TWSI Tristar Wellness Solutions Inc (PK)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2015

 

¨ 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: 000-29981

 

TRISTAR WELLNESS SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		91-2027724
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
720 SW Washington Street, Suite 200 Portland, OR		97205
(Address of principal executive offices)		(Zip Code)

 

(203) 571-1096

Registrant’s telephone number, including area code

 

_________________________________

(Former address, if changed since last report)

 

___________________________________ 

(Former fiscal year, if changed since last report)

 

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. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

 

Applicable only to corporate issuers:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 17, 2015, there were 25,171,715 shares of common stock, $0.001 par value, issued and outstanding.

 

 

 

TRISTAR WELLNESS SOLUTIONS, INC.

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION
ITEM 1	Financial Statements			3
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations			14
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk			18
ITEM 4	Controls and Procedures			18
PART II – OTHER INFORMATION
ITEM 1	Legal Proceedings			20
ITEM 1A	Risk Factors			20
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds			20
ITEM 3	Defaults Upon Senior Securities			20
ITEM 4	Mine Safety Disclosures			20
ITEM 5	Other Information			20
ITEM 6	Exhibits			21

 

2

 

PART I – FINANCIAL INFORMATION

 

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

 

ITEM 1 Consolidated Financial Statements

 

The unaudited condensed consolidated interim financial statements of registrant for the three months ended March 31, 2015 and 2014 are below. The unaudited condensed consolidated interim financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.

 

3

 

TRISTAR WELLNESS SOLUTIONS, INC. AND SUBSIDIARIES

 

Condensed Consolidated Balance Sheets

(dollars in thousands)

 

		March 31,				December, 31
		2015				2014
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	313			$	189
Accounts receivables, net			431				652
Receivable from related party			-				1
Prepaid expenses and other			133				141
Inventories, net			600				814
Total current assets			1,477				1,797
Non-current assets
Accounts receivables, net of current portion			41				41
Property and equipment, net			295				312
Intangible assets, net			760				782
Other non-current assets			120				137
Total non-current assets			1,216				1,272
TOTAL ASSETS		$	2,693			$	3,069
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses		$	2,285			$	2,450
Accounts payable and accrued expenses due to related parties			1,545				1,839
Short-term notes (net of debt discount $99 and $12 as of March 31, 2015 and December 31, 2014, respectively)			4,940				4,332
Short-term notes - related party			4,460				4,300
Convertible notes			671				671
Convertible notes - related party			230				230
Deferred revenue			-				48
Derivative liability			779				270
Total current liabilities			14,910				14,140
TOTAL LIABILITIES			14,910				14,140
STOCKHOLDERS' DEFICIT
Convertible preferred stock, $0.001 par value; 10,000,000 shares authorized; 5,621,667 and 5,621,667 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively			6				6
Common stock; $0.0001 par value; 50,000,000 shares authorized; 25,171,715 and 24,221,715 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively			2				2
Additional paid-in capital			20,512				20,055
Other comprehensive gain			326				182
Accumulated deficit			(33,063	)			(31,316	)
TOTAL STOCKHOLDERS' DEFICIT			(12,217	)			(11,071	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	2,693			$	3,069

 

See accompanying unaudited notes to the condensed consolidated interim financial statements

 

4

 

TRISTAR WELLNESS SOLUTIONS, INC. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Operations (unaudited)

(dollars in thousands)

 

		For the three months ended
		March 31,
		2015				2014
Sales revenue		$	1,145			$	1,303
Cost of Goods Sold			398				1,038
Gross profit			747				265
Continuing operations
Operating expenses:
General and administrative			765				725
Sales, marketing and development expenses			543				727
Amortization on intangible assets			22				20
Total operating expenses			1,330				1,472
Loss from operations			(583	)			(1,207	)
Other income and (expenses)
Interest expense			(529	)			(552	)
Gain on sale of assets and liabilities			32				-
Change in fair value of derivative liability			(509	)			(1,799	)
Other expenses			(158	)			(12	)
Total other income (expenses)			(1,164	)			(2,363	)
Net loss			(1,747	)			(3,570	)
Other comprehensive gain (loss)
Foreign currency translation gain (loss)			144				(39	)
Total comprehensive loss		$	(1,603	)		$	(3,609	)
Loss per share		$	(0.07	)		$	(0.16	)
Diluted loss per share		$	(0.07	)		$	(0.16	)
Weighted average common shares outstanding			24,340,604				22,163,935
Diluted weighted average common shares outstanding			24,340,604				22,163,935

  

See accompanying unaudited notes to the condensed consolidated interim financial statements

 

5

 

TRISTAR WELLNESS SOLUTIONS, INC. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)

 

