ITEM 1. BUSINESS
General
Health Advance Inc. (the “Company”) was 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 President and sole director.
On February 14, 2013, the Company effected a 10-for-1 forward split of the Company’s issued and outstanding shares of common stock, par value $0.001 (the “Common Stock”). The Company’s issued and outstanding shares of Common Stock were therefore increased from 2,452,000 to 24,520,000. All per share amounts have been restated to reflect this stock split.
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.
The Company has recognized the sales and profit potential of medical/surgical supplies as a necessity item primarily due to the aging population. 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.
We do not consider ourselves a blank check company, as we have a specific business plan and have moved forward with our business operations. Specifically we, while in the development stage, are proceeding with our business plan by constructing and implementing an automated website. We have taken certain steps in furtherance of this business plan including establishing the website and the establishment of accounts with wholesale distributors of medical supplies. We do not have any plan, arrangement, or understanding to engage in a merger or acquisition with any other entity.
The Company operates under the corporate website at www.healthadvanceinc.com and its on-line retailer website at www.leadingmedicalproducts.com.
The Company believes the outlook for the health care industry in general is positive. Over the next several years, we believe we will benefit significantly from certain favorable demographic and industry trends, including:
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the rising healthcare and prescription drug needs of the ageing Canadian and US population;
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a heightened focus on health and wellness by the baby boomer generation and the increasing demand for lifestyle drugs;
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increased investment in research and development by pharmaceutical and medical supply companies resulting in new and more effective products; and
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the fragmented nature of the Canadian and US health care retailing marketplace providing tremendous consolidation opportunities.
Demographic trends indicate that our markets are growing as an aging U.S. population is increasingly using healthcare services. Between 2000 and 2010 the population aged 45-64 grew at a rate of 31.55. The large growth in this age group is primarily due to the aging of the Baby Boom population. In 2011, the first members of the Baby Boom generation will reach age 65, and the Baby Boom will represent 25 percent of the total population (in the middle series). The last of the Baby-Boom population will reach age 65 in the year 2029. By that time, the Baby-Boom population is projected to represent about 16 percent of the total population. Between 2009 and 2019, the 45 and older population is expected to grow by approximately 15%. Between 2009 and 2029, this age group is expected to grow by approximately 30%.
This compares with expected U.S. population growth rates of approximately 10% between 2009 and 2019 and approximately 20% between 2009 and 2029. Furthermore, it is estimated that 70 million people will be 65 or older by 2030 - nearly doubling the 34 million today. (The foregoing statistics are extracted from the 2011 U, S. Census.)
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The growing senior population demands more medical attention and ten out of the twenty most rapidly growing industries in the U.S. are in the health care sector. As the population ages an increased number of seniors are taking a more active role in managing their health care and as they age in to their golden years, their adult children and family member often become key healthcare support systems. There is a growing trend toward care at home and empowering seniors to be more independent. Today the market for senior care is highly fragmented between online and offline delivery. Nursing home operators, insurance companies and doctors are trying to reduce the visits of elder patients to high cost facilities.
Strategy
Our business strategy is designed to drive sales growth, maximize gross margin dollars and operating cash flow, capitalize on cost reduction opportunities and build customer loyalty, which we believe will result in the Company being a leading home healthcare provider. The company will rely on the dedication of its knowledgeable staff for the successful implementation of its business strategy. Key elements of this strategy include:
Diverse Product Selection
We carry a vast number of brand named products that are well recognized by our customers. These products will be well priced value products which are used on a regular basis by our customers.
Strong Customer Service
We believe the best customer is a happy customer and through third parties and directly, we provide a range of services to educate and tailor support to each senior customer.
Health Advance’s Position in the Health Care Industry
Favorable industry trends, such as those described above, provide the Company with continued opportunities to capitalize on its strengths in providing high quality health care services and building trust with its customers while at the same time educating the customer. The Company intends to strengthen its leadership position in this high growth category by improving operations, enhancing the quality of healthcare services provided to its customers and cultivating a professional environment which the Company believes attracts superior health care staff. A key element of this strategy is increased investment in technology to support the growing demand for health care services and reduce the administrative burden on staff, enabling them to dedicate more time to customer care. These initiatives will best position the Company to maximize profits and customer retention. The Company also intends to build market share in the health care category by continuing to offer the added convenience of expedited home delivery.
