HEALTHTECH SOLUTIONS INC. Results of Operations
On
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The primary focus of our operating activities during 2021 was
Our ownership and control of Varian during 2021 is reflected on our Statements
of Operations as a Loss from Discontinued Operations. Specifically, we recorded
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Our loss from operations for 2021 and 2020 was attributable primarily to the administrative expenses incurred as we developed the infrastructure and relationships necessary to effectively implement the incubator model that is the core of our business plan.
The largest item contributing to our loss from operations was general and
administrative expenses attributable to related parties, which totaled
The remainder of the general and administrative expenses were primarily attributable to compensation (cash and stock) of the group of consultants who represent our labor force, legal and accounting expenses (particularly high due to acquisitions and several aborted efforts at acquisitions), office expenses, public relations expenses, and other expenses related to our efforts to bring Healthtech to the level of an effective incubator.
The research and development activities relating to MediScan and RevHeart caused
us to incur
As a result of the expenses described above, we realized in 2021 a loss from
operations totaling
In the fall of 2020, prior to our reverse merger, MediScan sold 7% Convertible
Debentures to obtain capital. In connection with the reverse merger, the
MediScan debentures were exchanged for 7% Convertible Debentures issued by
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 loss for the change 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.
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Accounting for the Convertible Debentures, as described above, we realized a
derivative expense of
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.
In 2021, the operating activities of our continuing operations used
At
The cash requirements of our business plan are intense. To attract exciting additions to our portfolio, we must be able to offer each 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 our investments) will be tens of millions of dollars.
Note 3 to our 2021 consolidated financial statements discloses that the
financial condition of
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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 years ended
· Our determination of the fair value of the derivative liability
embedded in the 7% Convertible Debentures. We based the determination
of fair value on certain assumptions specified in Note 9 to our
Financial Statements. Application of those assumptions led us to record
a derivative expense of $2,933,735 for 2021 and a change in fair value
of derivative liability of $2,773 for 2020.
· Our determination to record as $60,000 the fair value of the 5.5%
interest in Varian Biopharmaceuticals that we received in November
2021 . This determination was based on the financial condition of Varian
at that time and the absence of objective criteria for attributing fair
value to its technology. As a result, our investment in Varian was
fully expensed in our 2021 financial statements.
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.
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