		For the three months ended
		March 31,
		2015				2014
Cash flows from operating activities:
Loss for the period from continuing operations		$	(1,747	)		$	(3,570	)
Adjustments to reconcile net profit/loss from continuing operations  to net cash provided by operating activities:
Depreciation expenses			23				67
Change in fair value of derivative liability			509				1,799
Amortization of debt discount			25				278
Intangible asset amortization			22				20
Imputed interest on note payable			18				7
Changes in operating assets and liabilities:
Accounts receivables			222				(27	)
Inventory			214				135
Prepaid expenses			8				65
Accounts payable and accruals			192				45
Other non-current assets			17				-
Other receivables			-				(5	)
Deferred revenue			(48	)			(136	)
Accounts payable and accrued expenses - related party			(294	)			258
Net cash used in operating activities from continuing operations			(839	)			(1,064	)
Cash flow from investing activities:
Purchase of property plant and equipment			(6	)			(22	)
Net cash provided by (used in) investing activities			(6	)			(22	)
Cash flow from financing activities:
Proceeds from issuance of short-term notes			695				740
Proceeds from issuance of short-term convertible notes - related party			-				230
Rrepayment of short-term notes- related party			(20	)			-
Proceeds from issuance of convertible notes			-				100
Proceeds from issuance of common stock			150				-
Net cash generated from financing activities from continuing operations			825				1,070
Cumulative translation adjustment			144				(39	)
Net change in cash			124				(55	)
Cash and cash equivalent, beginning			189				193
Cash and cash equivalent, ending		$	313			$	138
Supplemental schedule of non-cash activities
Issuance of warrants in conjunction with promissory notes		$	112			$	389
Increase in additional paid in capital on extinguishment of debt		$	393			$	-
Debt discount due to embedded derivative liabilities within convertible debentures issued		$	-			$	239
Conversion of notes payable to common stock		$	-			$	8

 

See accompanying unaudited notes to the condensed consolidated interim financial statements

 

6

 

TRISTAR WELLNESS SOLUTIONS, INC. AND SUBSIDIARIES

 

Unaudited Notes to the Condensed Consolidated Financial Statements

(dollars in 000’s except per share)

 

1. The Company

 

TriStar Wellness Solutions, Inc. (“the Company”) was incorporated on August 28, 2000 in the state of Nevada under the name “Quadric Acquisitions”. From the date of its incorporation through April 27, 2012, the Company had several name changes and different business plans all under prior management that is no longer with the Company. On April 27, 2012, the Company underwent a change of control transaction and changed its business plan. On January 7, 2013, the Company changed its name from Biopack Environmental Solutions, Inc. to TriStar Wellness Solutions, Inc. with the State of Nevada, and such change was effected with FINRA on January 18, 2013. The Company conducts its current operations under the name TriStar Wellness Solutions, Inc. The vast majority of the Company’s operations are conducted through its wholly-owned subsidiary, HemCon Medical Technologies Inc., an Oregon corporation (“HemCon”), and involve the development, marketing and sale of HemCon’s innovative wound care products.

 

2. Summary of Significant Accounting Policies

 

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on April 15, 2015.

 

Basis of Presentation and Principles of Consolidation

 

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2014. All intercompany balances and transactions have been eliminated.

 

Use of Estimates

 

In preparing financial statements in conformity with U.S. GAAP, management is required 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 financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment arrangements, estimating the fair value of equity instruments upon issuance, and estimating the useful lives of depreciable assets and whether impairment charges may apply.

 

Recently Issued Accounting Pronouncements

 

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which require debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. ASU 2015-03 is effective for the interim and annual periods ending after December 15, 2015. The Company does not expect any material impact from adoption of this guidance on the Company's condensed consolidated financial statements.

 

7

 

3. Liquidity and Going Concern

 

The Company's unaudited condensed consolidated interim financial statements are prepared using accounting principles generally accepted in the United States of America (GAAP) 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 revenue sufficient to cover its operating costs and allow it to continue as a going concern. In addition, as of March 31, 2015, the Company had an accumulated deficit of $33,063, and had incurred a net loss for the three months ended March 31, 2015 of $1,747 and had negative working capital of $13,433. Funding has been provided by related parties as well as new investors committed to make it possible to maintain, expand, and ensure the advancement of the TriStar Wellness products.

 

The consolidated financial statements for the fiscal year ended December 31, 2014 states that because the Company has suffered recurring operating losses from operations, there is substantial doubt about the Company’s ability to continue as a going concern. A “going concern” opinion indicates that the consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

 

4. Inventories

 

Inventories, net consist of the following at March 31, 2015 and December 31, 2014 (in thousands):

 

	March 31,				December 31,
	2015				2014
Raw materials	$	201			$	157
Work in Progress		286				178
Finished Goods		113				479
	$	600			$	814

 

Reserve for obsolescence was approximately $251 and $227, as of March 31, 2015 and December 31, 2014, respectively.

 

5. Property and Equipment

 

Property and equipment consist of the following at March 31, 2015 and December 31, 2014 (in thousands):

 

		Estimates Useful Life			March 31,				December 31,
		(Years)			2015				2014
Manufacturing Equipment		7-10			$	290			$	290
Office Furniture and Equipment		3-7				127				121
Computer Equipment and Software		1-5				23				23
						440				434
Less: Accumulated Depreciation, amortization and impairments						(145	)			(122	)
					$	295			$	312

 

Depreciation expense was approximately $23 and $67, for the three months ended March 31, 2015 and 2014, respectively.