Driving Sales and Profitability
The Company intends to improve profitability by refining its merchandising mix through the introduction of new product categories and the tactical use of private label products. The focus on an improved product offering is intended to increase customer satisfaction, enhancing the attractiveness of Health Advance web experience as a destination for purchases of all health care needs. Simplifying e-store activities are also key elements of driving retail sales and profitability.
Marketplace
The US Industry
Market National healthcare spending will reach over $4.3 trillion by 2018, up from $1.42 trillion in 2001 and accounting for 20.3% of GDP according to the Centers for Medicare and Medicaid Services (CMS).
Currently, more than 130 million Americans live with a chronic condition, including Alzheimer’s disease, arthritis, cancer, cardiovascular disease, chronic obstructive lung disease, and diabetes. By 2020, about 157 million Americans will be affected by chronic illness, according to the US Department of Health and Human Services.
First Research estimates the number of Americans over 65 will double from 34 million to 62 million between 2000 and 2025. Currently, 90 million Americans live with chronic diseases. The research firm Rand estimates the number of Americans with two or more chronic conditions will increase from 60 to 81 million between the years 2000 and 2020.
Health Advance expects to see continued growth in the health care market driven by advances in medical technology, the growing trend toward shorter hospital stays and an ageing population. The Company believes as the baby boomer population ages, the already flourishing medical supply industry will experience a 20-year explosion in growth. The Company believes that it will be well positioned to participate in the future growth opportunities available in the home health care market.
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Industry Trends
Over the next several years, Health Advance expects to benefit significantly from certain favorable demographic and industry trends, including:
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The rising healthcare and prescription drug needs of the ageing population
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A heightened focus on health and wellness by the baby boomers generation and the increasing demand for lifestyle drugs: This segment of U.S. and Canadian society is also placing a greater emphasis on prevention and early diagnosis of medical conditions and on the purchase of self-care products.
Governmental Regulations
We are not subject to any local, state, federal and foreign governmental laws and regulations applicable to the distribution and resale of products. All the products marketed through Health Advance are developed and meet US specifications and stringent criteria by the US Federal Drug and Administration bodies, as well as Medicare and Medicaid US government social security operations.
Canadian Competition
We face competition from many retailers in the home healthcare and prescription drug business as the sale of these products is not restricted to pharmacy outlets. While the Canadian drug-retailing sector continues to be dominated by groups or chains and independents, the competitive environment has changed significantly in recent years with many new entrants targeting price sensitive consumers. The percentage of pharmacy outlets operated by non-traditional competitors, such as mass merchandisers and supermarkets, has increased over the past three years as they added pharmacy departments to their stores.
The Company’s competitors in the industry include independent operators, buying/banner groups such as Shoppers Drug Mart Home Health Care, IDA, Guardian, Pharma Plus, mass merchandisers such as Wal-Mart and Zellers, and large supermarket chains with prescription dispensing such as Loblaws, Sobey’s and Real Canadian Superstore.
We believe we will be well positioned to compete against many drug store chains, as well as supermarkets, mass merchandisers and independent drug stores by concentrating on providing high levels of professional service and a diverse product selection. The Company believes that consumers will pay for its value-added services and will be attracted to its large selection of home health care products and home delivery infrastructure.
US Competition
The distribution and manufacture of healthcare supplies and equipment is highly competitive. Many of the healthcare distribution products we sell are available to our customers from a number of other suppliers. In addition, our competitors could obtain exclusive rights from manufacturers to market particular products. Manufacturers also could seek to sell directly to end-users, and thereby eliminate or reduce our role and that of other distributors.
