HEALTH ADVANCE INC. - Quarter Report: 2016 October (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the Quarterly Period Ended October 31, 2016
or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from ______to______.
Commission File Number: 333-177122
HEALTH ADVANCE INC.
(Exact
name of registrant as specified in its Charter)
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WYOMING
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46-0525223
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3651 Lindell Rd. Suite D155
Las Vegas, NV, 89103
(Address
of Principal Executive Offices)(Zip Code)
702-943-0309
(Registrants
telephone number, including area code)
N/A
(Former
name, or former address and 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 Exchange Act of
1934 during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes ☒ 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 ☒ 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 filer. See the definitions of “large
accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the
Exchange Act.
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Large
Accelerated Filer
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Accelerated
Filer
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Non-Accelerated
Filer
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☐
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(Do not
check if a smaller reporting company)
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Smaller
Reporting Company
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☒
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Indicate
by check mark whether the registrant is a shell company as defined
in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒
Indicate
the number of shares outstanding of each of the issuer’s
classes of common stock. As of December 14, 2016, there were
26,520,000 shares of the issuer’s common stock issued
and outstanding.
HEALTH ADVANCE INC.
FORM 10-Q
October 31, 2016
INDEX
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PART I — FINANCIAL INFORMATION
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Condensed
Financial Statements - Unaudited
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3
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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10
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Quantitative
and Qualitative Disclosures About Market Risk
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16
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Controls
and Procedures
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16
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PART II — OTHER INFORMATION
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Legal
Proceedings
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17
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Risk
Factors
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17
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Unregistered
Sales of Equity Securities and Use of Proceeds
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17
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Defaults
Upon Senior Securities
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17
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Mine
Safety Disclosures
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17
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Other
Information
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17
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Exhibits
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18
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18
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PART I – FINANCIAL INFORMATION
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Item 1.
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Condensed Financial
Statements
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HEALTH ADVANCE INC.
CONDENSED FINANCIAL STATEMENTS
OCTOBER 31, 2016
CONTENTS
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PAGE -
4
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CONDENSED
BALANCE SHEETS AS AT OCTOBER 31, 2016 (UNAUDITED) AND AS AT JULY
31, 2016 (AUDITED)
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PAGE -
5
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CONDENSED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED
OCTOBER 31, 2016 AND 2015 (UNAUDITED)
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PAGE -
6
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CONDENSED
STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED OCTOBER 31,
2016 AND 2015 (UNAUDITED)
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PAGE -
7
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NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
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3
HEALTH ADVANCE INC.
CONDENSED BALANCE SHEETS
AS AT OCTOBER 31, 2016 (UNAUDITED) AND JULY 31, 2016
(AUDITED)
(Expressed in United States Dollars)
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October 31,
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July 31,
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2016
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2016
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$
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$
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ASSET
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CURRENT ASSET
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Cash
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—
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—
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TOTAL ASSET
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—
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—
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LIABILITIES AND SHAREHOLDERS' DEFICIENCY
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CURRENT LIABILITIES
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Accounts
payable
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57,378
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58,353
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Accrued
liabilities
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6,575
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2,500
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102,211
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98,542
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TOTAL LIABILITIES
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166,164
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159,395
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SHAREHOLDERS' DEFICIENCY
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Authorized:
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24,520,000
common stock as at October 31, 2016 and July 31, 2016
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24,520
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24,520
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Additional
paid-in capital
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186,080
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186,080
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67,500
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67,500
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Accumulated
deficit
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(444,264)
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(437,495)
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TOTAL SHAREHOLDERS' DEFICIENCY
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(166,164)
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(159,395)
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TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY
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—
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—
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Going
concern (Note 3)
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Subsequent
events (Note 9)
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See accompanying notes
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4
HEALTH ADVANCE INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2016 AND 2015
(UNAUDITED)
(Expressed in United States Dollars)
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Three months
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Three months
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ended
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ended
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October 31,
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October 31,
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2016
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2015
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$
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$
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SALES
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—
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—
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COST OF SALES
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—
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—
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GROSS PROFIT
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—
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—
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EXPENSES
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Professional
fees
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3,835
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5,406
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Office
and general
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2,934
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1,030
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Total expenses
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6,769
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6,436
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Foreign
exchange loss
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—
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—
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Loss
before income taxes
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(6,769)
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(6,436)
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Income
taxes
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—
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—
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NET AND COMPREHENSIVE LOSS FOR THE PERIOD
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(6,769)
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(6,436)
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Loss
per common share, basic and diluted
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(0.0,003)
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(0.0,003)
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Weighted
average number of
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common stock outstanding, basic and diluted
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24,520,000
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24,520,000
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See accompanying notes
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5
HEALTH ADVANCE INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2016 AND 2015
(UNAUDITED)
(Expressed in United States Dollars)
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Three months
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Three months
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ended
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ended
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October 31,
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October 31,
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2016
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2015
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net
loss for the period
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(6,769)
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(6,436)
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Adjustments for non-cash items
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Common
stock issued for services
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—
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—
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In-kind
contribution of services
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—
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—
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Net change in non-cash working capital balances:
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Accounts
payable
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(975)
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7,831
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Accrued
liabilities
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4,075
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(2,425)
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Net cash used in operating activities
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(3,669)
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(1,030)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds
from issuance of common stock
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—
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—
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Advances
from a shareholder
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3,669
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1,030
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Net cash provided by financing activities
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3,669
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1,030
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Net decrease in cash during the period
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—
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—
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Cash,
beginning of period
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—
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—
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Cash, end of period
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—
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—
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See accompanying notes
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Supplemental cash flow information [Note 8]
6
HEALTH ADVANCE INC.