 

8

 

6. Loans Payable 

 

		March 31,				December 31,
		2015				2014
Short-term notes (net of debt discount of $99 and $12 as of March 31, 2015 and December 31, 2014, respectively)		$	4,940			$	4,332
Short-term notes - related party			4,460				4,300
		$	9,400			$	8,632
Convertible notes		$	671			$	671
Convertible notes - related party			230				230
		$	901			$	901

 

Promissory Notes

 

First Quarter 2015 Activities

 

During the quarter ended March 31, 2015, the Company issued promissory notes (the “Notes”) to a third party, in the principal amount of $510. The Notes has an interest rate of 18% per annum, simple interest and is due on or before September 30, 2015. In connection with the Note, the Company issued warrants to purchase 1,020,000 shares of our common stock at an exercise price of $0.20 per share. The relative fair value of the warrants compared to the debt was recorded as a component of stockholders’ equity with the offset recorded as a discount on the promissory notes and included as a component of promissory notes in the accompanying condensed consolidated balance sheet as of March 31, 2015. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: risk free interest rate – 1.3% - 1.7%, volatility – 77.5% - 80.8%, expected term – 4 years, expected dividends– N/A. The debt discounts related to the warrants are being amortized over a 0.8 year period (through maturity) on a straight-line basis. The Company also recorded 6% accrued facility fees in aggregate for approximately $31 in connection with the Notes. The accrued loan fees is due on September 30, 2015. The Company recorded a $95 discount at issuance, and of the $95 discount recorded at issuance the portion relating to the detachable warrants of $64 was credited to additional paid in capital and the $31 loan fee described above was credited to accrued expense.

 

During the quarter ended March 31, 2015, the Company issued promissory note (the “Note”) to a third party, in the principal amount of $90. The Note has an interest rate of 18% per annum, simple interest and is due on or before September 30, 2015. In connection with the Note, the Company issued warrants to purchase 180,000 shares of our common stock at an exercise price of $0.20 per share. The relative fair value of the warrants compared to the debt was recorded as a component of stockholders’ equity with the offset recorded as a discount on the promissory notes and included as a component of promissory notes in the accompanying condensed consolidated balance sheet as of March 31, 2015. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: risk free interest rate – 1.5%, volatility – 80.2%, expected term – 4 years, expected dividends– N/A. The debt discounts related to the warrants are being amortized over a 0.6 year period (through maturity) on a straight-line basis. The Company also recorded 6% accrued loan fees in aggregate for approximately $5 in connection with the Notes. The accrued facility fees is due on September 30, 2015. The Company recorded an $18 discount at issuance, and of the $18 discount recorded at issuance the portion relating to the detachable warrants of $12 was credited to additional paid in capital and the $6 facility fee described above was credited to accrued expense.

 

During the quarter ended March 31, 2015, the Company issued promissory notes to several third parties, in the principal amount of $95. The notes have effective interest rate of 30% per annum, simple interest and were due on September 30, 2015.

 

9

 

On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with John Linderman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6 in the equity. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. On March 4, 2015, the Company paid back $10, and the outstanding principal and accrued interest as of March 31, 2015 were $40 and $13, respectively.

 

On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with James Barickman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6 in the equity. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. On March 4, 2015, the Company paid back $10, and the outstanding principal and accrued interest as of March 31, 2015 were $40 and $13, respectively.

 

On March 3, 2015, the Company entered into a promissory note agreement (the “Note”) with NorthStar Consumer Products, LLC, one of the largest shareholders and an entity controlled by John Linderman and James Barickman, to settle the outstanding accounts payable of $381 with principal of $180 promissory note. The Note is due on September 2, 2017, with interest rate of 18% per annum. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $201 in the equity. The outstanding accrued interest is $2 as of March 31, 2015.

 

During the quarter ended March 31, 2015, the Company recorded total amortization on debt discount of $25. The outstanding accrued interest is $1,598 as of March 31, 2015.

 

7. Stockholders’ Equity

 

Diluted Shares

 

There were 405,000 shares of Series A, 1,000,000 shares of Series B and no shares of Series C outstanding as of March 31, 2015. Each share of Preferred D is convertible into twenty five shares of common stock. Convertible preferred stock was considered anti-dilutive for the three months ended March 31, 2015 and 2014, due to net losses. As of March 31, 2015, there are 4,216,667 Series D Convertible Preferred Shares which are convertible into 105,416,675 of common shares. All Series D Convertible Preferred Stock voting rights are on an “as converted to common stock” basis. Dividends are not mandatory. If declared by the Board Series D Preferred Stock shall have preference over common stock and equal to other series of preferred stock. As of March 31, 2015, there are 12,376,600 warrants which are convertible into one share of common stock with a weighted average exercise price of $1.22. In addition, convertible debt of $901 as of March 31, 2015 is convertible into 48,398,253 shares of the Company’s common stock.

 

Common Stock Issued for Cash

 

During the quarter ended March 31, 2015, the Company issued 950,000 shares of common stock for approximately $150 in cash. The shares were issued to third parties.

 

Detachable Warrants

 

During the quarter ended March 31, 2015, the Company issued Promissory Notes containing 1,200,000 detachable Warrants. The detachable Warrants were valued at approximately $0.07 per warrant using the Black-Scholes model at March 31, 2015. The relative fair value of the detachable Warrants compared to the debt of approximately $112 was recorded as a component of stockholders’ equity and accrued expenses with the offset recorded as a discount on the promissory notes and included as a component of promissory notes in the accompanying condensed consolidated balance sheet as of March 31, 2015. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: risk free interest rate – 1.3% - 1.7%, volatility – 77.5% - 80.8%, expected term – 4 years, expected dividends– N/A. The debt discount related to the warrants are being amortized over a nine month period (through maturity) on a straight-line basis.

 

10

 

8. Related Party Transactions

 

Consulting Agreements

 

On January 6, 2014 the Company entered into a revised consulting agreement with Chord Advisors, LLC ("Chord"). David Horin, the Company's Chief Financial Officer has a significant equity partnership stake in Chord. Currently the agreement is on a month to month basis. The Company has agreed to pay Chord a monthly consulting fee of approximately $13 for Mr. Horin's services and services of his firm and 50,000 warrants upon the consummation of a financing transaction in excess of $2 million with an exercise price equal to the exercise price of such warrants in a financing transaction. The Company incurred $38 and $38 for the three months ended March 31, 2015 and 2014, respectively, and has an account payable balance related to this agreement of $186 as of March 31, 2015.