In North America, we compete with distributors, as well as several manufacturers primarily on the basis of price, breadth of product line, customer service and value-added products and services. Our primary competitors in the sale of medical products are the General Medical division of McKesson Corp., PSS World Medical, Inc. and the Allegiance division of Cardinal Health, Inc., which are national distributors.
Significant price reductions by our competitors could result in a similar reduction in our prices. Any of these competitive pressures may materially adversely affect our operating results.
Brick and mortar senior specialty stores - Generally speaking senior supply brick and mortar retail stores focus on high-end expensive equipment. Retails stores catering to seniors also provide very little price comparison or depth of product. They tend to focus on durable medical equipment items from one or two wholesalers and tend to focus on products that are covered by Medicare.
Large Chains - Increasingly with Walgreens, CVS, and Walmart are entering the smaller ticket item Durable Medical Equipment and Products areas, but their brand and product selection at any one store is limited. Many seniors in many States do not live near major cities and don’t have easy access to retail stores for their medical needs. With very little visibility consumers are turning to the internet for their home medical supplies.
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Senior Websites - The biggest advantage derived by seniors, their care givers and family from using the internet is price comparison, product selection and reach (i.e. access to seniors who are not able to get to or drive to a retail location nearby). Today there are numerous companies on the web catering to the senior market. They fall or position themselves into four areas:
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Durable Medical Product Companies who cover a wide range of products and predominately are resellers.
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Lifestyle Companies who position themselves as a place to purchase luxury Senior care products
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Specialized web and TV direct response business sites specialize in certain areas such as Diabetes Care or Wheelchair/Power Chair mobility
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Content companies - that provide knowledge, content and care. Companies such as agingcare.com
Growth Markets
Respiratory Diseases
According to COPD International, over 16 million people in the U.S. have respiratory diseases, including chronic obstructive lung disease, asthma, and chronic bronchitis. In 2002, these diseases had a total estimated cost of over $32.1 billion. In 2001, the NHBLI reports 12.1 million adults 25 and older were diagnosed with these diseases and as many as 14 million remain undiagnosed. These ailments require frequent treatment with oral medications and/or aerosol medications, which require a compressor or atomizing device during preparation.
Diabetes
Diabetes is the seventh leading cause of death among Americans, accounts for $98 billion in medical costs and lost productivity each year, according to the Centers for Disease Control and Prevention (cdc.org). In recent years, cases of type 2 (“adult onset”) diabetes have been on the rise in the United States; it is now considered a national epidemic. We intend to launch an aggressive campaign to build up this sector of our business.
Mastectomy Supplies
Mastectomy supplies typically generate substantial revenues and high gross margins for home health care providers. Mastectomy products include items such as the prosthesis and special bras, sleep and swimwear. According to the National Institute of Health, breast cancer treatment costs nearly $7 billion.
Regular screening mammographies and self-examinations can result in increased early detection and treatment. With improved diagnostic and treatment technologies, survival rates are increasing, resulting in a rising number of post-mastectomy consumers for longer repeat purchase periods.
Ostomy Products
An ostomy is a surgically created opening in the body, which allows body fluids or excrement to escape into a collection device. Product focus areas including two piece, drainable pouches, cohesive seals, skin barrier protective products, irrigation products, tapes, adhesives and deodorants and accessories. Ostomy and Incontinence products market is expected to reach $11.2 billion by 2017, according to Global Industry Analysts.
Incontinence & Urological
The larger consumer base for adult incontinence, combined with this growth, has created opportunities for new products in the segment that respond to three major requirements-comfort, discretion and ease of use. As sufferers of incontinence seek more active lifestyles, they are demanding products that can work with them as they go about their daily lives.
Durable Medical Equipment
To address the growing senior market, our online site, Leadingmedicalproducts, carries a full spectrum of durable medical equipment, including:
Bath related Products key products, include: bidets, portable showers, wheel chair showers, bath traction, bidet accessories, inflatable bidets, inflatable commodes, bath in a bag, high-end bidet system for toilets, and hemorrhoid toilet supports systems.