NOTES TO THE
CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2016
(UNAUDITED)
(Expressed in United States Dollars)
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1.
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NATURE OF OPERATIONS AND ORGANIZATION
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Health
Advance Inc. (the “Company” or “Health
Advance”) was incorporated on April 14, 2010 in the State of
Wyoming. The Company is an online retailer of home medical products
with operations in Canada and the United States of America
(“USA”).
On October 13, 2016, the Company entered into a share exchange
agreement (the “Share Exchange Agreement”) with Hantian
Labs Limited., a corporation existing under the laws of the United
Kingdom (“Hantian Labs”), to acquire all of the issued
and outstanding shares of Hantian Labs. Pursuant to the Share
Exchange Agreement, the Company will acquire from Hantian Labs one
hundred percent (100%) interest in Hantian Labs and its controlling
subsidiaries. In consideration for the Share Exchange Agreement,
the Company shall issue to Hantian Labs 1.5 common shares of the
Company for each share of Hantian Labs issued and outstanding at
the time of closing. As a closing condition to the Share Exchange
Agreement, Hantian Labs is required to complete a financing of a
minimum of $250,000 for the marketing of Hantian Labs’
product line. This closing condition has not been met and thus no
share exchange has taken place.
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2.
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BASIS OF PRESENTATION
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The
condensed financial statements have been prepared by the Company in
accordance with accounting principles generally accepted in the USA
for interim financial information and the SEC instructions to Form
10Q. Accordingly, they do not include all of the information and
notes to the financial statements required by generally accepted
accounting principles for complete financial statements. All
adjustments, consisting of normal recurring accruals, considered
necessary for a fair presentation have been included. For further
information, refer the financial statements and notes thereto
included in the Company’s annual report on Form 10K for the
year ended July 31, 2016.
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3.
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GOING CONCERN
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These
financial statements have been prepared assuming the Company will
continue on a going concern basis. The Company has incurred losses
since inception and the ability of the Company to continue as a
going concern depends upon its ability to develop profitable
operations and to continue to raise adequate financing. Management
is actively targeting sources of additional financing to provide
continuation of the Company’s operations. In order for the
Company to meet its liabilities as they come due and to continue
its operations, the Company is solely dependent upon its ability to
generate such financing.
There
can be no assurance that the Company will be able to continue to
raise funds, in which case the Company may be unable to meet its
obligations. Should the Company be unable to realize its assets and
discharge its liabilities in the normal course of business, the net
realizable value of its assets may be materially less than the
amounts recorded in these financial statements.
These
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the
Company be unable to continue in existence.
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4.
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LOSS PER SHARE
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The
Company has adopted the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards
Codification (“ASC”) Topic 260-10 which provides for
calculation of “basic” and “diluted”
earnings per share. Basic earnings per share includes no dilution
and is computed by dividing net income or loss available to common
shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflect the
potential dilution of securities that could share in the earnings
of an entity. Diluted earnings per share exclude all potentially
dilutive shares if their effect is anti-dilutive. There were no
potentially dilutive shares outstanding as at October 31, 2016 and
July 31, 2016.
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5.
