NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2020 AND 2019
NOTE 1 – Organization, Basis
of Presentation and Going Concern
Organization
Global WholeHealth Partners Corporation was
incorporated on March 7, 2013 in the State of Nevada. On May 9, 2019, the Company amended its Articles of Incorporation to effect
a change of name to Global WholeHealth Partners Corporation. The Company’s ticker symbol changed to GWHP.
The Company sells and develop in-vitro diagnostic products, including
rapid diagnostic tests, such as the COVID-19 Test, 6 minute rapid whole blood Ebola Test, 6 minute whole blood Zika test, 8 minute
whole blood rapid TB test and over 75 other tests.
Basis of Presentation
The accompanying unaudited interim condensed
consolidated financial statements of Global WholeHealth Partners Corporation and Subsidiary (the “Company”) as of September
30, 2020, and for the three months ended September 30, 2020 and 2019, include the accounts of the Company and its wholly-owned
and controlled subsidiary, Global WholeHealth Partners Corp, a private Wyoming corporation, and have been prepared in accordance
with generally accepted accounting principles in the United States of America (“US GAAP”), for interim financial information
and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information or footnote disclosures normally included
in financial statements prepared in accordance with GAAP have been condensed or omitted.
The preparation of consolidated financial statements
in conformity with U.S. 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 consolidated financial statements, and the reported
amounts of expenses during the reporting periods. Actual results may differ from those estimates. The interim financial statements
should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report
on Form 10-K for the year ended June 30, 2020. In the opinion of management, the accompanying unaudited interim condensed
consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments
(including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of September,
2020, results of operations for the three months ended September 30, 2020 and 2019, and stockholders’ equity and cash flows
for the three months ended September 30, 2020 and 2019. The Company did not record an income tax provision during the periods presented
due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations
for the entire year.
Risks and Uncertainties
In December 2019, an outbreak of the
COVID-19 virus was reported in Wuhan, China. On March 11, 2020, the World Health Organization declared the COVID-19 virus a
global pandemic and on March 13, 2020, President Donald J. Trump declared the virus a national emergency in the United
States. This highly contagious disease has spread to most of the countries in the world and throughout the United States,
creating a serious impact on customers, workforces and suppliers, disrupting economies and financial markets, and potentially
leading to a world-wide economic downturn. It has caused a disruption of the normal operations of many businesses, including
the temporary closure or scale-back of business operations and/or the imposition of either quarantine or remote work or
meeting requirements for employees, either by government order or on a voluntary basis. The pandemic may adversely affect our
operations, our employees and our employee productivity. It may also impact the ability of our subcontractors, partners, and
suppliers to operate and fulfill their contractual obligations, and result in an increase in costs, delays or disruptions in
performance. Our employees are working remotely and using various technologies to perform their functions. In reaction to the
spread of COVID-19 in the United States, many businesses have instituted social distancing policies, including the closure of
offices and worksites and deferring planned business activity. The disruption and volatility in the global and domestic
capital markets may increase the cost of capital and limit our ability to access capital. Both the health and economic
aspects of the COVID-19 virus are highly fluid and the future course of each is uncertain. For these reasons and other
reasons that may come to light if the coronavirus pandemic and associated protective or preventative measures expand, we may
experience a material adverse effect on our business operations, revenues and financial condition; however, its ultimate
impact is highly uncertain and subject to change.
Going Concern
The Company’s consolidated financial
statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not
yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern.
As shown in the accompanying financial statements, the Company incurred negative operating cash flows of $294,788 for the three
months ended September 30, 2020 and has an accumulated deficit of $4,995,772 from inception through September 30, 2020. The
ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable.
In view of these conditions, the ability of
the Company to continue as a going concern is in 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. Historically, the Company has relied upon internally
generated funds, and funds from the sale of stock, issuance of promissory notes and loans from its shareholders and private investors
to finance its operations and growth. Management is planning to raise necessary additional funds for working capital through loans
and/or additional sales of its common stock. However, there is no assurance that the Company will be successful in raising additional
capital or that such additional funds will be available on acceptable terms, if at all. Should the Company be unable to raise this
amount of capital its operating plans will be limited to the amount of capital that it can access. These 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 consolidated financial statements.
NOTE 2 – Significant Accounting
Policies
New Accounting Pronouncements Not Yet Adopted
We evaluate all Accounting Standards Updates
(ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in
our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated
Financial Statements.
Accounting Pronouncements Recently Adopted
None.
Principles of Consolidation
Global WholeHealth Partners Corp, a private
Wyoming corporation was incorporated on April 9, 2019 to receive private investor funds and aggregate certain in vitro diagnostic
assets.
These consolidated financial statements presented
are those of Global WholeHealth Partners Corporation and its wholly owned subsidiary, Global Private. All significant intercompany
balances and transactions have been eliminated.