Bed and Sleeping aids key products, include: bed rails, wedge pillows, mattress protectors, folding bed boards, air mattress overlays, bed protection, incontinence bed products, bed rails, and a range of beds for seniors
Bariatric key products include: obesity aids, bariatric aids, bariatric box-springs, bariatric ring cushions, bariatric home equipment, and extra large blood pressure cuffs.
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Power Mobility Sales
As the population ages, people’s ability to walk and move around can be diminished, creating increased demand for power mobility equipment, such as power wheelchairs and scooter.
Operations
Product Sourcing
As sales increase, we believe that we will be in a position to negotiate large discounts from its suppliers indicating manufacturer confidence in our company. We will also source products from FDA approved manufacturers in China for private label purposes. We are also developing direct from manufacturer sourcing programs.
If our supplier is no longer carrying a given product: we may suppress the product altogether. We may keep the product on as a means to attract customers who may be interested in a discontinued product and then we up-sell them to the latest product from the same manufacturer. We have found that in many cases it is good to keep even discontinued older models active on our site. We also learn which products have been discontinued where there is demand and that may result in us considering finding or re developing such product direct from MFG.
We plan to carry a wide selection of products for post-operative and healthcare, and ranging from the following:
Aids To Daily Living, Ambulatory Products, Bath Safety, Bed Accessories, Catheters, Core Wound Care, Diabetic, Diagnostic equipment, Enteral Nutrition-Feeding, Home Diagnostics, Incontinence, Lift Chairs / Geri Chairs, IV Supplies, Needles / Syringes, Orthopedics, Ostomy, Pain Management, Patient Lifts & Acc, Personal Protection / Gloves, Professional Use and Diagnostics, Respiratory, Scooters & Accessories, Seating / Cushions, Specialty Medical Equipment & Accessories, Tracheostomy Care, Urologicals / Collection Device, Specialty Wound Care, Wheelchairs Accessories, and Womens-Infant Products.
Inventory
Currently, we are working on a cash basis with our suppliers and we have multiple suppliers to facilitate our purchases, therefore we do not have any formal agreements with our suppliers. Each supplier will handle the shipping of our product once the order is received. Our suppliers carry in excess of 10,000 products and with the drop-ship arrangements we will be able to operate more efficiently, and easily update and change our product mix based on changes in online demand for our products without having to financial risk of carrying inventory. Currently we have purchase accounts set up with Invacare, Briggs Healthcare and Complete Medical Supplies. As our operations increase we intend to formalize relationships with additional suppliers and will attempt to set up net 30-day terms with most suppliers.
System Management
We currently offer about 3,900 products through our website. In partnership with various vendors we plan to add another 6,000 products over the next 12 months. To optimize and keep current the pricing and product details we are running a routine database extraction mapping and rationalizing program outlined in some detail below.
We do not have any formal agreements in place with our suppliers. Currently, we have accounts set up with multiple wholesale distributors enabling us to make purchases with them. Since there are various vendors that we can make purchases from, we do not believe it is necessary to formalize any long-term contracts with any particular vendor.
We map the Leadingmedicalproducts Website to our preferred suppliers products’ database that contain a total of more than 10,000 unique products with all the latest pricing. This database is updated monthly by the supplier. Our programs extract the latest pricing and flag which products have been discontinued.
During our weekly product and pricing reviews we make decisions based on our database scan of our vendors systems. Each situation is unique and we assess the best strategy in terms of merchandising optimization. Scenarios that we evaluate and decision we make, include the following:
Optimizing Margins and Pricing
As a discounter we will need to make at least 23 % gross margin on any order after paying back the supplier and the paying other transaction costs. We use a rules based system to track and optimize profits and margins. We create and model numerous profitability scenarios daily by product, brand, region and inventory.
New Product Uploads: Our multi-vendor database is designed to correctly manage wholesalers data feeds to our database and shopping cart template, as well as upload data files and images feeds from third party FTP sites. These business rules enable us to categorize product correctly, guaranteeing that all products and images are properly visible and place correctly, and key word search terms are added on a timely basis to optimize search engine marketing.