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RECENT ACCOUNTING PRONOUNCEMENTS
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Recently Issued Accounting Standards
In March 2016, the Company adopted the accounting pronouncement
issued by the Financial Accounting Standards Board ("FASB") to
update guidance on how companies account for certain aspects of
share-based payments to employees. This pronouncement is effective
for fiscal years beginning after December 15, 2016, and interim
periods within those years, with early adoption permitted. This
guidance requires all income tax effects of awards to be recognized
in the income statement when the awards vest or are settled and
changes the presentation of excess tax benefits on the statement of
cash flows.
The Company adopted these provisions on a prospective basis. In
addition, this pronouncement changes guidance on: (a) accounting
for forfeitures of share-based awards and (b) employers’
accounting for an employee’s use of shares to satisfy the
employer’s statutory income tax withholding obligation. The
adoption of this pronouncement did not have a material impact on
Company’s financial position and/or results of
operations.
7
HEALTH ADVANCE INC.
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2016
(UNAUDITED)
(Expressed in United States Dollars)
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5.
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RECENT ACCOUNTING PRONOUNCEMENTS (continued)
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In February 2016, an accounting pronouncement was issued by the
FASB to replace existing lease accounting guidance. This
pronouncement is intended to provide enhanced transparency and
comparability by requiring lessees to record right-of-use assets
and corresponding lease liabilities on the balance sheet for most
leases. Expenses associated with leases will continue to be
recognized in a manner similar to current accounting guidance. This
pronouncement is effective for annual and interim periods beginning
after December 15, 2018, with early adoption permitted. The
adoption is required to be applied on a modified retrospective
basis for each prior reporting period presented. The Company has
not yet determined the effect that the adoption of this
pronouncement may have on its financial position and/or results of
operations.
On January 1, 2016, the Company adopted the accounting
pronouncement issued by the FASB to update the guidance related to
the presentation of debt issuance costs. This guidance requires
debt issuance costs, related to a recognized debt liability, be
presented in the balance sheet as a direct deduction from the
carrying amount of the related debt liability rather than being
presented as an asset. The Company adopted this pronouncement on a
retrospective basis, and the adoption did not have a material
impact on its financial position and/or results of
operations.
In November 2015, an accounting pronouncement was issued by the
FASB to simplify the presentation of deferred income taxes within
the balance sheet. This pronouncement eliminates the requirement
that deferred tax assets and liabilities are presented as current
or noncurrent based on the nature of the underlying assets and
liabilities. Instead, the pronouncement requires all deferred tax
assets and liabilities, including valuation allowances, be
classified as noncurrent. This pronouncement is effective for
fiscal years beginning after December 15, 2016, with early adoption
permitted. The Company intend to adopt this pronouncement on
January 1, 2017, and the adoption will not have a material impact
on its financial position and/or results of
operations.
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6.
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RELATED PARTY TRANSACTIONS AND BALANCES
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The
transactions with related parties were in the normal course of
operations and were measured at the exchange value which
represented the amount of consideration established and agreed to
by the parties. Related party transactions or balances not
disclosed elsewhere in these financial statements are as
follows:
Advances
from a shareholder of the Company as at October 31, 2016 and July
31, 2016 were $102,211 and $98,542, respectively. These advances
are non-interest bearing, unsecured and have no specific terms of
repayment.
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7.
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SHAREHOLDERS’ DEFICIENCY
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COMMON STOCK - AUTHORIZED
As at
October 31, 2016, the Company has 500,000,000 authorized shares of
common stock with a par value of $0.001 per share.
COMMON STOCK - ISSUED AND OUTSTANDING
As at
October 31, 2016 and July 31, 2016, the Company has 24,520,000
shares of common stock issued and outstanding.
8
HEALTH ADVANCE INC.
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2016
(UNAUDITED)
(Expressed in United States Dollars)
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7.
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SHAREHOLDERS’ DEFICIENCY (continued)
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COMMON STOCK – TO BE ISSUED
The
Company’s 6,790,000 common stock ($67,500) to be issued
amounting to $67,500 as at October 31, 2016 and July 31, 2016
consist of the following:
In
November 2012, the Company agreed to issue 2,000,000 shares of
common stock at an issue price of $0.005 per share for a total cash
proceeds of $10,000. These shares were issued in December
2016.
In
December 2012, the Company agreed to issue 1,000,000 shares of
common stock valued at $0.01 per share for a total value of $10,000
for web design services and repairs.
