UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ___________ to ___________
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
|
|
|
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act:
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark 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. o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
As of June 2, 2025, the issuer had shares of its common stock issued and outstanding.
MEDIXALL GROUP, NC. AND SUBSIDIARIES
INDEX
| Page No. | ||
| PART I | FINANCIAL INFORMATION | |
| ITEM 1. | FINANCIAL STATEMENTS: | |
| Condensed Consolidated Balance Sheets at June 30, 2024 (unaudited) and December 31, 2023 | 1 | |
| Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (unaudited) | 2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and six months ended June 30, 2024 and 2023 (unaudited) | 3 | |
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited) | 4 | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | 5 | |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 16 |
| ITEM 4. | CONTROLS AND PROCEDURES | 16 |
| PART II | OTHER INFORMATION | |
| ITEM 1. | LEGAL PROCEEDINGS | 17 |
| ITEM 1A. | RISK FACTORS | 17 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 17 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 17 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 17 |
| ITEM 5. | OTHER INFORMATION | 17 |
| ITEM 6. | EXHIBITS | 18 |
| SIGNATURES | 19 | |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable | ||||||||
| Other Assets | ||||||||
| Total current assets | ||||||||
| Furniture and equipment, net | ||||||||
| Intellectual property | ||||||||
| Right-of-use-operating lease asset | ||||||||
| Website and development costs | ||||||||
| Total assets | ||||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses - related party | ||||||||
| Operating lease liability | ||||||||
| Notes payable | ||||||||
| Senior Convertible Debentures, net of discount of $ | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Notes payable, net of current portion | ||||||||
| Total liabilities | ||||||||
| STOCKHOLDERS' DEFICIT: | ||||||||
| Convertible Preferred Series A stock, $ par value, authorized; and issued and outstanding | $ | $ | ||||||
| Convertible Preferred Series B stock, $ par value, authorized issued and outstanding | ||||||||
| Common Stock, $ par value shares authorized; and shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 1 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of Services | ||||||||||||||||
| Gross Margin | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Personnel related expenses | ||||||||||||||||
| Other selling, general and administrative | ||||||||||||||||
| Interest Expense | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less preferred stock dividends | ||||||||||||||||
| Net Loss to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share | ||||||||||||||||
| Basic | $ | ( | ) | ( | ) | $ | ( | ) | ||||||||
| Diluted | $ | ( | ) | ( | ) | $ | ( | ) | ||||||||
| Weighted average number of common shares outstanding during the periods | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 2 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
| Series A Voting Preferred Stock | Series B Voting Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||
| $0.001 Par Value | $0.001 Par Value | $0.001 Par Value | Additional Paid-in | Accumulated | Total Stockholders' | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Common stock expense for services (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Proceeds from sale of common stock (Unaudited) | — | — | ||||||||||||||||||||||||||||||||||
| Fair value of Warrants issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, March 31, 2023 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Conversion of shares from preferred stock to common (Unaudited) | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||
| Common stock expense for services (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Fair value of Warrants issued with Convertible Debentures (Unaudited) | — | — | — | |||||||||||||||||||||||||||||||||
| Net Loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, June 30, 2023 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Conversion of shares from preferred stock to common (Unaudited) | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||
| Retirement of common stock (Unaudited) | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net Loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, March 31, 2024 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Common stock expense for services (Unaudited) | — | — | ( | ) | ||||||||||||||||||||||||||||||||
| Common stock issued (Unaudited) | — | — | ( | ) | ||||||||||||||||||||||||||||||||
| Net Loss (Unaudited) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance, June 30, 2024 (Unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation & amortization | ||||||||
| Common stock issued as compensation for services | ||||||||
| Amortization of debenture discounts | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other assets | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable and accrued expenses - related party | ( | ) | ||||||
| Net change in right-of-use operating lease asset and liability | ( | ) | ||||||
| Amortization of intellectual property | ||||||||
| Amortization of website and development costs | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from the sale of common stock, net of offering costs | ||||||||
| Proceeds from notes payable, net of repayments | ||||||||
| Proceeds from issuance of convertible debentures | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | ||||||||
| Supplemental disclosures of non-cash information | ||||||||
| Discount issued with Convertible Debentures | ||||||||
| Right-of-use lease asset obtained in exchange for operating lease liabilities | ||||||||
| Cash paid during the period for interest | ||||||||
| Cash paid during the period for taxes | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - Organization and Nature of Operation
MediXall Group, Inc. (OTCPK:MDXL) (the “Company” or “MediXall”) was incorporated on December 21, 1998 under the laws of the State of Nevada under the name of IP Gate, Inc. The Company had various name changes since, to reflect changes in the Company’s operating strategies. The Company owns various subsidiaries listed but operates primarily under HealthKarma Inc (“Health Karma”).
