Company paid $11,062 and $44,097, respectively in rent expense.
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NOTE 98 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
| September 30, 2022 | December 31, 2021 | |||||||
| Computer, equipment and vehicles (5 year useful life) | $ | 153,196 | $ | 66,445 | ||||
| Leasehold improvements (2 year useful life) | 64,681 | - | ||||||
| Less: accumulated depreciation | (72,766 | ) | (43,536 | ) | ||||
| Total property and equipment, net | $ | 145,112 | $ | 22,909 | ||||
During the period ending June 30, 2022, the Cancun lab was completed and $121,332 of equipment and leaseholds in prepaid was capitalized along with $28,838 of equipment and leaseholds purchased during the three months ended September 30, 2022.
| March 31, 2023 | December 31, 2022 | |||||||
| Computer, equipment and vehicles (5 year useful life) | $ | 154,682 | $ | 149,196 | ||||
| Leasehold improvements (2 year useful life) | 133,208 | 133,208 | ||||||
| Less: accumulated depreciation | (128,378 | ) | (96,135 | ) | ||||
| Total property and equipment, net | $ | 159,512 | $ | 186,269 | ||||
Depreciation expense for the ninethree months ended September 30,March 31, 2023 and the year ended December 31, 2022 was $32,243 and September 30, 2021 was $29,230 and $1,856,$55,199, respectively.
NOTE 10 – ACQUISITION
On August 18, 2021, through a Stock Purchase AgreementWe evaluate the carrying value of long-lived assets for impairment on an annual basis or whenever events or changes in which 100% of the outstanding 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 the issuance of 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 directorscircumstances indicate 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 datecarrying amounts may not be recoverable. Further testing of the acquisition remain in controlspecific assets or grouping of the combined entity. In addition, no new officers or directors were brought on board as a result of the acquisition.
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The following table presents an allocation of the purchase price to the 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, planned growth in new markets, and synergies expected to be achieved from the combined operations of Meso Numismatics, Inc. and Global Stem Cells Group.
| Description | As of August 18, 2021 | |||
| 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 following table presents the supplemental consolidated financial results of the Company on an unaudited pro forma basis, as if the acquisition had been consummated on January 1, 2021 through the periods shown below. The primary adjustments reflected in the pro forma results relate to (1) adjustment to remove transaction costsrequired when undiscounted future cash flows associated with the acquisitionassets is less than their carrying amounts. An asset is considered to be impaired when the anticipated undiscounted future cash flows of Global Stem Cells Group Inc froman asset group are estimated to be less than its carrying value. The amount of impairment recognized is the pro forma income statements, (2) adjustments to recorded depreciation and amortization expenses as a resultdifference between the carrying value of the acquisition,asset group and (3)its fair value. Fair value estimates are based on assumptions concerning the income tax effectamount and timing of the unaudited pro forma adjustments above using statutory tax rates.
The unaudited pro forma financial information presented below does not purport to represent the actual resultsestimated future cash flows. We recorded no impairment of operations that Meso Numismatics, Inc and Global Stem Cells Group Inc would have achieved had the companies been combined during the periods presented and is not intended to project the future results of operations that the combined company may achieve after the acquisition. The unaudited pro forma financial information does not reflect any potential cost savings, operating efficiencies, long-term debt pay down estimates, financial synergies or other strategic benefits that may be realized as a result of the acquisition and also does not reflect any restructuring costs to achieve those benefits.
| For the Nine Months Ended September 30, | ||||
| 2021 | ||||
| Revenue | $ | 1,089,976 | ||
| Net loss | $ | (12,999,298 | ) | |
| Earnings per share | $ | (1.13 | ) | |
Under the provisions of purchase accounting, the Company has up to 1 year from the date of the acquisition to finalize the accountinglong-lived assets for the assets acquiredthree months ended March 31, 2023 and liabilities assumed. The amounts included in the table above are therefore still subject to revision should additional information become available to the Company regarding the assets acquired and liabilities assumed. year ended December 31, 2022.