In
January 2013, the Company agreed to issue 500,000 shares of common
stock valued at $0.01 per share for a total value of $5,000 for
consulting services.
In
March 2013, the Company agreed to issue 800,000 shares of common
stock at an issue price of $0.01 per share for a total cash
proceeds of $8,000.
In June
2013, the Company agreed to issue 350,000 shares of common stock at
an issue price of $0.01 per share for a total cash proceeds of
$3,500.
In
October 2013, the Company agreed to issue 1,600,000 shares of
common stock at an issue price of $0.0025 per share for a total
cash proceeds of $4,000.
In
April 2014, the Company agreed to issue 40,000 shares of common
stock at an issue price of $0.05 per share for a total cash
proceeds of $2,000.
In
August 2014, the Company agreed to issue 500,000 shares of common
stock at an issue price of $0.05 per share for a total cash
proceeds of $25,000.
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8.
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SUPPLEMENTAL CASH FLOW INFORMATION
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During
the three months ended October 31, 2016, and 2015, there were no
interest or taxes paid by the Company.
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9.
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SUBSEQUENT EVENTS
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The
Company’s management has evaluated subsequent events up to
December 14, 2016, the date the financial statements were issued,
pursuant to the requirements of ASC 855 and has determined the
following subsequent events to report.
In December 2016, the Company issued 2,000,000 shares of common
stock at an issue price of $0.005 per share for a total cash
proceeds of $10,000, which were received in 2012.
9
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Item 2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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The following plan of operation provides information which
management believes is relevant to an assessment and understanding
of our results of operations and financial condition. The
discussion should be read along with our financial statements and
notes thereto. This section includes a number of forward-looking
statements that reflect our current views with respect to future
events and financial performance. Forward-looking statements are
often identified by words like believe, expect, estimate,
anticipate, intend, project and similar expressions, or words
which, by their nature, refer to future events. You should not
place undue certainty on these forward-looking
statements. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from our predictions.
Overview
Health
Advance Inc. (the “Company”) was incorporated on April
14, 2010 in Wyoming. The Company is an on-line retailer of home
medical products with operations in Canada and the United States,
and with administration and infrastructure supported
globally. Our strategy is to attract opportunities in
the health care industry through the development and growth of our
existing web site
www.leadingmedicalproducts.com. We believe we can
operate more cost efficiently and compete as a discounter that
delivers value and low cost branded lines of home medical care
products together with valuable customer care that is currently
missing in the marketplace. Our goal is to become our
customers’ single source for low cost health care supplies,
by meeting all of our customer’s needs.
From
inception to October 31, 2016 we have incurred a net loss of
$444,264. The ability of the Company to continue as a
going concern depends upon its ability to raise adequate financing
and develop profitable operations. If we cannot generate sufficient
revenues from our services, we may have to delay the implementation
of our business plan. Management is actively targeting sources of
additional financing to provide continuation of the Company’s
operations. In order for the Company to meet its liabilities as
they come due and to continue its operations, the Company is solely
dependent upon its ability to generate such financing.
The
Company is actively seeking financing for its current business
operation. The Company is optimistic that the financing
will be secured and the going concern risk will be
removed. We are in discussions with various parties and
believe a successful financing is likely. Any capital raised will
be through either a private placement or a convertible debenture
and will result in the issuance of shares of common stock from the
Company’s authorized capital. In addition, the Company is
also seeking acquisitions within the health space as a means to
grow the Company.
On
February 14, 2014, the Company affected a 10-for-1 forward split of
the Company’s issued and outstanding common shares. The
Company’s issued and outstanding common shares were therefore
increased from 2,452,000 to 24,520,000. All per share
amounts have been restated to reflect this stock
split.
Plan of Operation
We were
incorporated on April 14, 2010 in Wyoming. Our business office is
located at 3651 Lindell Road, Suite D#155, Las Vegas, NV,
89103. Our telephone number is 702-943-0309. We were
founded by Jordan Starkman, who serves as our President and
Director. In addition, Domenico Pascazi was appointed as
a director in March 2011. On February 12, 2013, Mr.
Pascazi resigned from his position as a member of the board of
directors. Mr. Pascazi’s resignation was not a result of any
disagreement with the Company or its executive officers, or any
matter relating to the Company’s operations, policies or
practices.