The Health Karma business model is purposefully designed and structured around delivering practical, value-based, customized solutions to individuals, employers, and organizations which will enhance their employee’s and members’ overall mental, physical health and well-being, increase productivity, and help control the cost of care of the individual, the employer, or membership-based organization. Our unique, customized, proactive solutions are available anytime, anywhere, delivering timely, quality care to individuals, employees, and members.
The Company has the following wholly-owned subsidiaries: (1) Health Karma, Inc., which was established in 2020 to carry out the operations of MediXall Group Inc.; (2) Medixaid, Inc.; a dormant subsidiary and dissolved on April 19, 2025 (3) MediXall.com, Inc.; a dormant subsidiary and dissolved on April 19, 2025 (4) IHL of Florida, Inc., a dormant subsidiary and dissolved on September 27, 2019; and, (5) Medixall Financial Group, a dormant subsidiary and dissolved on April 19, 2025. The only active operating subsidiary is Health Karma Inc.
NOTE 2 – Going Concern
The Company had an accumulated
deficit of $
Since the Company has
generated minimal revenues from its planned operations, its ability to continue as a going concern is wholly dependent upon its ability
to obtain additional financing. Since inception, the Company has funded operations through short-term borrowings, and the proceeds from
equity sales in order to meet its strategic objectives. The Company's future operations are dependent upon its ability to generate revenues
along with additional external funding as needed. However, there can be no assurance that the Company will be able to obtain sufficient
funds to continue the development of its business plan. Subsequent to June 30, 2024, the Company issued $
In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These condensed consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 5 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of June 30, 2024 and the condensed consolidated results of operations and cash flows for the periods presented. The condensed consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on January 27, 2025.
Principles of Consolidation
These unaudited condensed consolidated financial statements presented are those of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Reclassifications
Certain reclassifications have been made to prior periods for comparative presentation purposes only.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.
A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of intellectual property. The Company uses various assumptions it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustments are reflected in current operations.
Risks and Uncertainties
The Company's operations are subject to significant risks and uncertainties including financial, operational, and regulatory risks, including the potential risk of business failure.
Income Taxes
The Company accounts for income taxes using the liability method prescribed by the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 740, "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely- than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the year that includes the enactment date.
| 6 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies (continued)
Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more- likely-than-not threshold to determine the amount of benefit to be recognized in the condensed consolidated financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than -not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de- recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de- recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.
The Company assessed its earnings history, trends, and estimates of future earnings, and determined that the deferred tax asset could not be realized as of June 30, 2024. Accordingly, a valuation allowance was recorded against the net deferred tax asset.
Revenue Recognition
In accordance with GAAP, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (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 performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.
The Company generates revenues from selling bundle medical, healthcare and well-being services to individuals, employer groups, organizations, associations, resellers, and third-party administrators. Our product offerings operate on a monthly subscription model with agreements and contracts typically spanning a 12-month commitment. We derive significant revenue stability and visibility from this structure. Under our per-membership-per-month (“PMPM”) subscription model, our client customers pay a monthly fee based on the total number of active memberships for that month times the contracted PMPM fee. This revenue generation model enables strong revenue stability as we establish long-term commitments with our clients, fostering a mutually beneficial partnership. The predictable monthly fee structure and the long-term nature of the contracts contribute to increased revenue visibility and forecasting accuracy. It also allows us to align our resources efficiently to meet the needs of our clients, ensuring high-quality service delivery throughout the contracted period. We recognize revenue monthly as the services are rendered and performance obligations are satisfied.