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NOTE 119 – INTELLECTUAL PROPERTY
A 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:
| September 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
| Tradename - Trademarks | $ | 87,700 | $ | 87,700 | $ | 87,700 | $ | 87,700 | ||||||||
| Intellectual Property / Licenses | 363,000 | 363,000 | 363,000 | 363,000 | ||||||||||||
| Customer Base | 37,000 | 37,000 | 37,000 | 37,000 | ||||||||||||
| Intangible assets | 487,700 | 487,700 | 487,700 | 487,700 | ||||||||||||
| Less: accumulated amortization | (109,030 | ) | (36,076 | ) | (158,001 | ) | (133,616 | ) | ||||||||
| Total intangible assets, net | $ | 378,670 | $ | 451,624 | $ | 329,699 | $ | 354,084 | ||||||||
Amortization is computed on straight-line method based on estimated useful lives of 5 years. During the ninethree months ended September 30,March 31, 2023 and the year ended December 31, 2022, and September 30, 2021, the Company recorded amortization expense of the intellectual property of $72,954$24,385 and $11,491,$97,540, respectively.
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NOTE 1210 – 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 monthly rent of $2,714 and security deposit of $5,588. In January 2022, the Company began the buildout of the clinic and order equipment. The Cancun facility is to be inaugurated in May 2022 is accredited both by the Mexican General Health Council and Cofepris (Mexican FDA).
The 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 | $ | 24,427 | ||
| 2023 | 18,998 | |||
| 2024 | — | |||
| 2025 | — | |||
| 2026 | — | |||
| Total undiscounted cash payments | 43,425 | |||
| Less interest | (2,016 | ) | ||
| Present value of payments | $ | 41,409 |
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 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 a security deposit of $5,568.
NOTE 14 – PREPAID EXPENSES$5,588.
DuringIn January 2022, the period ending March 31, 2022, Global Stem Cell Group, Inc. had made prepayments towardsCompany began the buildout of the clinic at the Tulum Trade Center and purchase of equipment in the amount of $121,332.began to order equipment. The Cancun facility is to bewas inaugurated in May 2022 and is accredited both by the Mexican General Health Council and Cofepris (Mexican FDA).
DuringThe following table summarizes the period ending June 30, 2022,Company’s undiscounted cash payment obligations for its non-cancelable lease liabilities through the Cancun labend of the expected term of the lease:
| 2023 | $ | 24,426 | ||
| 2024 | 2,714 | |||
| 2025 | — | |||
| 2026 | — | |||
| 2027 | — | |||
| Total undiscounted cash payments | 27,140 | |||
| Less interest | (766 | ) | ||
| Present value of payments | $ | 26,374 |
NOTE 11 – GOODWILL
On August 18, 2021, through a Stock Purchase Agreement, 100% of the outstanding 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 the issuance of 8,974 shares of preferred series DD stock.
The preliminary purchase price for the merger was completeddetermined 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 $121,332(iii) $225,000 in cash of equipmentwhich $175,000 was advanced prior to closing of the transaction (See Note 9).
Under the acquisition method, the purchase price must be allocated to the reporting units net assets acquired, inclusive of intangible assets, with any 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, planned growth in new markets, and leaseholds in prepaid was capitalized along with $28,838synergies expected to be achieved from the combined operations of equipmentMeso Numismatics, Inc. and leaseholds purchasedGlobal Stem Cells Group.
The following table summarizes the Company’s carrying amount of goodwill during the three months ended June 30,March 31, 2023 and the years ended December 31, 2022:
| Goodwill | ||||
| Balance at December 31, 2021 | $ | 5,805,438 | ||
| Acquisition | - | |||
| Impairment | - | |||
| Balance at December 31, 2022 | $ | 5,805,438 | ||
| Acquisition | - | |||
| Impairment | - | |||
| Balance at March 31, 2023 | $ | 5,805,438 | ||
During each fiscal year, we periodically assess whether any indicators of impairment exist which would require us to perform an interim impairment review. As of each interim period end during each fiscal year, we concluded that a triggering event had not occurred that would more likely than not reduce the fair value of our reporting unit below their carrying values. We performed our annual test of goodwill for impairment as of December 31, 2022. The results of the goodwill impairment test indicated that the fair value of the reporting unit was in excess of the carrying value, and, thus, we did not require an impairment charge.