We are
an on-line retailer of home medical products with operations in
Canada and the United States, and with administration and
infrastructure supported globally. In September 2015, the Company
launched a new e-commerce platform, leadingmedicalproducts.com. The
site features a new vibrant design with a fresh look, and offers
quick and easy access to essential product information that
provides a more comprehensive understanding of the Company’s
product lines. Our strategy is to attract opportunities in the
health care industry through the development and growth of our
existing web site. We believe we can operate more cost efficiently
and compete as a discounter that delivers value and low cost
branded lines of home medical care products together with valuable
customer care that is currently missing in the
marketplace. Our goal is to become our customers’
single source for low cost health care supplies, by meeting all of
our customer’s needs.
We
strive to offer health care professionals, medical distributors and
consumers the highest quality brands and products at the most
affordable prices. We expect to achieve this by forming
relationships with suppliers that will be able to provide us with
preferred prices once we are able to make bulk
purchases.
10
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Item 2.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
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In the fiscal year of 2017, we plan to build our business across
four key product categories including: (1) respiratory, (2)
diabetes, (3) ostomy, and (4) mastectomy supplies. Our growth
plan is to achieve net revenues within the first 12 months
following our July 31, 2016 year–end.
On
October 13, 2016, the Company entered into a share exchange
agreement (the “Share Exchange Agreement”) with Hantian
Labs Limited., accorporation existing under the laws of the United
Kingdom (“Hantian Labs”) to acquire all of the issued
and outstanding shares of Hantian Labs. Pursuant to the Share
Exchange Agreement, the Company will acquire from Hantian Labs one
hundred percent (100%) interest in Hantian Labs and its controlling
subsidiaries. In consideration for the Share Exchange Agreement,
the Company shall issue to Hantian Labs 1.5 common shares of the
Company for each share of Hantian Labs issued and outstanding at
the time of closing. As a closing condition to the Share Exchange
Agreement, Hantian Labs is required to complete a financing of a
minimum of $250,000 for the marketing of Hantian Labs’
product line.
On
October 31, 2016, the Company entered into a nonbinding letter of
intent to acquire certain proprietary product formulations for the
manufacture of generic drugs. The Company expects to enter into a
definitive agreement by the end of 2016.
We plan to complete a financing in the fiscal year of
2017. We have not yet entered into any agreements with
any parties with respect to obtaining financing for the
Company.
If we are unable to obtain financing on reasonable terms, we could
be forced to delay or scale back our plans for expansion. In
addition, such inability to obtain financing on reasonable terms
could have a material adverse effect on our business, operating
results, or financial condition.
If we are able to obtain financing, we plan to implement both
online and offline marketing and customer engagement campaigns for
both our traditional durable medical products and our four key
product areas mentioned above. We intend to target consumers with
on-line marketing, and businesses, including various senior care
facilities, with direct mail, telemarketing and flyer campaigns.
Initially, we will target small to medium size facilities. We also
intend to launch our direct mail onsite flyer campaigns and
outbound calling campaigns in unison to increase the frequency and
awareness of Leadingmedicalproducts. We expect to replace and
expand any existing major wholesaler relationships we currently
work with by the beginning of year two following our July 31,
2016 year-end. Further, during this expected time frame, we plan to
establish direct-from-manufacturer programs for our four key growth
markets. We intend to continue to run our durable
medical products business through the existing wholesaler
relationships given the large range of product SKUs in the durable
medical product category where we carry no less than a selection of
nearly 2,000 products. No steps have been taken thus far to secure
customers for our products.
The Company expects to start preparing for an online marketing
campaign our financing has secured. The Company has a
relationship with AGS Cybertech located in India who will manage
and coordinate all of our online marketing efforts. The
campaign will include internet banner ads, search engine
optimization, and social media optimization. All banner
advertising will be strategically placed with various click per
view programs as part of our overall sales and marketing
plan.
In our key growth areas we plan to focus on reducing and
concentrating the number of product SKUs in each growth category in
order to create leverage with our supply chain across selected
relationships with respiratory, diabetes, ostomy and mastectomy
suppliers. These new direct-from-manufacturer programs
will primarily be drop ship programs and will essentially result in
no new product inventory risks. They will be
predominantly product substitution strategies where direct
manufacturers carry the inventory risk in order to get shelf space
within our business to consumer ecommerce
property www.leadingmedicalproducts.com and
other sales channels. These programs will be based on
committed but non-binding contracted volume from us with each
manufacturer, but where the manufacturer still carries the
inventory, marketing investment, and the majority of the time
continues to handle drop shipments direct to our customers and
sales channels.