Senior Convertible Debentures and Warrants
At issuance, the senior convertible debentures (“Convertible Debt”) are recorded at its fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant, establishing the cost basis.
Warrants issued with the Convertible Debt are accounted for under the fair value and relative fair value method. The warrants are first analyzed per its terms as to whether it has derivative features or not. The warrants were determined to not have derivative features and were recorded into equity at their fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of their fair value to the total fair value including the fair value of the Convertible Debt. The warrants relative fair values are recorded as a discount to the Convertible Debt and as additional paid-in-capital. Discount on the Convertible Debt is amortized to interest expense over the life of the debt.
The Company applies the fair value method in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values the stock-based compensation at the market price for the Company's stock as of the date of issuance.
| 7 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies (continued)
The computation of basic loss per share (“LPS”) is based on the weighted average number of shares that were outstanding during the periods, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted LPS is based on the number of basic weighted-average shares outstanding. The computation of diluted LPS does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on LPS. Therefore, when calculating LPS, there is no inclusion of dilutive securities as their inclusion in the LPS calculation is antidilutive due to net loss for the periods.
Following is the computation of basic and diluted loss per share for the three and six month periods ended June 30, 2024 and 2023:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Basic and Diluted LPS Computation | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Series B Preferred Stock Dividends | ||||||||||||||||
| Loss available to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Basic and diluted LPS | $ | $ | ) | $ | ) | $ | ) | |||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
Potentially dilutive securities not included in the calculation of diluted LPS attributable to common stockholders because to do so would be anti- dilutive are as follows (in common stock equivalent shares):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Series A Preferred stock (convertible) | ||||||||||||||||
| Series B Preferred stock (convertible) | ||||||||||||||||
| Senior Convertible Debentures and Warrants | ||||||||||||||||
Recoverability of Long-Lived Assets
The Company assesses the recoverability of long-lived assets annually or whenever events or changes in circumstances indicate that expected future undiscounted cash flows might not be sufficient to support the carrying amount of an asset. The Company deems an asset to be impaired if a forecast of undiscounted future operating cash flows is less than the carrying amount. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying value of the asset exceeds its fair value. There was no impairment of long-lived assets pertaining to the three and six month periods ended June 30, 2024 and 2023. However, there can be no assurances that future impairment tests will not result in a charge to operations.
Intellectual Property
The intellectual property (“Intellectual Property”) is an intangible asset arising from the Company’s right to use the proprietary technology and programs of the 24hr Virtual Clinic. The Intellectual Property was initially measured at fair value and will be amortized on a straight line basis over its estimated useful life as the economic benefits are consumed or otherwise realized. Management has determined the estimated useful life to be seven years.
| 8 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 3 - Summary of Significant Accounting Policies (continued)
Website and Development Costs
Internal and external costs incurred to develop the internal-use computer software during the application and development stage shall be capitalized subsequent to the preliminary project stage and when it is probable that the project will be completed. As of June 30, 2024 and December 31, 2023, the Company has met the capitalization requirements and then began to amortize the assets. Amortization is calculated using the straight line method over the estimated useful life of the assets, which management determined to be five years.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated condensed financial statements.
NOTE 4 - Intellectual Property
Intellectual Property consists of the following:
| Balances, June 30, 2024 | ||||
| Gross | $ | |||
| Accumulated amortization | ( | ) | ||
| Net carrying amount | $ | |||
Estimated amortization expense for the intellectual property for each of the future years ending December 31, is as follows:
| 2024 (six months) | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Total | $ | ||||
NOTE 5 – Preferred Stock
The outstanding Series A preferred shares are convertible into common shares based on a conversion factor of 1:94. The preferred shares do not pay dividends. The number of votes for the preferred shares shall be the same as the amount of shares of common shares that would be issued upon conversion.