Inventory
Inventory is comprised of finished goods and
stated at the lower of cost or net realizable value. Inventory cost is determined on a weighted average basis in accordance with
ASC 330-10-30-9. Provisions are made to reduce slow-moving, obsolete, or unusable inventories to their estimated useful or scrap
values. When necessary, the Company establishes reserves for this purpose.
Equipment
Fixed assets are carried at cost, less accumulated
depreciation. Major improvements are capitalized, while repair and maintenance are expensed when incurred. Renewals and betterments
that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in that period.
Depreciation is computed on a straight-line
basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:
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Estimated
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Useful Lives
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Computer equipment and software
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3 years
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Equipment, furniture and fixtures
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5 years
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Revenue Recognition
The Company recognizes revenue from operations
through the sale of products. Product revenue is comprised of the sale of consumables. To date, all products sold have been fully
paid for in advance of shipment.
Revenue is recognized when control of products
and services is transferred to the customer in an amount that reflects the consideration that the Company expects to receive from
the customer in exchange for those products and services. This process involves identifying the contract with the customer, determining
the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance
obligations in the contract, if applicable, and recognizing revenue when the performance obligations have been satisfied. A performance
obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its
own or together with other resources that are readily available to the customer and is separately identified in the contract. The
Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning
the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied
performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control.
Revenue from product sales is generally recognized
upon shipment to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs
prior to shipment and the term between invoicing and when payment is due is not significant.
Revenue is recorded net of discounts, and sales
taxes collected on behalf of governmental authorities. Sales commissions are recorded as selling and marketing expenses when incurred.
The Company records any payments received from
customers prior to the Company fulfilling its performance obligation(s) as deferred revenue.
The Company had five customers that represented
91.1% of revenue (20.8%, 20.2%, 19.0%, 17.3% and 13.8%) for the three months ended September 30, 2020.
Net Income (Loss) Per Share
Basic net loss per common share attributable
to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number
of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per common share
attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average
number of common share equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock
equivalents are comprised of convertible notes. For all periods presented, there is no difference in the number of shares used
to calculate basic and diluted shares outstanding due to the Company’s net loss position.
The potentially dilutive securities that
would be anti-dilutive due to the Company’s net loss are not included in the calculation of diluted net loss per share
attributable to common stockholders. The anti-dilutive securities are as follows (in common stock equivalent shares):
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September 30,
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2020
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2019
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Convertible promissory notes
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271,849
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10,727
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NOTE 3 – Equipment
Equipment consists of the following:
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September 30,
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June 30,
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2020
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2019
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Computers, office equipment and software
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$
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3,505
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$
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—
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Total equipment
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3,505
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—
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Accumulated depreciation
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(194
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)
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—
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Equipment, net
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$
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3,311
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$
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—
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During the three months ended September 30,
2020, the Company purchased $3,505 of computer equipment. During the three months ended September 30, 2020, the Company recognized
depreciation expense of $194.
NOTE 4 – Stockholder’s Equity
Preferred Stock
The Company has Preferred stock: $0.001 par
value; 10,000,000 shares authorized with no shares issued and outstanding.
Common Stock
The Company has 400,000,000 shares of Common
Stock authorized of which 59,966,358 shares were issued and outstanding as of September 30, 2020 and June 30, 2020.
On July 9, 2020, the Company and Dr. Scott
Ford, Director, entered into a subscription agreement for the purchase 45,000 shares of common stock at a price of $2.00 per share
which represents a 50% discount to the share price due to the lack of marketability and the thinly traded nature of our common
stock on the OTC.
On September 24, 2020, the Company and Dr.
Scott Ford, Director, entered into a subscription agreement for the purchase 219,298 shares of common stock at a price of $1.14
per share which represents a 50% discount to the share price due to the lack of marketability and the thinly traded nature of our
common stock on the OTC.
On July 22, 2020, the Company entered
into a Common Stock Purchase Agreement (the “EMC2 SPA”) and a Registration Rights Agreement with EMC2 Capital,
LLC (“EMC2 Capital”) pursuant to which EMC2 Capital agreed to invest up to One Hundred Million Dollars
($100,000,000) to purchase the Company’s common stock at a purchase price as defined in the Common Stock Purchase
Agreement (the "Purchase Shares"). As consideration for entry into the EMC2 SPA, the Company agreed to issue
1,415,094 shares of common stock (the "Commitment Shares") and a warrant to purchase up ro two million (2,000,000)
shares of common stock (the “Commitment Warrant”). Additionally, the Company agreed to file a Registration Rights
Agreement as an inducement to EMC2 Capital to execute and deliver the Common Stock Purchase Agreement, whereby the Company
agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations
thereunder, and applicable state securities laws, with respect to the shares of common stock issuable for EMC2
Capital’s investment pursuant to the Common Stock Purchase Agreement. The right of the Company to sell Purchase Shares
to EMC2 Capital is dependent on the Company satisfying certain conditions, including notice of effectivness of the shelf
registration statement registering the Purchase Shares, issuance of the Commitment Shares and Commitment Warrant. As of the
date of this quarterly report, the Company has not filed a registration statement registering the Puchase Shares. The company
is currently in negotiations with EMC2 Capital to modify or cancel the EMC2 SPA in order to better align the financing needs
of the Company with the terms of the EMC2 SPA.