The first tranche of these direct from manufacturer programs is
expected to be with North America based manufacturers given a
tendency for higher quality product, margins and their ability to
handle inventory and direct shipments to our
customers. We also plan to evaluate a select number of
overseas supplier relationships if we identify that a select
overseas direct supplier can and will meet our delivery, financing
and quality and return warranty terms. As a result of
these supply chain improvements we expect to increase our net
revenues based on margin improvements of an average of 20-25% and
this does not include factoring in even higher margins if we choose
to source from overseas markets.
We expect that these new product launches will be outlined and
planned within the 2017 fiscal year and the beginning of fiscal
year 2018, once our financing is completed. During the
next 24 months following our 2016 year-end, we plan to work with
our manufacturing partners to develop and finalize no less than two
new product lines within each core product group for respiratory,
diabetes, ostomy and mastectomy supplies and launch them by the
second half of year 2. Together with our manufacturer
partners we intend to develop and test market and then finalize our
packaging and product features and licensing requirements by the
end of July 2018.
11
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
|
In addition to attempting to achieve supply chain optimization by
the beginning of January 2018, which we intend to result in reduced
overall cost of goods, we also plan to drive top line growth with a
major marketing initiative for new products. No formal products
have been discussed as of yet. By the end of July 2018, we intend
to achieve the 3 key milestones outlined above including: (1)
entering into new growth markets, (2) optimizing our supply chain,
and (3) launching new product lines in our new growth from
existing product line sales in growth markets for respiratory,
diabetes, ostomy and mastectomy supplies through a margin optimized
supply chain; a contribution from our traditional durable medical
products businesses through existing wholesaler channels and from
new products launched.
We have estimated that we will incur minimum expenses equal to
$15,000 in the year following our July 31, 2016 year-end in order
to maintain our business operations. However, if we
conduct a financing, we will devote the capital raised to
operational expenses as indicated below. The Company will attempt
to complete a financing for a minimum of $500,000 within the
12-month period following the Company’s 2016
year-end. Any capital raised will be through either a
private placement or a convertible debenture and will result in the
issuance of common shares from the Company’s authorized
capital.
12
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
|
|
Web Development and
Maintenance
|
$10,000
|
|
Legal/Accounting
|
$25,000
|
|
Computer hardware
and software systems
|
$10,000
|
|
Advertising and
Marketing
|
$325,000
|
|
General and
administrative
|
$30,000
|
|
Salaries and
Customer Service
|
$90,000
|
|
Telephone
|
$2,000
|
|
Travel
|
$8,000
|
|
Total
Expenses
|
$500,000
|
The
above represents managements’ best estimate of our cash
requirements based on our business plans and current market
conditions. The above is based on our ability to raise sufficient
financing and generate adequate revenues to meet our cash flow
requirements. The actual allocation between expenses may vary
depending on the actual funds raised and the industry and market
conditions over the next 12 months following our July 31, 2016
year-end.
The
Company is currently negotiating financing in the amount of
$500,000 to further the Company’s business
operations. Any capital raised will likely be through
either a private placement or a convertible debenture and will
likely result in the issuance of common shares from the
Company’s authorized capital.
If we
are able to complete a financing through a private offering for a
minimum of $500,000 within the 12 month period following our July
31, 2016 year-end, we expect to replace and expand any existing
major wholesaler relationships we currently work with by the
beginning of July 31, 2017 year-end. Further, during this expected
time frame, we plan to establish direct-from-manufacturer programs
for our four key growth markets in order to achieve improved margin
of between 25-35%. We will continue, however, to run our
durable medical products business through the existing wholesaler
relationships given the large range of product SKUs in the durable
medical product category where we carry no less than a selection of
nearly 2,000 products. In addition, the Company is also seeking
acquisitions within the health space as a means to grow the
Company.
In October 2016, the Company announced it is launching its first
private label product under the web domains discounttamanuoil.com
and bestoiloftamanu.com. Tamanu
Oil is a natural nut oil that is extracted from the nut kernels of
the Tamanu Tree after the nut kernels have been collected and left
to cure naturally over a 6-8 week period. The scientific name for
the Tamanu Nut Tree is Calophyllum Inophyllum – an evergreen
tree and a member of the Mangosteen Family. This tree is indigenous
to tropical countries, especially the Melanesian Islands of
Vanuatu.