On June 24, 2020, the Company filed with the Secretary of State of the State of Nevada (the “Secretary of State”) a certificate of designation (the “Certificate of Designation”) of Series B Convertible Preferred Stock, par value $ per share (the “Series B Preferred Stock”). The Certificate of Designation was effective upon filing with the Secretary of State and designated a new series of preferred stock of the Company as Series B Convertible Preferred Stock with shares authorized for issuance.
Upon the occurrence of the events as set forth in paragraph (a) or (b) below, each share of Series B Preferred Stock shall be converted into four (the “Conversion Ratio”) fully paid and non-assessable shares of common stock or any shares of capital stock or other securities of the Company into which such common stock shall hereafter be changed or reclassified (the “Conversion Shares”) as set forth in the Certificate of Designation.
| 9 |
MEDIXALL GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 5 – Preferred Stock (continued)
| (a) | Automatic Conversion |
Immediately upon the listing of the common stock for trading on the New York Stock Exchange or the Nasdaq Stock Market, all of the issued and outstanding shares of Series B Preferred Stock shall automatically be converted into Conversion Shares without any further action of any holder of Series B Preferred Stock (each, a “Series B Holder” and collectively, “Series B Holders”).
| (b) | Optional Conversion |
A Series B Holder shall have the right at any time during the period beginning on the date which is six months following the date that the Series B Preferred Stock is initially issued and prior to any automatic conversion as provided in the Certificate of Designation, to convert all or any part of the outstanding Series B Preferred Stock held by such Series B Holder into Conversion Shares at the Conversion Ratio as provided in the Certificate of Designation, subject to limitations set forth in the Certificate of Designation.
Dividends
Series B Holders will
be entitled to receive a quarterly dividend, until the conversion of the Series B Preferred Stock, at the rate of
Voting Rights
Each share of Series B Preferred Stock shall have a number of votes on any matter submitted to the holders of the Company’s common stock, or any class thereof, for a vote, equal to the number of Conversion Shares into which the Series B Preferred Stock is then convertible, and shall vote together with the common stock, or any class thereof, as applicable, as one class on such matter for as long as the share of Series B Preferred Stock is issued and outstanding.
NOTE 6 – Related Party Transactions
During the three and six
months ended June 30, 2024, Wellcare Dimensions, Inc. was paid $
NOTE 7 – Senior Convertible Debentures and Warrants
As of June 30, 2024, the Company’s common stock underlying the convertible debentures and warrants is subject to a registration rights agreement. The Company is required to use its reasonable best efforts to comply with the provisions of the registration rights agreement.
As of June 30, 2024, the
Company issued warrants to acquire up to an aggregate
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MEDIXALL GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
NOTE 7 – Senior Convertible Debentures and Warrants (continued)
The fair value of each warrant issued during the six months ended June 30, 2024 was estimated on the date of issuance using the Black-Scholes option- pricing model with the following assumptions:
| Stock price | $ | |||
| Exercise price | $ | |||
| Risk-free interest rate | - | % | ||
| Expected dividend yield | % | |||
| Expected stock volatility | % | |||
| Expected life in years |
The expected life was based on the average life of the warrants. Expected volatility is based on historical volatility of Company's common stock. The risk-free rate for periods within the contractual life of the warrants is based on the U.S. Treasury yield curve in effect at the time of issuance. The dividend yield assumption is based on the Company's expectation of dividend payments.
The relative fair value
of the warrants issued during the three and six months ended June 30, 2024 was $
The following summarized the senior convertible debentures during the six-month period ended June 30, 2024:
| Senior Convertible Debentures at December 31, 2023 | $ | |||
| Debentures Issued | ||||
| Relative fair value of warrants issued as discount | ||||
| Accretion of warrants issued as discount | ||||
| Senior Convertible Debentures at June 30, 2024 | $ | |||
NOTE 8 – Subsequent Events
The Company has evaluated all subsequent events through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the unaudited condensed consolidated financial statements as of June 30, 2024, and events which occurred subsequently but were not recognized in the unaudited condensed consolidated financial statements.
Subsequent to June 30, 2024, the Company has converted all debentures and Preferred Series B shares into the Company’s common stock, along with all in-kind interest due.