Website Daily Maintenance & Support
We outsource our Website’s daily maintenance including new product uploading, shipping code management and updates from various vendors, management of our Access database, daily website HTML support and various updates and edits to the front-end of the website as needed.
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Website Product Management
To streamline operations we have a strategic partner responsible for uploading data files and image feeds manually and from third party FTP sites to the Leadingmedicalproducts website. Their responsibilities include categorizing product correctly, guaranteeing that all products and images are properly visible and located in correct sub-categories on our website, making sure that the correct key word search terms are added in our shopping cart for each product, and matching correct shipping code and rates provided by different vendor.
Customer Service
There is a knowledge gap and fear today as elder citizens and their families fend for themselves through a range of medical complications. This provides an opportunity for a trusted knowledge service provider who will take the time to listen and solve problems specific to each customer’s unique product needs and concerns. Many medical needs for senior citizens are chronic, and life-long but are not life threatening. This creates a long term annuity business opportunity.
Customer Inquiry Management
We plan to establish an operating team to handle inbound customer calls in the US and Canada during the working hours from 8-8 pm Pacific. We will begin extended hours and provide support service for International inquiries in the second half of our operating year once we develop quality level standards that are consistent across multiple markets. We also plan to launch a live 24-hour nursing service hotline and 24-hour global customers handling by phone, email and chat within the first six months of operations once funding has been obtained.
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Level 1 - Simple questions that can be answered on the spot - i.e. order status, delivery costs, etc.
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Level 2 - More complex (Needs Analysis) questions - that require research with the wholesaler about availability, color, dimensions etc
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Level 3 - Product inquiries (Problem Solving) that for items we do not carry on our site, but may be able to source. This requires significant research and may or may not be worth the investment. Within one-hour from receiving customer call, we will complete research from various vendors if needed, confirm product availability and verify and product questions from the prospective customer
Customer - Privacy and Security
Health Advance has created this privacy statement in order to demonstrate our firm commitment to privacy. The following discloses our information gathering and dissemination practices for this web site.
We do not sell customer e-mail address or related information to third parties and unless customers join our mailing list they will not receive advertising e-mails from us. We track IP addresses for security reasons to discourage fraudulent activity attempts. By doing this we are making our customer shopping experience more safe and secure.
Our site uses cookies to keep track of customers shopping cart for multiple purchases while our customers are shopping with us. We do not require our customers to open an account with us in order to shop so each purchase session usually means you may need to re-enter your information.
Our site's registration form requires users to give us contact information, like their name and email address, and unique identifiers. We use customer contact information from the registration form to send the user information about purchases that have been processed. The customer's contact information is also used to contact the visitor when necessary if they have subscribed to the mail list. Users may opt-out of receiving future mailings by choosing to unsubscribe.
This site may contain links to other sites. We are not responsible for the privacy practices or the content of such web sites.
Order Fulfillment
Our order fulfillment is handling systematically when we are working with vendors whose systems can integrate with Leadingmedicalproducts. However, there are a number of product vendors and wholesalers with whom we have not integrated our systems.
Currently, management will process any order received. The order fulfillment process entails, checking and monitor for incoming orders (during US business Hours), verifying product inventory availability by calling wholesalers and checking their online catalogue and handling any clarifications with customer before charging their credit card.
Returns
We have a general set of standards we use to manage our returns process. Returns are accepted for the full product credit if received at our vendors warehouse within 30 days form the date of purchase. After 30 days, a minimum restocking fee of 15% will be applied to all returns. Merchandise returns are not accepted after 60 days from the date of purchase. Shipping cost refunds will not include reimbursing of the original shipping fees. The return process begins by calling our 1-800-854-7970 number or sending an email to info@healthadvanceinc.com. Return without an authorized number or an expired authorization number will not be accepted. Return merchandise must be in the same unit of measure as originally purchased. Refunds will not be granted for merchandise unsuitable for resale.
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Sterile items, incontinence, underwear, etc and product that are made unsuitable for resale once opened are not returnable. Defective merchandise will be repaired or replaced based on the manufacturer’s policy. Our close-out and special orders are not returnable.