The
real healing power of this traditional topical oil is its unique
ability to promote the formation of new tissue, thereby
accelerating wound healing and the growth of healthy skin
(anti-aging). The scientific term for this process is
“cicatrization”. Scientists don’t fully
understand the unique cicatrizing properties of the Oil as it has
an extremely complex portfolio of chemistry that is difficult to
decipher or explain. However, scientific studies clearly establish
that Tamanu Oil is a significant healing agent, not only because of
its ability to produce new skin tissue, but also because of its
anti-inflammatory, anti-neuralgic, antibiotic and antioxidant
properties.
While
there are many so called “anti-aging” products on the
market that promise more youthful looking skin, the majority of
them contain chemicals, artificial preservatives and synthetic
colourings that are often toxic and likely to do more harm than
good. However, given Tamanu Oil’s unique ability to promote
the growth of new, healthy skin tissue, the anti-aging benefits of
Tamanu Oil are obvious. The benefits of Tamanu Oil are
extensive:
1.
Relieves and protects the skin against inflammation, skin redness,
sunburn and insect bites.
2. Has
a regenerating effect on the skin (especially the epidermis cells)
and so it effective for healing wounds, burns, cuts
etc.
3.
Reduces scarring, especially the appearance of scars that are one
or more years old).
4. Is
an anti-septic and anti-acne 5. Has anti-viral
properties.
6. Has
antibiotic, antibacterial, anti-fungal and anti-coagulative
properties
7.
Contains 4-Phenylcoumarins from Calophyllum (ie.
anti-tumor-promoting agents or cancer chemopreventive
agents.
8. Has
anti-ageing and anti-wrinkle qualities – Moisturizes,
nourishes and repairs the epidermal cells of dry and damaged
skin)
9.
Increases microcirculation (heavy legs, bruising)
10.
Body hygiene (body odors, infections, skin rashes, dermatitis,
psoriasis).
11.
Hypoallergenic (non-irritant, non-sensitizing).
Upon
the successful completion of a financing, the Company plans to
effectively market both tamanu oil domain names and is currently
seeking distribution agreements with various parties.
13
Results of Operations
For the three months ended October 31, 2016 and 2015
For the
three months ended October 31, 2016 and 2015 we did not have any
sales. The Company has launched a new e-commerce platform,
leadingmedicalproducts.com. The site features a new vibrant design
with a fresh look, and offers quick and easy access to essential
product information that provides a more comprehensive
understanding of the Company’s product lines. In addition,
the Company has not been successful in completing the required
financing to begin its advertising campaign and promotion of
www.leadingmedicalproducts.com. We expect to generate increased
sales once our advertising campaign begins.
Operating
expenses for the three months ended October 31, 2016 were $6,769,
as compared to $6,436 the three months ended October 30,
2015.
During
the three months ended October 31, 2016, we recorded $3,835, as
professional fees (three months ended October 31, 2015, $5,406) and
$2,934, as office and general expenses (three months ended October
31, 2015, $1,030).
During
the three months ended October 31, 2016 and 2015, we had no
provision for income taxes due to the net operating losses
incurred.
14
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
|
Liquidity and Capital Resources
As of
October 31, 2016, we had nil cash balance and a working capital
deficiency of $166,164.
The Company is currently seeking funding for our continued
operations. The Company intends to raise a minimum of
$500,000 and a maximum of $1,000,000 in order to continue the
introduction of the www.leadingmedicalproducts.com e-commerce
site to the retail community and health care community as well as
besttamanuoil.com and discounttamanuoil.com. To achieve our
goals the Company expects to commit the majority of its funding to
the advertising of the Company’s web sites. There is no
assurance that the Company will be able to raise the capital
required to complete its goal and objectives and the Company is
currently seeking capital to further its business
plan. We will likely raise funds through either debt or
issuing shares of our common stock in order to achieve our business
goals. The issuance of additional shares or securities convertible
into any such shares by us, any shares issued would dilute the
percentage ownership of our current shareholders. There are no
agreements with any parties at this point in time for additional
funding; however, we are in discussions with various funders in the
United States.
We believe we can satisfy our cash requirements for the next twelve
months with our expected revenues and if needed an additional loan
from our director, Jordan Starkman. We cannot assure
investors that adequate revenues will be generated and there
is no current loan commitment in place between the Company and
Jordan Starkman. However, the success of our operations is
dependent on attaining adequate revenue. In the absence of our
projected revenues, we may be unable to proceed with our plan of
operations or we may require financing to achieve our profit,
revenue, and growth goals.