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NOTE 12 – DISCONTINUED OPERATIONS
On October 28, 2022, we entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiary with our prior officer and director, Mr. Melvin Pereira, pursuant to which we agreed to sell Mr. Pereira 100% of our interest in Meso Numismatics Corp., a Florida corporation. In exchange, Mr. Pereira has agreed to assume all of the liabilities of Meso Numismatics, provide whatever financial and other materials needed by us to prepare and complete our financial statements for reporting purposes, and to not disparage our company. The Company reclassified the results of operations of the coins, paper currency, bullion and medals business resulting in a loss on discontinued operations of $124 for the three months ended March 31, 2022.
As a result of this transaction, we are no longer engaged in the sale of coins, paper currency, bullion and medals and we have moved into what we believe is a more lucrative opportunity for our company, the operations of Global Stem Cell Group.
The following table presents the loss from discontinued operations for the three months ended March 31, 2022:
| Revenue | $ | 11,330 | ||
| Cost of revenue | 11,109 | |||
| Gross profit | 221 | |||
| Operating expenses | ||||
| Advertising and marketing | 73 | |||
| Depreciation and amortization expense | 200 | |||
| General and administrative | 71 | |||
| Total operating expenses | 344 | |||
| Loss from discontinued operations | $ | (124 | ) |
NOTE 1513 – SUBSEQUENT EVENTS
On October 28, 2022,In accordance with ASC 855-10, we entered into an Agreement of Conveyance, Transferhave analyzed events and Assignment of Subsidiary with our prior officer and director, Mr. Melvin Pereira, pursuanttransactions that occurred subsequent to which we agreed to sell Mr. Pereira 100% of our interest in Meso Numismatics Corp., a Florida corporation. In exchange, Mr. Pereira has agreed to assume all ofMarch 31, 2023 through the liabilities of Meso Numismatics, provide whatever financial and other materials needed by us to prepare and complete ourdate these financial statements for reporting purposes,were issued and have determined that we do not have any other material subsequent events to not disparage our company.
As a result of this transaction, we are no longer engageddisclose or recognize in the sale of coins, paper currency, bullion and medals and we have moved into what we believe is a more lucrative opportunity for our company, the operations of Global Stem Cell Group.these financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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
Since the acquisition of Global Stem Cell Group in August last year,of 2021, our focus has been mainly dedicated to its operations serving the markets in the regenerative medicine industry. We still have numismatics operation, but the overall plan for the company is too move fromOn October 28, 2022, we entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiary with our prior officer and director, Mr. Melvin Pereira, pursuant to which we agreed to sell Mr. Pereira 100% of our interest in Meso Numismatics Corp., a Florida corporation. As a result of this transaction, we are no longer engaged in the sale of coins, paper currency, bullion and medals and we have moved into what we believe is a more lucrative opportunity for our company.company, the operations of Global Stem Cell Group.
We believe stem cell therapy is becoming an increasingly effective clinical solution for treating conditions that traditional or conventional medicine only offers within palliative care and pain management. Patients around the world are seeking a natural regenerative alternative without the potential risks and side effects sometimes associated with conventional pharmaceuticals.
We work with doctors and their staff to provide products, 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 change 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 extensive education platform. Our revenue comes directly from the training and the seminars, 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.
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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 leverages these multinational relationships to build best practices and further our mission.
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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 recoverhave been recovering in 2022 and into 2023, we are integrating every aspect of the regenerative medicine industry. During 2022,2023, we plan to continue 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 20222023 and beyond.
Results of Operations
Results of Operations for the Three Months Ended September 30, 2022 and 2021.
Below is a summary of the results of operations for the three months ended September 30, 2022March 31, 2023 and 2021.2022.