 

Accounts Payable and Accrued Expenses

 

As of March 31, 2015, the Company owed Daystar $50, Chord Advisors $186 and Rivercoach $72.

 

Related Party Notes

 

On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with John Linderman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. On March 4, 2015, the Company paid back $10, and the outstanding principal and accrued interest as of March 31, 2015 were $40 and $13, respectively.

 

On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with James Barickman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. On March 4, 2015, the Company paid back $10, and the outstanding principal and accrued interest as of March 31, 2015 were $40 and $13, respectively.

 

On March 3, 2015, the Company entered into a promissory note agreement (the “Note”) with NorthStar Consumer Products, LLC, one of the largest shareholders and an entity controlled by John Linderman and James Barickman, to settle the outstanding accounts payable of $355 with principal of $180 promissory note. The Note is due on September 2, 2017, with interest rate of 18% per annum. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $175. The outstanding accrued interest is $2 as of March 31, 2015.

 

As of March 31, 2015, the Company owed to Daystar Funding, LP $4,330 and accrued interest of $1,209.

 

9. Intangible Assets, Net

 

For the three months ended March 31, 2015, intangible assets consisted primarily of patents, customer lists, non-compete arrangements and a trade name. Patents, customer lists, non-compete arrangements and a trade name acquired in business combinations under the purchase method of accounting are recorded at fair value net of accumulated amortization since the acquisition date. The intangible assets are amortized over their estimated useful life which is 4 to 16 years.

 

11

 

The amortization expense for the three months ended March 31, 2015 and 2014 was $22 and $20, respectively.

 

									Amortized as of				Balance as of
Description		Life in Years			Price				March 31, 2015				March 31, 2015
Patents		12				336				53			$	283
Customer list		14				198				29			$	169
Trade name		16				266				25			$	241
Non-compete agreement		4				127				60			$	67
						927				167			$	760

 

10. Litigation

 

The Company recognizes a liability for a contingency when it is probable that liability has been incurred and when the amount of loss can be reasonably estimated. When a range of probable loss can be estimated, the Company accrues the most likely amount of such loss, and if such amount is not determinable, then the Company accrues the minimum of the range of probable loss. As of March 31, 2015, there was no litigation against the Company and therefore the litigation accrual was zero.

 

11. Fair Value Measurements

 

The Company has adopted the provisions of ASC 820 which defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 provides guidance on how to measure certain financial assets and financial liabilities at fair value. The requirement to measure an asset as liability at fair value is determined under the U.S. GAAP.

 

Certain of the Company’s assets and liabilities are considered to be financial instruments and are required to be measured at fair value in the consolidated balance sheets. Certain of these financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term debt and deferred revenue are measured at cost, which approximates fair value due to the short-term maturity of these instruments. Derivative liabilities are measured at fair value. 

 

The Company measures fair value basis based on the following key objectives: 

 

	·	Fair value is defined as the price that 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-level hierarchy (“Valuation Hierarchy”) which prioritizes the use of observable pricing data (Level 1 and Level 2 inputs as defined below) over unobservable pricing data (Level 3 inputs as defined below) is used in measuring value; and
	·	The Company’s creditworthiness is considered when measuring the fair value of liabilities.

 

12

 

The valuation hierarchy used in measuring fair value is defined as follows: 

 

	·	Level 1 inputs are observed inputs such as quoted prices for identical instruments inactive markets;
	·	Level 2 inputs are inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments inactive markets or quoted prices for identical or similar instruments in markets that are not active; and
	·	Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs are unobservable. Level 3 requires significant management judgment or estimation.

  

All items measures at fair value are required to be classified and disclosed as a Level 1, 2 or 3 asset or liability based on the inputs used to measure for value of an asset or liability in its entirety. An asset or liability classified as Level 1 is measured by quoted prices in active markets for identical instruments. An asset or liability classified as Level 2 is measured using significant observable inputs and an asset or liability classified as Level 3 is measured using significant unobservable inputs.

 

The following tables classify the Company’s liabilities measured at fair value on a recurring basis (primarily reflecting an increase in stock price per share) into the fair value as of March 31, 2015 and December 31, 2014 (in thousands):

 

March 31, 2015

 

Description			Level 1				Level 2				Level 3
Derivative liability - conversion options			$	-			$	-			$	779

 

December 31, 2014

 

Description			Level 1				Level 2				Level 3
Derivative liability - conversion options			$	-			$	-			$	270

 

There were no transfers between Level 1, 2 or 3 during the three months ended March 31 2015

 

The following table presents changes in Level 3 liabilities measured at fair value from the period ended December 31, 2014 through March 31, 2015. Both observable and unobservable inputs are used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

 

Balance as of December 31, 2014		$	270
Change in fair value of derivative liability - conversion option			509
Balance - March 31, 2015		$	779

 

* The Notes contain an embedded conversion feature that the Company has determined is a derivative requiring bifurcation in accordance with the provisions of ASC 815.

 

12. Subsequent Events

 

The Company has evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There were no subsequent events that required recognition or disclosure.

 

13

 

ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q of TriStar Wellness Solutions, Inc. for the period ended March 31, 2015 contains forward-looking statements, principally in this Section and “Business.” Generally, you can identify these statements because they use words like “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements reflect only our current expectations. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen, including, among others, the risks we face as described in this filing. You should not place undue reliance on these forward-looking statements which apply only as of the date of this annual report. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation of belief will be accomplished.