Shipping
We will have different drop-ship arrangements with each supplier. Generally we will allow each of our suppliers to decide which shipping company to use for a particular shipment. For domestic shipment orders our suppliers ship via Fedex, UPS Ground or United States Postal Service Priority Mail depending on the size and weight of the order. Small orders generally ship Priority Mail. Large orders generally ship by Fedex. Very small orders, at our discretion, may be sent via First Class Mail with a reduced shipping and handling charge.
Health Advance offers “auto-ship” on frequently consumed items and we currently have an auto-ship program running for Incontinence products. At this time we do not offer free shipping as part of a plan to be as upfront as possible about our pricing while many companies build the shipping price into their products while supposedly offering free shipping. We would like to offer the lowest possible product price therefore we charge separately for shipping so the customer knows the exact cost of the product and the exact cost of the shipping.
International Shipments
Shipping charges for international orders vary greatly. For international shipping we have requested that customers email us with the items they are interested in buying with their address and the destination country. We email back international customers with information on ordering, including shipping and handling charges.
The Leadingmedicalproducts website is also planning to partner with Bongo International Parcel and mail forwarding to service our international customers. Bongo International provides its customers with their very own US address (not a P.O. Box). Once customers have a US address, they will be able to make purchases at our website as well as other US based online retailers. Bongo receives customer orders and logs them into their online system where they are consolidated with other orders. This process saves international customers up to 82% off typical international shipping rates.
Payment Handling
We accept payments today on a cash and carry basis that means we do not accept or process Medicare or Medicaid payments. For our website business, Health Advance is setting up a merchant account and processes American Express, Visa, MasterCard, and Discover through the merchant service provider Merchant Warehouse, Inc., and has set up a Paypal account.
Warranties
We act as a reseller and as such our product liability is mitigated through the warranty and liability coverage provided by the product manufacturers and distributors we work with. Each of our supplier and manufacturers who sell on our site provide a minimum of a one-year warranty on the products that we sell to protect the consumer from product defects. Health Advance will be an authorized dealer for all of the home medical equipment we sell. This means our customers can buy with knowing that the manufacturers provide their manufacturer’s warranty behind all the products we sell. Customers receive full warranties from the manufacturers when a customer purchases a product from Health Advance.
Typically the product manufacturers offer one-year warranty and product coverage parts & labor on any internal-wear of components & control-panel components. Any other product defects are addressed on an as-is basis. Customers can call our Toll-Free telephone number and we will direct them to the needed manufacturer to resolve their product warranty claims within the first year. After the first year we direct our customers directly to the manufacturers.
At this time we do not sell or offer any extended product warranties on any product we sell. These programs may exist with individual suppliers and from time to time we investigate this option for a customer.
Marketing and Sales
Marketing and Brand Recognition
Strategic communications are central to building and reinforcing the Health Advance brand. The Health Advance advertising, marketing and public relations strategy are expected to be established by the Company’s management and, where appropriate, implemented with the support of industry professionals. The Company’s marketing communications strategy will focus on both brand awareness as well as more traditional product/price advertising. Brand awareness advertising will focus on the Company’s health care services and private label products and is used to communicate to consumers that Health Advance is a market leader in terms of understanding consumer needs and bringing innovative products and services to market.
Market Segments
We have two distinct market channel segments: B2B - hospitals, elderly care facilities, hospitals, nursing facilities, clinics, schools, and private business practices. B2C - nurse practitioners, adult children of senior citizens and increasingly the senior citizens themselves.
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Internet Sales and Home Delivery
Health Advance believes it can position itself to capitalize on e-commerce opportunities through its user friendly, state of the art website with the added benefit of the next day home delivery infrastructure. Health Advance’s e-commerce initiative will encompasses a dynamic web site configured to provide a comprehensive shopping experience for both professionals and customers. The web site is designed utilizing the latest in technology web software and high-end graphics providing pictures and descriptions of all items available for sale.