| For the Three Months Ended September 30, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Revenue | $ | 374,359 | $ | 165,042 | $ | 209,317 | 126.83 | % | ||||||||
| Cost of revenue | 109,364 | 88,520 | 20,844 | 23.55 | % | |||||||||||
| Gross profit | 264,995 | 76,522 | 188,473 | 246.30 | % | |||||||||||
| Operating expenses | ||||||||||||||||
| Advertising and marketing | 80,931 | 22,351 | 58,580 | 262.09 | % | |||||||||||
| Professional fees | 143,118 | 336,299 | (193,181 | ) | -57.44 | % | ||||||||||
| Officer compensation | 22,500 | 518,833 | (496,333 | ) | -95.66 | % | ||||||||||
| Depreciation and | ||||||||||||||||
| amortization expense | 39,882 | 12,947 | 26,935 | 208.04 | % | |||||||||||
| Investor relations | 32,749 | 32,574 | 175 | 0.54 | % | |||||||||||
| General and administrative- related party | - | 8,116,269 | (8,116,269 | ) | -100 | % | ||||||||||
| General and administrative | 107,908 | 52,651 | 55,257 | 104.95 | % | |||||||||||
| Total operating expenses | 427,088 | 9,091,924 | (8,664,836 | ) | -95.30 | % | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (1,183,166 | ) | (900,039 | ) | (283,127 | ) | 31.46 | % | ||||||||
| Derivative financial | ||||||||||||||||
| instruments | 876 | — | 876 | 00 | % | |||||||||||
| Net loss | $ | (1,344,383 | ) | $ | (9,915,441 | ) | $ | 8,571,058 | -86.44 | % | ||||||
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| For the Three Months Ended March 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Revenue | $ | 786,198 | $ | 298,748 | $ | 487,450 | 163.16 | % | ||||||||
| Cost of revenue | 249,397 | 192,484 | 56,913 | 29.57 | % | |||||||||||
| Gross profit | 536,801 | 106,264 | 430,537 | 405.16 | % | |||||||||||
| Operating expenses | ||||||||||||||||
| Advertising and marketing | 141,637 | 54,541 | 87,096 | 159.69 | % | |||||||||||
| Professional fees | 209,371 | 395,739 | (186,368 | ) | -47.09 | % | ||||||||||
| Officer compensation | 22,500 | 22,500 | - | 0.00 | % | |||||||||||
| Depreciation and | ||||||||||||||||
| amortization expense | 56,628 | 26,777 | 29,851 | 111.48 | % | |||||||||||
| Investor relations | 2,250 | 47,250 | (45,000 | ) | -95.24 | % | ||||||||||
| General and administrative | 178,626 | 101,847 | 76,779 | 75.39 | % | |||||||||||
| Total operating expenses | 611,012 | 648,654 | (37,642 | ) | -5.80 | % | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (1,600,426 | ) | (1,140,529 | ) | (459,897 | ) | -40.32 | % | ||||||||
| Gain on Derivative financial instruments | 1,927 | 6,079 | (4,152 | ) | -68.30 | % | ||||||||||
| Gain on settlement of debt | 2,463 | - | 2,463 | 0.00 | % | |||||||||||
| Loss from continuing operations | (1,670,247 | ) | (1,676,840 | ) | 6,593 | 0.39 | % | |||||||||
| Discontinued operations: | ||||||||||||||||
| Loss on sale of discontinued operations | - | (124 | ) | 124 | 100.00 | % | ||||||||||
| Loss from discontinued operations | - | (124 | ) | 124 | 100.00 | % | ||||||||||
| Net loss | $ | (1,670,247 | ) | $ | (1,676,964 | ) | $ | 6,717 | 0.40 | % | ||||||
Revenue
Revenue increased by 126.83%163.16% in the amount of $209,317$487,450 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021.2022. The key reason for the increase in revenue was a result of the acquisitionopening of the Cancun facility in the second half of 2022, which provided a facility for physicians to come for training and preform patient procedures Additional, Global Stem Cells Group, Inc. on August 18, 2021. Revenue from viable cell therapylike almost everyone else in the world, was severely affected by the covid 19 pandemic during 2021 and immune support related productsthe first six months of 2022, restrictions our international travel along with physicianin person meetings limited our training increased by $214,114 offset by a decrease in sale of coins, metalsnew customers along with selling them products and paper moneyequipment which adversely affecting our results of $4,797 for the three months ended September 30, 2022, compared to the same period in 2021.operations.