Subsequent to June
30, 2024, and as of the date of this filing, the Company issued $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements contained in this report speak only as of the date of this report, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Such forward-looking statements include statements regarding, among other things, matters associated with:
| · | our ability to continue as a going concern, |
| · | our history of losses which we expect to continue, |
| · | the significant amount of liabilities due to related parties, |
| · | our ability to raise sufficient capital to fund our company, |
| · | our ability to integrate acquisitions and the operations of acquired companies, |
| · | the limited experience of our management in the operations of a public company, |
| · | potential weaknesses in our internal control over financial reporting, |
| · | increased costs associated with reporting obligations as a public company, |
| · | a limited market for our common stock and limitations resulting from our common stock being designated as a penny stock, |
| · | the ability of our board of directors to issue preferred stock without the consent of our stockholders, |
| · | our management controls the voting of our outstanding securities, |
| · | the conversion of shares of Series A and B preferred stock will be very dilutive to our existing common stockholders, |
| · | risks associated with and unique to health care, |
| · | risks associated with stability of the internet, data security, exposure to data breach, and |
| · | risks associated with using third-party providers for the deliverables of our products and services. |
You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements, including those made in this report, in Part I. Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2023 and our other filings with the Securities and Exchange Commission. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
OTHER PERTINENT INFORMATION
Unless specifically set forth to the contrary, when used in this report the terms “MediXall Group”, the “Company,” “we”, “us”, “our” and similar terms refer to MediXall Group, Inc., a Nevada corporation, and its wholly owned subsidiaries.
GENERAL
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the Company’s results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q.
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The MD&A is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
OVERVIEW
The Company’s business model is an innovation-driven healthcare solutions company dedicated to transforming the way individuals and organizations approach health and well-being. Through our operating subsidiary, Health Karma Inc., we deliver proactive, value-based, and customized solutions that empower individuals to achieve optimal physical, mental, and social well-being. Our mission is rooted in the concept of "health karma” for improving lives by addressing health needs at the first moment, the critical point when a healthcare event occurs, ensuring better outcomes and reduced costs. This is why our branding is focused around 1st Moment™.
Unlike traditional healthcare companies that focus on reactive, downstream care, Health Karma is uniquely positioned to intervene at the “1st Moment”, providing timely, accessible, and high-quality care through telephonic, secure video, and app-based platforms. This proactive approach not only enhances individual health and well-being but also drives measurable benefits for our clients, including increased productivity, reduced healthcare costs, and improved profitability. Our focus set us apart in the healthcare industry, positioning us as a leader in proactive, value-driven care. We are committed to delivering solutions that not only meet the evolving needs of our clients and members but also drive long-term value for our shareholders. Further, our 1st Moment™ brand emphasizes the fact that the majority of our solutions deliver immediate in-the-moment access to our provider network of medical doctors, master’s level behavioral health clinicians, registered triage nurses and even veterinarians.
Our solutions are designed to serve a broad spectrum of stakeholders, including corporations, Third-Party Administrators (TPAs), insurance companies, healthcare benefits providers, Professional Employer Organizations (PEOs), first responders, public safety agencies, educational institutions, and associations. By addressing health needs at the earliest possible stage, we create a ripple effect of positive outcomes—improving lives, reducing costs, and fostering healthier, more productive communities.
Although revenue was down 26% from the same quarter in 2023, revenue for the six-month period grew 14% over the same six-month period in 2023. The drop in Q2 revenue was due to a key client restructuring their program which caused a temporary pause in their offering from the end of April 2024 to September 2024.
Moreover, the Company successfully reduced its net loss in the first six months of 2024 by over $1.2 million from the same period in 2023. The net loss for the six months ended June 30, 2024 was $972,462 versus $2,200,873 for the same period in 2023. This is the result of the new management taking decisive steps to reduce costs by moving its corporate office, continuing the remote work strategy started under pandemic conditions, dramatically reducing the number of employees by procuring out-sourced marketing expertise, its User Experience/User Interface (UX/UI) platform, its IT development and maintenance, and the use of independent sales consultants and brokers.