 

We believe it is important to communicate our expectations to our investors. There may be events in the future; however, that we are unable to predict accurately or over which we have no control. The risk factors listed in this filing, as well as any cautionary language in this annual report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results or events to differ materially from those anticipated, include, but are not limited to: our ability to successfully obtain financing for product acquisition; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in various tax laws; and the availability of key management and other personnel.

 

Overview

 

We were incorporated on August 28, 2000 in the state of Nevada under the name “Quadric Acquisitions”. From the date of our incorporation through April 27, 2012, we had several name changes and different business plans all under prior management that is no longer with the company. On April 27, 2012, we underwent a change of control transaction and changed our business plan. On January 7, 2013, we changed our name from Biopack Environmental Solutions, Inc. to TriStar Wellness Solutions, Inc. with the State of Nevada, and such change was effected with FINRA on January 18, 2013. We conduct our current operations under the name TriStar Wellness Solutions, Inc. On May 6^th, 2013 TWSI purchased HemCon Medical Technologies, Inc. (HemCon) gaining entry into the advanced wound care sector.

 

We are focused on providing best of breed solutions of advanced wound care products to the worldwide professional healthcare industry. The HemCon platform enables TWSI to execute a strong professional medical focus on advanced wound care products to support improved medical outcomes. We believe we have entered the market uniquely aligned to important underlying factors that are redefining how care givers and patients engage in managing advanced wound care,

 

TriStar Wellness Solutions, Inc. (TWSI, us or TriStar) through HemCon’s advanced wound care solutions is focused on bringing new technologies to patients that address both traumatic and chronic therapeutic healthcare opportunities based on a combination of superior science, product development and market positioning worldwide. Each of our products is designed to improve medical outcomes through superior and proven technologies. Our innovative products and technologies exclusively focus in the projected worldwide $23 billion wound care sector.

 

	·	Wound care treatment products focused on superior hemostasis and infection control technology targeting a wide range of professional medical (e.g., interventional cardiology, surgery, dialysis, post-procedure recovery), trauma, military and first responders applications. The company has developed FDA approved products targeted to specific procedures within the broad global professional wound care markets.
	·	Research and Development programs on-going in underserved wound treatment markets.

 

14

 

Results of Operations for the Three Months Ended March 31, 2015 and March 31, 2014

 

Summary of Results of Operations (in thousands)

 

		For the three months ended
		March 31,
		2015				2014
Sales revenue		$	1,145			$	1,303
Cost of Goods Sold			398				1,038
Gross profit			747				265
Continuing operations
Operating expenses:
General and administrative			765				725
Sales, marketing and development expenses			543				727
Amortization on intangible assets			22				20
Total operating expenses			1,330				1,472
Loss from operations			(583	)			(1,207	)
Other income and (expenses)
Interest expense			(529	)			(552	)
Gain on sale of assets and liabilities			32				-
Change in fair value of derivative liability			(509	)			(1,799	)
Other expenses			(158	)			(12	)
Total other income (expenses)			(1,164	)			(2,363	)
Net loss		$	(1,747	)		$	(3,570	)

 

Operating Loss

 

We had an operating loss of approximately $583 for the three months ended March 31, 2015, compared to an operating loss of approximately $1,207 for the three months ended March 31, 2014. This difference was largely attributable to a decrease in our cost of goods sold of approximately $640 (which led to a gross profit of $747 for the period), and a decrease in our sales, marketing and development expenses of approximately $184. The decrease in operating for the period ended March 31, 2015 was largely due our transition from in-house manufacturing of our HemCon products to utilizing outsourced, third-party manufacturers and to a reduction of sales and marketing expenses related to the historical Tristar wellness products.

 

15

 

Revenue

 

Our revenue from the three months ended March 31, 2015 was $1,145 compared to $1,303 for the three months ended March 31, 2014. Our revenue was primarily derived from the operations of our subsidiary, HemCon. Revenue from HemCon amounted to approximately $1,151 for the three months ended March 31, 2015. The decrease in revenue was a result of the timing of international and government orders which are highly dependent of certain outside factors. During the prior period we received $857 for international and government sales. During the current period we received $711 for international and government sales.

 

Cost of Goods Sold

 

Our cost of goods sold for the three months ended March 31, 2015 were $398, compared to $1,038 for the same period in 2014. The cost of goods sold for the three months ended March 31, 2015 primarily related to the revenues generated from HemCon. HemCon’s cost of goods sold amounted to approximately $385 or approximately 33% of HemCon’s revenue for the three months ended March 31, 2015. Our cost of goods sold decreased significantly for the three months ended March 31, 2015 compared to March 31, 2014, primarily due to our transition from in-house manufacturing of our HemCon products to utilizing outsourced, third-party manufacturers. This transition began in December 2014.

 

General and Administrative Expenses

 

General and administrative expenses were $765 for the three months ended March 31, 2015, compared to $725 for the three months ended March 31, 2014. Our primary general and administrative expenses for the period in 2015 were $111 from accrued but not paid executive salaries, $111 from professional fees related to TriStar such as audit, marketing and legal fees, and $654 related to salaries, occupancy cost, utilities, etc. attributable to Hemcon.

