HEALTHTECH SOLUTIONS INC. Results of Operations
At the end of
The other significant contributor to our loss from operations in the first
quarter of 2022 was general and administrative expenses of
We expect that our research and development expenses will rise significantly if we obtain the capital resources necessary to fully implement our business plan. In particular, the effort to bring MediScan's and RevHeart's technology to market will require several million dollars of capital investment.
In the fall of 2020, prior to the reverse merger of
We accounted for our convertible debt in accordance with ASC 815, Derivatives and Hedging as the conversion feature embedded in the convertible debentures could have resulted in the debenture principal and related accrued interest being converted to a variable number of our common shares. The conversion feature on these debentures was variable and based on trailing market prices. It therefore contained an embedded derivative. The fair value of the conversion feature was calculated when the debentures were issued, and we recorded a debenture discount and derivative liability for the calculated value. We recognized interest expense for accretion of the debenture discount over the term of the note. The conversion liability was valued at the end of the reporting period and resulted in income for the reduction in fair value. Among the reasons why we negotiated a cancellation of the Debentures in exchange for common stock was that the volatile price of our stock meant that the gain or loss realized due to the Debentures could often be material to our results.
Accounting for the Convertible Debentures, as described above, we realized
income of
After taking these Other Expenses (Income) into account, we realized a net loss
of
1
Liquidity and Capital Resources
Our company is designed to function as an incubator for development stage medical technology enterprises. During 2021 and 2020 our statements of cash flows reflected that design: in each year we raised capital from the sale of securities and used approximately the amount of cash raised to fund medical research. Our administrative expenses, albeit representing a large portion of our loss in each year, were primarily paid for by issuance of common stock.
During the first quarter of 2022 we modified the funding process. For the funds
needed to sustain our operations in the first quarter of 2022, particularly the
funds required by HWC to complete development of AmnioBind, we relied on loans
from shareholders and from non-affiliated parties. During that quarter, we
borrowed
In the first quarter of 2021, our sources and uses of funds differed somewhat
from the first quarter of 2022. We entered 2021 with
At
We anticipate realizing revenue from the wound care business of HWC beginning in the second quarter of 2022, which will alleviate some of the cash flow burden of that business. That revenue, occurring shortly after our acquisition of the wound care business, will likely be the exception to the norm for our portfolio companies. Our business plan contemplates that, to attract exciting additions to our portfolio, we will offer most the several million dollars of financing that is necessary to bring a medical technology to a stage where its sponsor can function independently. Since our ambition is to sustain a portfolio of such enterprises, our near term capital requirements (near term being the two to three years before we can anticipate initial returns on most of our investments) will be tens of millions of dollars.
Note 3 to our consolidated financial statements discloses that the financial
condition of
Application of Critical Accounting Policies
In preparing our financial statements we are required to formulate working
policies regarding valuation of our assets and liabilities and to develop
estimates of those values. In our preparation of the financial statements for
the three month period ended
? Our determination to record $60,000 as the fair value of the 5.5%
interest in Varian Biopharmaceuticals, Inc. that we received in
November 2021 . This determination was based on the financial condition
of Varian Biopharmaceuticals at that time and the absence of objective
criteria for attributing fair value to its technology. The fair value
of Varian Biopharmaceuticals is included in the item on our Balance
Sheets titled "Investment in and advance to non-consolidated
affiliate."
2
? Our determination to record an allowance of $257,432 and reduce to
$260,000 the book value of the $517,432 prepaid commission that we
advanced to Predictive Technology Group, Inc. ("PTG") in connection
with our purchase of the wound care business carried on by PTG's
subsidiary, Predictive Biotech, Inc. (See: Note 6 to the Consolidated
Financial Statements.) Our determination was based on the fact that the
prepaid commissions will be earned by PTG only as a result of sales to
three specific customers and the fact that at the time of the
acquisition Predictive Biotech, Inc. did not have a marketable product.
Impact of Accounting Pronouncements
There were no recent accounting pronouncements that have or will have a material effect on the Corporation's financial position or results of operations.
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 or results of operations.
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