Going Concern
We have incurred net losses of approximately $38.1 million since inception through June 30, 2024. The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2023 contains an explanatory paragraph regarding our ability to continue as a going concern based upon the fact that we are dependent upon our ability to increase revenues along with raising additional external capital as needed. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
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Results of Operations
Three-Month Period Ended June 30, 2024 Compared to the Three-Month Period Ended June 30, 2023
Revenue
Revenue for the three months ended June 30, 2024 was $52,839, whereas our revenue for the three months ended June 30, 2023 was $71,524 which was 26% less than the previous year.
Moreover, the Company successfully reduced its Net Loss in the three months ended June 30, 2024 by $493,516 from the same period in 2023. The Net Loss for the three months ended June 30, 2024 was $485,862 versus $979,378 for the same period in 2023.
Operating Expenses
A summary of our operating expense for the three-month periods ended June 30, 2024 and 2023 follows:
Three Months Ended June 30, | (Decrease) / | |||||||||||
| 2024 | 2023 | Increase | ||||||||||
| Operating expense | ||||||||||||
| Professional fees | $ | 126,468 | $ | 544,750 | $ | (418,282 | ) | |||||
| Personnel related expenses | 165,697 | 211,869 | (46,172 | ) | ||||||||
| Other selling, general, and administrative | 126,114 | 225,754 | (99,640 | ) | ||||||||
| Interest Expense | 105,835 | 32,944 | 72,891 | |||||||||
| Total operating expense | $ | 524,114 | $ | 1,015,317 | $ | (491,203 | ) | |||||
Operating expenses decreased $491,203, or 48.4%, to $524,114 during the three months ended June 30, 2024 compared to $1,015,317 during the same period in 2023. The decrease in total operating expenses is primarily due to:
| 1. |
The decrease in professional fees of $418,282 is primarily due to the decrease of stock compensation for consultant services during the three-month period ended June 30, 2024.
|
We expect expenses to decrease as we move forward as the Company continues its remote work strategy started under pandemic conditions, and dramatically reduced the number of employees by procuring out-sourced marketing expertise, its User Experience/User Interface (UX/UI) platform. Its IT development and maintenance, and the use of independent sales consultants and brokers.
Six-Month Period Ended June 30, 2024 Compared to the Six-Month Period Ended June 30, 2023
Revenue
Revenue for the six months ended June 30, 2024 was $170,981, whereas our revenue for the six months ended June 30, 2023 was $149,390 which was 14% greater than the previous year.
Operating Expenses
A summary of our operating expense for the six-month periods ended June 30, 2024 and 2023 follows:
Six Months Ended June 30, | (Decrease) / | |||||||||||
| 2024 | 2023 | Increase | ||||||||||
| Operating expense | ||||||||||||
| Professional fees | $ | 194,630 | $ | 1,111,107 | $ | (916,477 | ) | |||||
| Personnel related expenses | 335,321 | 487,248 | (151,927 | ) | ||||||||
| Other selling, general, and administrative | 262,195 | 492,087 | (229,892 | ) | ||||||||
| Interest Expense | 286,299 | 134,835 | 151,464 | |||||||||
| Total operating expense | $ | 1,078,445 | $ | 2,225,277 | $ | (1,146,832 | ) | |||||
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Operating expenses decreased $1,146,832, or 51.5%, to $1,078,445 during the six months ended June 30, 2024 compared to $2,225,277 during the same period in 2023. The decrease in total operating expenses is primarily due to:
| 1. |
The decrease in professional fees of $916,477 is primarily due to the decrease of stock compensation for consultant services during the six-month period ended June 30, 2024.
|
We expect expenses to decrease as we move forward as the Company continues its remote work strategy started under pandemic conditions, and dramatically reduced the number of employees by procuring out-sourced marketing expertise, its User Experience/User Interface (UX/UI) platform. Its IT development and maintenance, and the use of independent sales consultants and brokers.