We anticipate that our fixed costs made up of legal &
accounting and general & administrative expenses for the next
12 months will total approximately $25,000. Legal and
accounting expenses of $15,000 represents the minimum funds needed
to sustain operations. The $25,000 will be financed through the
Company’s cash on hand, additional financing, net sales and
if needed, an advance from our officer and director, Jordan
Starkman. We do not anticipate the purchase or sale of any
significant equipment. We also do not expect any significant
additions to the number of employees, until financing is
raised. The foregoing represents our best estimate of
our cash needs based on our current business
condition.
The exact allocation, purposes and timing of any monies raised in
subsequent private financings may vary significantly depending upon
the exact amount of funds raised and our progress with the
execution of our business plan. It is currently expected
that the Company will spend an additional $175,000 in variable
costs relating to marketing and business development that will be
funded from future financings.
In the event we are not successful in reaching our initial revenue
targets, we will need additional funds to proceed with our business
plan for the development and marketing of our core services. Should
this occur, we would likely seek additional financing to support
the continued operation of our business. We anticipate that
depending on market conditions and our plan of operations, we may
incur operating losses in the foreseeable future. Therefore, our
auditors have raised substantial doubt about our ability to
continue as a going concern.
15
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
|
Recently Issued Accounting Standards
As
explained in note 5 to the condensed financial statements, the
Company evaluated all recent accounting pronouncements issued and
determined that the adoption of these pronouncements would not have
a material effect on the financial position, results of operations
or cash flows of the Company.
Off-Balance Sheet Arrangements
We do
not have any outstanding derivative financial instruments,
off-balance sheet guarantees, interest rate swap transactions or
foreign currency contracts.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market
Risk
|
Not
required for Smaller Reporting Companies.
|
Item 4.
|
Controls and
Procedures
|
Evaluation of disclosure controls and procedures
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934
(“Exchange Act”), the Company carried out an
evaluation, with the participation of the Company’s
management, including the Company’s principal executive
officer and principal financial officer of the effectiveness of the
Company’s disclosure controls and procedures (as defined
under Rule 13a-15(e) under the Exchange Act) as of the end of the
period covered by this report. Based upon that evaluation, the
Company’s principal executive officer and principal financial
officer concluded that the Company’s disclosure controls and
procedures were not effective as of October 31, 2016 to ensure that
information required to be disclosed by us in the reports that we
file or submit under the Exchange Act (i) is recorded, processed,
summarized and reported, within the time periods specified in the
SEC’s rules and forms and (ii) is accumulated and
communicated to our management, including our chief executive
officer and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure.
It
should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system are met. In addition,
the design of any control system is based in part upon certain
assumptions about the likelihood of future events. Because of these
and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
Changes in internal controls
No
change in our system of internal control over financial reporting
occurred during the nine months ended October 31, 2016 that
has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
16
PART II - OTHER INFORMATION
|
Item 1.
|
Legal Proceedings
|
We are
currently not involved in any litigation that we believe could have
a materially adverse effect on our financial condition or results
of operations. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our company’s or
our company’s subsidiaries’ officers or directors in
their capacities as such, in which an adverse decision could have a
material adverse effect.
The
Company has received a default judgment order against the Company
in favor of Anslow & Jaclin in the amount of $8,737.00 plus
interest for previous legal fees. The Company expects to negotiate
a settlement in the coming weeks.
|
Item 1A.
|
Risk Factors
|
Not
required for Smaller Reporting Companies.
|
Item 2.
|
Unregistered Sales of
Equity Securities and Use of Proceeds
|
No
recent sales of equity securities.
|
Item 3.
|
Defaults Upon Senior
Securities
|
None
|
Item 4.
|
Mine Safety Disclosures
|
Not
Applicable
|
Item 5.
|
Other Information
|
None
|
Item 6.
|
Exhibits
|
|
Certification
of Principal Executive Officer and Principal Financial Officer,
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification
of Principal Executive Officer and Principal Financial Officer of
the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
17
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.
|
|
Health
Advance, Inc.
|
|
|
|
|
|
|
|
|
Dated: December
14, 2016
|
By:
|
/s/
Jordan Starkman
|
|
|
|
|
Jordan
Starkman
|
|
|
|
|
President,
Chief Executive Officer,Chief Financial Officer
(Duly
Authorized Officer,Principal Executive Officer and
Principal
Financial Officer)
|
|
18