Listed below are the revenues, cost of revenues and gross profits by Company for the three months ended September 30, 2022:
| For the Three Months Ended September 30, 2022 | ||||||||||||
| Global Stem Cells Group | Meso Numismatics | Total | ||||||||||
| Revenue | $ | 367,697 | $ | 6,662 | $ | 374,359 | ||||||
| Cost of revenue | 102,779 | 6,585 | 109,364 | |||||||||
| Gross profit | $ | 264,918 | $ | 77 | $ | 264,995 | ||||||
| Gross profit % | 72.05 | % | 1.16 | % | 70.79 | % | ||||||
We expect that our revenues will increase in future quarters, as we ramp up operations at our manufacturing facilities, and as we continue to increase our revenues in future quarters fromadvertising and awareness efforts across the globe for our operations associated with Global Stem Cells with less expected revenues in future quarters associated with our numismatic operations.products and services.
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The following table presents the Company’s revenue by product category for the three months ended March 31, 2023 and 2022:
| For the Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Training | $ | 181,320 | $ | 53,394 | ||||
| Product supplies | 433,673 | 154,817 | ||||||
| Equipment | 93,690 | 90,537 | ||||||
| Patient procedures | 77,515 | - | ||||||
| Total revenue | $ | 786,198 | $ | 298,748 | ||||
Operating expenses
Operating expenses decreased by 95%5.8% in the amount of $8,664,836$37,642 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021.2022. Listed below are the major changes to operating expenses:
Advertising and marketing fees increased by $58,580$87,096 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, primarily due to the acquisition ofincrease in advertising by Global Stem Cells Group, Inc. on August 18, 2021.Group.
Professional fees decreased by $193,181$186,368 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, primarily due to audit and accounting expenses due to the acquisition of Global Stem Cells Group, Inc. on August 18, 2021.fees.
Officer compensation decreased by $496,333 for the three months ended September 30, 2022, compared to the same period in 2021, primarily due to the issuance of 896 shares of Series DD Preferred Stock of the Company to Dave Christensen, current Director, President, Chief Executive Officer, Chief Financial Officer and Secretary as compensation pursuant to the Professional Service Consulting Agreement. 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.
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Depreciation and amortization increased by $26,935$29,851 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, primarily due to completion of Cancun lab in May 2022.
General and administrative-related party expense decreaseInvestor relations decreased by $8,116,269$45,000 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, primarily due to the issuanceexpiration of the 1,000 shares of the Company’s Series CC Convertible Preferred Stock to Lans Holdings Inc. terminated and replacedagreement with a cash payment as consideration. The Company paid Lans Holdings Inc., by delivery in escrow, an amount equal to $8,200,000, offset by $83,731 the value of the 1,000 shares of the Company’s Series CC Convertible Preferred Stock terminated.investor relation firm at December 31, 2022.
General and administrative expense increase by $55,257$76,778 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, primarily due to an increase in travel and expenses associated with the acquisition of Global Stem Cells Group, Inc. on August 18, 2021.Cancun facility.
Other expense
Other expense increased by $282,251$461,585 for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, primarily as a result of the increase in amortization of debt discount of $320,635 and $139,262 of interest on promissory notes. During
Discontinued operations
On October 28, 2022, we completed the ninedisposition of our prior coins, paper currency, bullion and medals business by entering into an Agreement of Conveyance, Transfer and Assignment of Subsidiary with our prior officer and director, Mr. Melvin Pereira, pursuant to which we agreed to sell Mr. Pereira 100% of our interest in Meso Numismatics Corp., a Florida corporation. The Company reclassified the results of operations of the coins, paper currency, bullion and medals business resulting in a loss on discontinued operations of $124 for the three months ended September 30, 2021, we received $11,400,000 in proceeds receivedMarch 31, 2022.
The following table presents the loss from discontinued operations for the issuancethree months ended March 31, 2022:
| Revenue | $ | 11,330 | ||
| Cost of revenue | 11,109 | |||
| Gross profit | 221 | |||
| Operating expenses | ||||
| Advertising and marketing | 73 | |||
| Depreciation and amortization expense | 200 | |||
| General and administrative | 71 | |||
| Total operating expenses | 344 | |||
| Loss from discontinued operations | $ | (124 | ) |
Page 26 of promissory notes. We expect other expense to increase in future quarters as a result of the interest on the new debt.33
Net Loss
We recorded a net loss of $1,344,383$1,670,247 for the three months ended September 30, 2022,March 31, 2023, as compared with a net loss of $9,915,441$1,676,964 for the same in 2021.
Results of Operations for the Nine Months Ended September 30, 2022 and 2021.