 

Sales, Marketing and Development Expenses

 

Our expenses related to sales, marketing and development were $543 for the three months ended March 31, 2015, compared to $727 for the three months ended March 31, 2014. The vast majority of our sales, marketing and development expenses for both periods related to our Hemcon operations. Our sales, marketing and development expenses were lower in 2015 compared to 2014 due to greater utilization of partnership distribution channels in 2015 compared with direct selling, and we did not utilize retail over-the-counter advertising in 2015 like we did in 2014.

 

Amortization of Intangible Assets

 

During the three months ended March 31, 2015, we had $22 in amortization of intangible assets primary related to patents, non-compete agreements and customer lists acquired in the Hemcon acquisition. We had a comparable expense of $20 for the three months ended March 31, 2014.

 

Interest Expense

 

We had interest expense $529 for the three months ended March 31, 2015, compared to $552 for the three months ended March 31, 2014. During the three months ended March 31, 2015 interest expense primarily related to the amortization of debt discount on promissory notes and warrants issued in connection with the acquisition of HemCon.

 

Change in Fair Value of Derivatives

 

During the three months ended March 31, 2015 and March 31, 2014 we recognized a non-cash loss on derivative liabilities of $509 and $1,799, respectively, due primarily to the change in fair value of the conversion option on convertible debt which was recorded as a derivative liability.

 

Gain on sale of assets and liabilities

 

During the three months ended March 31, 2015, we received $32 cash from sale of fixed assets in 2014.

 

Other Expenses

 

During the three months ended March 31, 2015 and March 31, 2014 we recognized a foreign currency transaction loss of $158 and $12, respectively.

 

16

 

Liquidity and Capital Resources for Three Months Ended March 31, 2015 and 2014

 

Introduction

 

During the three months ended March 31, 2015 and 2014, because of our operating losses, we did not generate positive operating cash flows. Our cash and cash equivalents as of March 31, 2015 was $313. Due to our monthly cash burn rate we have significant short term cash needs. These needs are being satisfied through proceeds from the sales of our securities and the issuance of convertible notes. We currently do not believe we will be able to satisfy our cash needs from our revenues for some time.

 

Our cash, current assets, total assets, current liabilities, and total liabilities as of March 31, 2015 compared to December 31, 2014, respectively, are as follows (in thousands):

 

	March 31, 2015			December 31, 2014			Change
Cash and Cash Equivalents	$	313		$	189		$	124
Total Current Assets		1,477			1,797			(320	)
Total Assets		2,693			3,069			(376	)
Total Current Liabilities		14,910			14,140			770
Total Liabilities	$	14,910		$	14,140		$	770

 

Our total assets decreased by $376 as of March 31, 2015 compared to December 31, 2014. At March 31, 2015, we had $124 more in cash and cash equivalents, offset by $221 less in accounts receivable, net, $214 less in inventories, net, and slightly less in non-current assets, compared to the same period in 2014.

 

Our current liabilities increased by $770, as of March 31, 2015 as compared to December 31, 2014. A large portion of this increase was due to an increase in our short terms notes, and derivative liabilities.

 

In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.

 

Cash Requirements

 

We had cash and cash equivalents available as of March 31, 2015 of $313 and $189 as of December 31, 2014. We have significant short term cash needs. These needs are being satisfied through proceeds from the sales of our securities and the issuance of convertible notes. We currently do not believe we will be able to satisfy our cash needs from our revenues for some time.

 

Sources and Uses of Cash

 

Operations

 

We had net cash used in operating activities of $839 for the three months ended March 31, 2015, as compared to $1,064 for the three months ended March 31, 2014. For the three months ended March 31, 2015, the net cash used in operating activities consisted primarily of our net loss of $1,747, adjusted primarily by the amortization of debt discount of $25, gain on change in fair value of derivative liability of $509, depreciation expenses of $23, intangible asset amortization of $22, imputed note interest on note payable of $18, accounts payable and accrued expenses – related party of $294, accounts payable and accruals of $192, and inventory of $214, offset by prepaid expenses of $8, deferred revenue of $48, other non-current assets of $17, and accounts receivable of $222.

 

17

 

Investing

 

We had net cash used in investing activities of $6 for the three months ended March 31, 2015, as compared to net cash used in investing activities of $22 for the three months ended March 31, 2014.  Our net cash used in investing activities for the three months ended March 31, 2015 and March 31, 2014, related entirely to the purchase of property plant and equipment.

 

Financing

 

Our net cash provided by financing activities for the three months ended March 31, 2015 was $825, compared to $1,070 for the three months ended March 31, 2014. For the period in 2015, our financing activities consisted of $695 from proceeds from issuance of short terms notes and $150 from proceeds from issuance of common stock, offset by $20 from repayment of short-term notes-related party. For the period in 2014, our financing activities consisted of $740 from proceeds from issuance of short terms notes, $230 from proceeds from issuance of short term convertible notes – related party, and $100 from issuances of convertible debt.

 

Off Balance Sheet Arrangements

 

We have no off balance sheet arrangements.

 

ITEM 3 Quantitative and Qualitative Disclosures about Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 4 Controls and Procedures

 

(a) Evaluation of Disclosure Controls Procedures

 

We maintain disclosure controls and procedures (as defined in Rule 13a-l5(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2015. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2015, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended.

 

18

 

(b) Management’s Report on Internal Controls over Financial Reporting

 

Our management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a-l5(f) of the Securities Exchange Act). Management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that assessment, management believes that, as of March 31, 2015, the Company’s internal control over financial reporting was ineffective based on the COSO criteria, due to the following material weaknesses listed below.