NOTE 5 – Related Party Transactions
On July 9, 2020 and September 24, 2020, the
Company and Dr. Scott Ford entered into a subscription agreement for the purchase of restricted common stock resulting in the payment
of $340,000 to the Company, See “Note 3 – Stockholders’ Equity” above for additional information.
From time-to-time the Company receives shareholder
advances to cover operating costs. During the three months ended September 30, 2020, LionsGate provided advances totaling $24,110
which was used to pay professional fees and general costs. See Related Party Note below for additional information.
The Company utilizes the R&D capabilities
of Pan Probe Biotech to perform studies in validation of the Company’s COVID-19 tests. Additionally, the Company is renting
space at Pan Probe on a temporary basis, from April 21, 2020 through October 21, 2020, at a rate of $2,551 per month and which
was prepaid in full in April 2020. Dr. Shujie Cui is the Company’s Chief Science Officer and 100% owner of Pan Probe. During
the three months ended September 30, 2020 the Company paid a total of $135,000 to Pan Probe and recognized $7,653 of rent expense.
Related Party Note
On March 29, 2020, the Company issued a Promissory
Note (the “Note”) to LionsGate in the amount of $506,625 which was equivalent to the advances made to the Company
up to March 29, 2020. On March 30, 2020, LionsGate decided it would be in the best interests of the Company to forgive the portion
of the Note related to testing costs which totaled $443,750 as of March 30, 2020. As a result, the Company recognized an increase
to additional paid-in capital of $443,750 leaving a Note balance of $62,875. During the three months ended June 30, 2020, LionsGate
made payments totaling $58,090 on behalf of the Company with said funds added to the balance of the Note bringing the note balance
to $120,965. The Note was amended on June 30, 2020 (“Note Amendment”). Pursuant to the Note and Note Amendment,
the terms provide for total funding of up to $585,000. During the three months ended September 30, 2020, 1) LionsGate made payments
totaling $24,410 on behalf of the Company with said funds added to the balance of the Note; and 2) the Company made payments against
the Note totaling $110,000 resulting in a Note balance of $36,875. The Note bears interest at the rate of 5% per annum and the
principal and interest is due and payable in full on June 30, 2021 (the “Maturity Date”). If not paid by the
Maturity Date, a 5% penalty will be added to the Note and the term will extend for an additional 90 days.
During the three months ended September 30,
2020, the Company recognized $411 of interest expense related to the Note.
NOTE 6 – Convertible Promissory
Notes
On April 18, 2020, the Company issued five
separate unsecured convertible promissory notes in exchange for $95,000 (the "Convertible Notes"). Each Convertible
Note contains the same terms and conditions. The Convertible Notes bear interest of 8%, mature in six months on October 17, 2020
and are convertible at any time into shares of restricted common stock at a conversion price of $9.00 per share. The debt discount
attributable to the fair value of the beneficial conversion feature amounted to $42,224 for the Convertible Notes and is being
accreted over the term of the Convertible Notes.
On July 13, 2020 and August 3, 2020 and
September 8, 2020, the Company and Geneva Roth Remark Holdings, Inc. ("Geneva") entered into separate and
identical Securities Purchase Agreements (the "Geneva SPAs") Pursuant to the Geneva SPAs, Geneva and the
Company entered into separate and identical Convertible Promissory Notes also dated as of July 13, 2020 and August 3, 2020
and September 8, 2020 for principal amounts of $63,000, $55,000 and $53,000, respectively (the "Geneva
CPNs"). Pursunt to the terms of the Geneva CPNs, the Company received net proceeds of $60,000, $52,000 and $50,000
(the proceeds from each note was funded net of $3,000 in legal fees). The Geneva CPNs mature in one year, accrue interest of
10% and, after 180 days, are convertible into shares of common stock any time at a conversion price equal to 58% of the
lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion
date. Geneva has agreed to restrict its ability to convert the Geneva CPNs and receive shares of common stock such that the
number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does
not exceed 4.99% of the then issued and outstanding shares of common stock. The Geneva CPNs represent a debt obligation
arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. The
Geneva CPNs also provide for penalties and rescission rights if the Company does not deliver shares of our common stock upon
conversion within the required timeframes. In the event of default, the note interest rate increases to 22%.
The debt discount attributable to the fair
value of the beneficial conversion feature contained in the Geneva CPNs amounted to $123,831 and is being accreted over the term
of the Geneva CPNs.
During the three months ended September 30,
2020, the Company recognized $4,495 of interest expense and $41,050 of accretion related to the Convertible Notes and Geneva CPNs.
NOTE 7 – Subsequent Events
Management has reviewed material events subsequent
of the period ended September 30, 2020 and prior to the filing of our consolidated financial statements in accordance with FASB
ASC 855 “Subsequent Events”.