Below is a summary of the results of operations for the nine months ended September 30, 2022 and 2021.
| For the Nine Months Ended September 30, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Revenue | $ | 988,958 | $ | 185,254 | $ | 803,704 | 433.84 | % | ||||||||
| Cost of revenue | 468,838 | 115,170 | 353,668 | 307.08 | % | |||||||||||
| Gross profit | 520,120 | 70,084 | 450,036 | 642.14 | % | |||||||||||
| Operating expenses | ||||||||||||||||
| Advertising and marketing | 216,506 | 22,732 | 193,774 | 852.43 | % | |||||||||||
| Professional fees | 735,186 | 665,544 | 69,642 | 10.46 | % | |||||||||||
| Officer compensation | 67,500 | 552,932 | (485,432 | ) | -87.79 | % | ||||||||||
| Depreciation and | ||||||||||||||||
| amortization expense | 102,184 | 13,347 | 88,837 | 665,59 | % | |||||||||||
| Investor relations | 127,633 | 53,046 | 74,587 | 140.61 | % | |||||||||||
| General and administrative- related party | - | 8,116,269 | (8,116,269 | ) | -100.00 | % | ||||||||||
| General and administrative | 341,131 | 69,206 | 271,925 | 392.92 | % | |||||||||||
| Total operating expenses | 1,590,140 | 9,493,076 | (7,902,936 | ) | -83.25 | % | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (3,454,874 | ) | (1,659,724 | ) | 1,795,150 | 108.16 | % | |||||||||
| Derivative financial | ||||||||||||||||
| instruments | 10,482 | — | 10,482 | 0.00 | % | |||||||||||
| Other expense | — | (231,109 | ) | 231,109 | -100.00 | % | ||||||||||
| Net loss | $ | (4,514,412 | ) | $ | (11,313,825 | ) | $ | 6,799,413 | -60.10 | % | ||||||
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Revenue
Revenue increased by 433.84% in the amount of $803,704 for the nine months ended September 30, 2022, compared to the same period in 2021. The key reason for the increase in revenue was a result of the acquisition of Global Stem Cells Group, Inc. on August 18, 2021. Revenue from viable cell therapy and immune support related products along with physician training increased by $810,384 offset by a decrease in sale of coins, metals and paper money of $6,680 for the nine months ended September 30, 2022, compared to the same period in 2021.
Listed below are the revenues, cost of revenues and gross profits by Company for the nine months ended September 30, 2022:
| For the Nine Months Ended September 30, 2022 | ||||||||||||
| Global Stem Cells Group | Meso Numismatics | Total | ||||||||||
| Revenue | $ | 963,967 | $ | 24,991 | $ | 988,958 | ||||||
| Cost of revenue | 445,814 | 23,024 | 468,838 | |||||||||
| Gross profit | $ | 518,153 | $ | 1,967 | $ | 520,120 | ||||||
| Gross profit % | 53.75 | % | 7.87 | % | 52.59 | % | ||||||
We expect to increase our revenues in future quarters from our operations associated with Global Stem Cells with less expected revenues in future quarters associated with our numismatic operations.
Operating expenses
Operating expenses decreased by 83.25% in the amount of $7,902,936 for the nine months ended September 30, 2022, compared to the same period in 2021. Listed below are the major changes to operating expenses:
Advertising and marketing fees increased by $193,774 for the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to the acquisition of Global Stem Cells Group, Inc. on August 18, 2021.
Professional fees increased by $69,642 for the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to audit and accounting expenses.
Officer compensation decreased by $485,432 for the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to the issuance of 896 shares of Series DD Preferred Stock of the Company to Dave Christensen, current Director, President, Chief Executive Officer, Chief Financial Officer and Secretary as compensation pursuant to the Professional Service Consulting Agreement. 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.
Depreciation and amortization increased by $88,837 for the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to completion of Cancun lab in May 2022.
General and administrative-related party expense decrease by $8,116,269 for the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to the issuance of the 1,000 shares of the Company’s Series CC Convertible Preferred Stock to Lans Holdings Inc. terminated and replaced with a cash payment as consideration. The Company shall pay Lans Holdings Inc., by delivery in escrow, an amount equal to $8,200,000, offset by $83,731 the value of the 1,000 shares of the Company’s Series CC Convertible Preferred Stock terminated.