 

Insufficient segregation of duties in our finance and accounting functions due to limited personnel. We internally performed all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact these duties were performed by limited personnel, a lack of review was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC.

 

Insufficient corporate governance policies. Our corporate governance activities and processes are not always formally documented.

 

These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

 

When we are financially able, we intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies and we intend to consider the results of our remediation efforts and related testing as part of our next assessment of the effectiveness of our internal control over financial reporting.

 

(c) Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting during the period ended March 31, 2015, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 (d) Officer’s Certifications

 

Appearing as an exhibit to this Quarterly Report on Form 10-Q are “Certifications” of our Chief Executive and Financial Officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Quarterly Report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

 

19

 

PART II – OTHER INFORMATION

 

ITEM 1 Legal Proceedings

 

On December 8, 2014, Barry Starkman filed a Demand for Arbitration before the American Arbitration Association against TriStar Wellness Solutions, Inc. and Hemcon Medical Technologies, Inc. Mr. Starkman was TriStar’s Sr. Vice President of Operations and HemCon’s President and Chief Executive Officer from May 2013 through February 2014 pursuant to an Employment Agreement. Mr. Starkman claims that TriStar and HemCon impermissibly terminated him for cause and breached the Employment Agreement. He has asserted claims for breach of contract, promissory estoppel and violation of the Connecticut Wage Statute. He claims damages for breach of contract and promissory estoppel (which is essentially similar to the breach of contract claim) as well as double damages and attorneys’ fees under the Connecticut Wage Statute. His total base claim asserted is for $600,000. On January 5, 2015, HemCon and TriStar filed its Response to the Demand along with a Counterclaim against Starkman. In the Response to the Demand and in the Counterclaim, HemCon and TriStar deny the allegations in Mr. Starkman’s Demand for Arbitration and assert that Mr. Starkman was properly terminated for cause and is not entitled to any further payment under his Employment Agreement or any additional wages under the Connecticut Wage Statute. The Counterclaim asserts claims for approximately $800,000 for breach of the Employment Agreement as a result of obtaining unauthorized health benefits and engaging in unauthorized outside business activities. The parties have been, and continue to, conduct discovery. The parties’ witness and exhibit lists are due June 4, 2015 and an arbitration hearing is scheduled for August 3-4, 2015 in Westport, Connecticut before Hon. Beverly Margolis.

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

 

ITEM 1A Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

During the three months ended March 31, 2015, we issued the following unregistered securities:

 

During the quarter ended March 31, 2015, we agreed to issue an aggregate of 950,000 shares of our common stock for approximately $150,000 in cash to several third parties. The shares were issued on May 12, 2015. The issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933. The investors were sophisticated, familiar with our operations, and there was no solicitation.

 

During the quarter ended March 31, 2015, we issued warrants to purchase 1,200,000 shares of common stock at an exercise price of $0.20 per share. These warrants were issued in connection with certain non-convertible promissory notes we issued to certain third parties in exchange for loans totaling $600,000. The issuance of the warrants was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933. The investors were sophisticated, familiar with our operations, and there was no solicitation.

 

ITEM 3 Defaults Upon Senior Securities

 

During the period covered by this report there were no events which are required to be reported under this Item.

 

ITEM 4 Mine Safety Disclosures

 

During the period covered by this report there were no events which are required to be reported under this Item.

 

ITEM 5 Other Information

 

During the period covered by this report there were no events which are required to be reported under this Item.

 

20

 

ITEM 6 Exhibits

 

Item No.		Description
(3)		Articles of Incorporation and Bylaws
3.1		Articles of Incorporation (incorporated by reference from our Current Report on Form 8-K filed on May 9, 2001)
3.2		Bylaws (incorporated by reference from our Current Report on Form 8-K filed on May 9, 2001)
3.3		Certificate of Amendment of Articles of Incorporation (incorporated by reference from our Current Report on Form 8-K filed on May 9, 2001)
3.4		Articles of Merger (incorporated by reference from our Current Report on Form 8-K filed on May 9, 2001)
3.5		Certificate of Designation (incorporated by reference from our Current Report on Form 8-K filed on May 9, 2001)
3.6		Articles of Merger filed with the Secretary of State of Nevada on November 21, 2006 effective on November 26, 2006 (incorporated by reference from our Current Report on Form 8-K filed on November 28, 2006)
3.7		Articles of Merger filed with the Secretary of State of Nevada on February 21, 2007 effective on February 26, 2007 (incorporated by reference from our Current Report on Form 8-K filed on February 27, 2007)
3.8		Certificate of Correction filed with the Secretary of State of Nevada on June 27, 2007 (incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2009)
3.9		Certificate of Designation filed with the Secretary of State of Nevada on July 27, 2007 (incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2009)
3.10		Certificate of Change filed with the Secretary of State of Nevada on June 6, 2009 (incorporated by reference from our Current Report on Form 8-K filed on June 11, 2009)
3.11		Certificate of Designation for Series D Convertible Preferred Stock filed with the Secretary of State of Nevada on June 19, 2012 (incorporated by reference from our Annual Report on Form 10-K filed on April 16, 2013)
3.12		Certificate of Amendment to Articles of Incorporation filed with the Secretary of State of Nevada on August 29, 2012 (incorporated by reference from our Annual Report on Form 10-K filed on April 16, 2013)
3.13		Certificate of Amendment to Articles of Incorporation filed with the Secretary of State of Nevada on January 7, 2013 (incorporated by reference from our Annual Report on Form 10-K filed on April 16, 2013)
(10)		Material Contracts
10.1		Agreement for the Purchase of Preferred Stock (the “Agreement”) with Rockland Group, LLC dated April 27, 2012 (incorporated by reference from our Current Report on Form 8-K filed on May 11, 2012)
10.2		License and Asset Option Purchase Agreement with NorthStar Consumer Products, LLC dated June 25, 2012 (incorporated by reference from our Current Report on Form 8-K filed on July 2, 2012)
10.3		Agreement for the Purchase of Preferred Stock with Rockland Group, LLC dated June 29, 2012 (incorporated by reference from our Current Report on Form 8-K filed on July 2, 2012)
10.4		Subsidiary Acquisition Option Agreement with Xinghui Ltd. dated April 25, 2012 (incorporated by reference from our Current Report on Form 8-K filed on November 30, 2012)
10.5		Marketing and Development Services Agreement with InterCore Energy, Inc. dated July 11, 2012 (incorporated by reference from our Current Report on Form 8-K filed on November 30, 2012)
10.6		Purchase and Assignment of Rights Agreement with RWIP, LLC dated July 11, 2012 (incorporated by reference from our Current Report on Form 8-K filed on November 30, 2012)
10.8		Asset Purchase Agreement with Northstar Consumer Products, LLC, dated February 4, 2013 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2013)
10.9		Asset Purchase Agreement with HLBC Distribution Company, Inc., dated February 12, 2013 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2013)