Liquidity and capital resources
Liquidity is the ability of a company to generate sufficient cash to satisfy its needs. At June 30, 2024, we had $32,621 in cash and a net working capital deficit of $7,636,294.
For the six-month period ended June 30, 2024, we raised $514,000 from issuance of convertible debt.
Net cash used in operating activities for the six-month period ended June 30, 2024 was $603,086, as compared to $764,182 for the same six-month period ended June 30, 2023. This change primarily results from our lower net loss, offset by fluctuations in accounts payable and accrued expenses, and larger changes due to no stock based compensation expense and less amortization of debenture discounts.
Our primary source of capital to develop and implement our business plan has been from sales of common, preferred stock and proceeds from convertible debentures.
Other Contractual Obligations
None.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Critical Accounting Policies
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates.
A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of intellectual property. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustment is reflected in current operations.
Risks and Uncertainties
The Company's operations are subject to significant risks and uncertainties including financial, operational, and regulatory risks, including the potential risk of business failure. For information regarding such risks and uncertainties, see Item 1A, Risk Factors, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as the same may be amended or updated from time to time.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We carried out an evaluation as required by paragraph (b) of Rule 13a-15 and 15d-15 of the Exchange Act, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of June 30, 2024.
A material weakness can be defined as an insufficiency of internal controls that may result in a more than remote likelihood that a material misstatement will not be prevented, detected or corrected in a company’s condensed consolidated financial statements.
Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that as of June 30, 2024, our disclosure controls and procedures were not effective, based on the following deficiencies:
| · | Weaknesses in accounting and finance personnel: We have outsourced our accounting function, and we do not have the robust employee resources and expertise needed to meet complex and intricate GAAP and SEC reporting requirements of a U.S. public company. Additionally, numerous adjustments and proposed adjustments have been noted by our auditors. This is deemed by management to be a material weakness in preparing condensed consolidated financial statements. |
| · | We have written accounting policies and control procedures, but we do not have sufficient staff to implement the related controls. Management had determined that this lack of the implantation of segregation of duties, as required by our written procedures, represents a material weakness in our internal controls. |
| · | Internal control has as its core a basic tenant of segregation of duties. Due to our limited size and economic constraints, the Company is not able to segregate for control purposes various asset control and recording duties and functions to different employees. This lack of segregation of duties had been evaluated by management and has been deemed to be a material control deficiency. |
The Company has determined that the above internal control weaknesses and deficiencies could result in a reasonable possibility for the condensed consolidated financial statements that a material misstatement will not be prevented or detected on a timely basis by the Company’s internal controls.
Management is currently evaluating what steps can be taken in order to address these material weaknesses. As a growing small business, the Company continuously devotes resources to the improvement of our internal control over financial reporting. Due to budget constraints, the staffing size, proficiency, and specific expertise is below requirements for the operation. The Company is anticipating correcting deficiencies as funds become available.
Changes in Internal Control Over Financial Reporting
There were no changes during our last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Except as set forth herein, as of the date of this Quarterly Report on Form 10-Q, there are no material pending legal proceedings to which we are a party or which our property is the subject. In addition, none of our officers, directors, affiliates or 5% stockholders (or any associates thereof) is a party adverse to us, or has a material interest adverse to us, in any material proceeding.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None during the three-month period ended June 30, 2024.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable to our Company.
ITEM 5. OTHER INFORMATION.
During the quarter
ended June 30, 2024, no director or officer of the Company
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ITEM 6. EXHIBITS.
| Exhibit No. | Description | |
| 31.1 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer * | |
| 31.2 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer * | |
| 32.1 | Section 1350 Certification of Chief Executive Officer * | |
| 32.2 | Section 1350 Certification of Chief Financial Officer * | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) * | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document * | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document * | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document * | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document * | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document * | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
———————
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MediXall Group, Inc. | ||
| Dated: June 5, 2025 | By: | /s/ Shane Glavin |
| Shane Glavin | ||
| Principal Financial Officer | ||
|
Dated: June 5, 2025 |
By: |
/s/ Travis Jackson |
| Travis Jackson | ||
| Chief Executive Officer (Principal Executive Officer) |
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