General and administrative expense increase by $271,925 for the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to the acquisition of Global Stem Cells Group, Inc. on August 18, 2021.
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Other expense
Other expense increased by $1,553,559 for the nine months ended September 30, 2022, compared to the same period in 2021, primarily as a result of the increase in interest on promissory notes. During the nine months ended September 30, 2021, we received $11,400,000 in proceeds received from the issuance of promissory notes. We expect other expense to increase in future quarters as a result of the interest on the new debt.
Net Loss
We recorded a net loss of $4,514,412 for the nine months ended September 30, 2022, as compared with a net loss of $11,313,825 for the same 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 September 30, 2022March31, 2023 and December 31, 2021.2022.
| September 30, | December 31, | $ | % | |||||||||||||
| 2022 | 2021 | Change | Change | |||||||||||||
| Cash and cash equivalents | $ | 1,769,636 | $ | 2,978,525 | $ | (1,208,889 | ) | -40.59 | % | |||||||
| March 31, 2023 | December 31, 2022 | $ Change | % Change | |||||||||||||
| Cash and cash equivalents | $ | 1,636,624 | $ | 1,645,185 | $ | (8,561 | ) | -0.52 | % | |||||||
Summary of Cash Flows
Below is a summary of the Company’s cash flows for the ninethree months ended September 30, 2022March 31, 2023 and 2021.2022.
| For the Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Net cash used in operating activities | $ | (1,064,706 | ) | $ | (1,129,835 | ) | ||
| Net cash provided by (used in) investing activities | (129,901 | ) | 666,647 | |||||
| Net cash provided by (used in) financing activities | (14,282 | ) | 11,149,546 | |||||
| Net increase (decrease) in cash and cash equivalents | $ | (1,208,889 | ) | $ | 10,686,358 | |||
For the Three Months Ended | ||||||||
| 2023 | 2022 | |||||||
| Net cash provided by (used) in operating activities | $ | 6,775 | $ | (516,106 | ) | |||
| Net cash used in investing activities | (5,486 | ) | - | |||||
| Net cash used in financing activities | (9,850 | ) | (1,396 | ) | ||||
| Net decrease in cash and cash equivalents | $ | (8,561 | ) | $ | (517,502 | ) | ||
Operating activities
Net cash used inprovided by operating activities was $1,064,706$6,775 during the ninethree months ended September30, 2022March31, 2023 and consisted of a net loss of $4,514,412,$1,670,247, which was offset by a net change in operating assets and liabilities of $2,038,208$858,821 and non-cash items of $1,411,498.$818,201. The non-cash items for the ninethree months ended September 30, 2022,March 31, 2023, consisted of depreciation and amortization expenses of $102,184$56,628 and amortization of debt discount of $1,319,796,$765,963, partially offset by the change in derivative liabilities of $10,482.$1,927 and gain on settlement of debt of $2,463. The significant change in operating assets and liabilities was an increase in accounts payable and accrued liabilities, partially offset by the decrease in accounts receivable and prepaid expense.
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Net cash used in operating activities was $1,129,835$516,106 during the ninethree months ended September 30, 2021March 31, 2022 and consisted of a net loss from continuing operations of $11,313,825,$1,676,840, which was offset by a net change in operating assets and liabilities of $9,161,467$694,632 and non-cash items of $1,022,522.$466,226. The primary non-cash items for the ninethree months ended September 30, 2021,March 31, 2022, consisted of depreciation and amortization expenses of $26,777 and amortization of debt discount of $500,338$445,328, partially offset by the change in derivative liabilities of $6,079 and shares issued for services and settlementloss on discontinued operations of debt of $464,645.$124. The significant change in operating assets and liabilities was an increase in accounts payable and accrued liabilities, along with amount due Lans Holdings. partially offset by the decrease in accounts receivable and prepaid expense.
Investing activities
Net cash used in investing activities was $129,901$5,486 consisted of purchase of property and equipment associated with the completion of the Cancun lab during the ninethree months ended September 30, 2022.
Net cash provided by investing activities was $666,647 consisted of cash acquired in business combination and cash to Global Stem Cells Group Inc. during the nine months ended September 30, 2021.March 31, 2023.