 

21

 

10.10		Employment Agreement with John R. Linderman dated February 1, 2013 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2013)
10.11		Employment Agreement with James Barickman dated February 1, 2013 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2013)
10.12		Employment Agreement with Fredrick A. Voight dated February 1, 2013 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2013)
10.13		Employment Agreement with Michael S. Wax dated February 1, 2013 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2013)
10.14		Exclusive Manufacturing, Marketing and Distribution Definitive License Agreement with Argentum Medical, LLC dated March 7, 2013 (incorporated by reference from our Current Report on Form 8-K filed on March 14, 2013)
10.15		Order Confirming Debtor’s Fifth Amended Plan of Reorganization and Plan of Reorganization in In re HemCon Medical Technologies, Inc. filed May 6, 2013 (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.16		Agreement for Purchase and Sale of Stock entered into by and between TriStar Wellness Solutions, Inc. and HemCon Medical Services, Inc. dated April 18, 2013 (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.17		Employment Agreement with Barry Starkman (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.18		Employment Agreement with Simon McCarthy (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.19		Promissory Note with DayStar Funding, LP dated May 6, 2013 (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.20		Promissory Note with Lawrence K. Ingber Trust, dated June 14, 1980, as amended and restated March 6, 2006, dated May 6, 2013 (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.21		Promissory Note with James Barickman dated May 6, 2013 (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.22		Promissory Note with John Linderman dated May 6, 2013 (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.23		Promissory Note with James Linderman dated May 6, 2013 (incorporated by reference from our Current Report on Form 8-K filed on May 13, 2013)
10.24		Stock Exchange Agreement with M&K Family Limited Partnership dated July 11, 2013 (incorporated by reference from our Current Report on Form 8-K filed on August 1, 2013)
10.25		Stock Exchange Agreement with Northstar Consumer Products, LLC, dated July 11, 2013 (incorporated by reference from our Current Report on Form 8-K filed on August 1, 2013)
10.26		Stock Exchange Agreement with Rivercoach Partners, LP dated July 11, 2013 (incorporated by reference from our Current Report on Form 8-K filed on August 1, 2013)
(31)		Rule 13a-14(a)/15d-14(a) Certifications
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer (filed herewith).
(32)		Section 1350 Certifications
32.1		Section 1350 Certification of Chief Executive Officer (filed herewith).
32.2		Section 1350 Certification of Chief Accounting Officer (filed herewith).
101.INS **		XBRL Instance Document
101.SCH **		XBRL Taxonomy Extension Schema Document
101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **		XBRL Taxonomy Extension Label Linkbase Document
101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

___________ 

* Filed herewith.

 

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

22

 

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.

 

 

	TriStar Wellness Solutions, Inc. a Nevada corporation
Dated: May 20, 2015	By:	/s/ Michael Wax
		Michael Wax
	Its:	Interim Chief Executive Officer, Chief Development Officer and a Director

 

 

 

23

---

 

EXHIBIT 31.1

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

 

I, Michael Wax, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of TriStar Wellness Solutions, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

1 (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

2 (b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: May 20, 2015	By:	/s/ Michael Wax
		Michael Wax
	Its:	Chief Executive Officer

 

EXHIBIT 31.2

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

 

I, Dave Horin, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of TriStar Wellness Solutions, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: May 20, 2015	By:	/s/ Dave Horin
		Dave Horin
	Its:	Chief Financial Officer

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of TriStar Wellness Solutions, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Michael Wax, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

	(1)	The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 20, 2015	By:	/s/ Michael Wax
		Michael Wax
	Its:	Chief Executive Officer

 

A signed original of this written statement required by Section 906 has been provided to TriStar Wellness Solutions, Inc. and will be retained by TriStar Wellness Solutions, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of TriStar Wellness Solutions, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Dave Horin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

	(1)	The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 20, 2015	By:	/s/ Dave Horin
		Dave Horin
	Its:	Chief Financial Officer

 

A signed original of this written statement required by Section 906 has been provided to TriStar Wellness Solutions, Inc. and will be retained by TriStar Wellness Solutions, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.