Financing activities
Net cash used in financing activities was $14,282$9,850 consisted of principal payment of debt for the ninethree months ended September 30, 2022.March 31, 2023.
Net cash provided byused in financing activities was $11,149,546$1,396 consisted of proceeds received from the issuanceprincipal payment of promissory notes of $11,400,000 offset by proceeds from note receivable of $250,000 and principle payment on debt of $454 for the ninethree months ended September 30, 2021.March 31, 2022.
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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 $51 million$53,846,712 and a working capital deficit of $4,221,015$11,187,438 as of September 30, 2022March 31, 2023 and future losses are anticipated. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
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 maywill 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 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 September 30, 2022,March 31, 2023, the Company had no off-balance sheet arrangements.
Critical Accounting Policies
Our critical accounting policies have not materially changed during the ninethree months ended September 30, 2022.March 31, 2023. 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.
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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 BinomialMonte Carlo option pricing model to value the derivative instruments.
Stock Based Compensation
Share-based compensation issued to employees is measured at the grant date, based on the fair value of the 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 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.
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New Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden in accounting for (or recognizing the effects of)associated with transitioning away from 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 transactionsrates that reference the London Interbank Offered Rate (LIBOR) or another reference rateare expected to be discontinued becausediscontinued. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform—Scope, which clarified the scope and application 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, the original guidance. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform—Deferral of the Sunset Date of Topic 848. This update extends the sunset provision of ASU 2020 through -04 to 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. 2024. The Company has amended certain agreementsnot yet adopted this ASU 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 resulteffect of reference rate reform.adopting this new accounting guidance.
In October 2021, June 2016, the FASB issued amended guidanceASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires acquiring entitiesa consideration of a broader range of reasonable and supportable information to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance inform credit loss estimates. For companies that qualified as Smaller Reporting Companies as defined by the SEC as of November 19, 2019, ASU 2016-13 is effective for fiscal years beginning after December 15, 2023, including interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of thewithin those fiscal year of adoption. The adoption of this 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 contract liabilities acquired in future business combinations.
In November 2021, the FASB issued new 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 of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis.years. The Company is currently evaluating the impact of adoptionthe guidance 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 statementsstatements.
Goodwill
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Goodwill represents the excess of fair value over identifiable tangible and intangible net assets acquired in business combinations. Goodwill is not amortized, instead goodwill is reviewed for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Revenue Recognition
EffectiveOn January 1, 2018, the Company adopted ASC 606 — ASU 2014-09 Revenue from Contracts with Customers. Under ASC 606,Customers and all subsequent amendments to the ASU (collectively, “ASC 606”), the Company recognizes revenue from the salesales 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 material impact on the Company’s financial statements as a result of adopting Topic 606 for the three months ended March 31, 2023 and the year ended December 31, 2022.
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The Company’s main sourcessource of revenue areis comprised of the following:
| ● |
| Training-GSCG offers a Stem Cell & Exosomes Certification Program where physicians attending |
| ● | 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 a third party directly to physicians. |
| ● | Equipment- Physicians can order equipment through GSCG which includes a warranty from manufacture of equipment. Equipment is paid for upfront and shipped from manufacture directly to physicians. |
| ● |
The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer.customer or as services are rendered. Revenue is measured based on the consideration the Company receives in exchange for those products or services.products.
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 goodwill, 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.
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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 September 30, 2022March 31, 2023 and December 31, 2021,2022, 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 September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company does not have any assets or liabilities except for derivative liabilities andrelated to convertible notes payable required to be measured at fair value in accordance with FASB ASC Topic 820, Fair Value Measurement.
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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. | |
| 3. | The Company failed to account for the acquisition of GSCG using the full purchase accounting method in accordance with ASC 805. |
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 September 30, 2022.March 31, 2023. The Company plans to take remedial action to address these weaknesses during the fiscal year ended 2022.2023.
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 quarterthree months ended June 30, 2022March 31, 2023 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, toTo 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.
Item 1A. Risk Factors
See risk factors included in our Annual Report on Form 10-K for 2021,the fiscal year ended December 31, 2022, filed with the SEC on May 5, 2022.April 14, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
N/A
Item 5. Other Information
None.
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Item 6. Exhibits
| ** | 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,
| ||
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