Professionals will be able to either make purchases at a wholesale level or refer clients to make their own purchases. Health Advance will offer “auto-ship” on frequently consumed items.
We are also developing targeted marketing tie-ins with content providers to create and distribute co-produced content for blog spots, videos, webinars and internet direct response Infomercials. We also advertising on major search engines, affiliate markets and link exchanges, and social media sites that reach our target audiences. We are also increasingly using comparison shopping sites such as Amazon, Shopzilla, Nextag, and Shopping.com.
Sales Force
Health Advance will implement a strong sales force to call on our B2B channels. B2B - hospitals, elderly care facilities, hospitals, nursing facilities, clinics, schools, and private business practices. We believe success can be attained through an aggressive promotional campaign tailored to the medical profession. Fast delivery, great prices, and professional customer service will be our focus.
Sales reps will handle inbound calls to establish initial contact, qualify the consumer, identify the need and close the sale. Aggressive contact management efforts, outbound mailings and outbound phone calls by sales reps on active leads and established customers results in re-orders, cross selling opportunities and higher conversion rates than traditional mail-order businesses.
Telemarketing
Health Advance will also use telemarketing to reach out to its B2C customers and generate repeat sales within each market segment. We are in the process of launching a number of outreach marketing programs targeting nurse practitioners, adult children of senior citizens and increasingly the senior citizens themselves.
Web Site
We are looking at 6 approaches to the overall marketing. Health Advances’ first priority to drive web traffic organically through search engine optimization, online PR and social networking campaigns and sustained initiative. We will also evaluate the value of making key word purchases when we run campaign for a specific line of products. Thirdly, we will evaluate and test the return on investment from both direct email marketing and affiliate marketing.
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Search Engine Optimization
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Online PR - blogging and other online events and media
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Social Networking
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Direct - email marketing
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Media buys - keyword
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Affiliate marketing
Along with other sales and marketing channels, successful search engine optimization is a key approach to drive web traffic and improve conversion for our web based property Leadingmedicalproducts.
Target the right search terms and phrases that are getting typed into search engines when consumers and professionals are looking for products that we carry. The strategy we are employing is a niche targeted marketing model. This requires a niche marketing approach where we focus in on a number of verticals and invest in marketing and driving traffic to those specific product lines.
We will link our web pages together so the search engine spiders can navigate easily through our website. Key word anchor text linking helps search engine spiders understand what we are offering from our website and will give you the advantage in ranking in natural search results. Keyword anchor text linking will be used as one of the methods of improving search engine optimization.
We have a consultant working with us on a range of online PR initiatives including writing producing, news articles, blogs, forums and press releases that highlight new product developments across the range of products line we carry. Online PR is another avenue for sending highly targeted visitors directly to our site and compliment our search engine optimization strategy.
Employees
As of July 31, 2016, we had two part-time consultants to the Company.
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ITEM 1A.
ITEM 1A. RISK FACTORS
Much of the information included in this annual report includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections and estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
Such estimates, projections or other “forward looking statements” involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward looking statements”.
We have a limited operating history that you can use to evaluate us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company.
We were incorporated in Wyoming in April 14, 2010. We have no significant financial resources and nominal revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities.
We will require financing to achieve our current business strategy and our inability to obtain such financing could prohibit us from executing our business plan and cause us to slow down our expansion of operations.
We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our capital requirements to implement our business strategy will be approximately $500,000. Moreover, in addition to monies needed to continue operations over the next twelve months, we anticipate requiring additional funds in order to implement our plan of operations. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if and when it is needed on terms we deem acceptable.
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.
Our auditor has expressed substantial doubt as to our ability to continue as a going concern.
Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. During the year ended July 31, 2016 we have incurred a net loss of $29,503 and have an accumulated deficit of $437,495as of July 31, 2016. If we cannot generate sufficient revenues from our services, we may have to delay the implementation of our business plan.
Our future success is dependent, in part, on the performance and continued service of Jordan Starkman, our sole officer and director. Without his continued service, we may be forced to interrupt or eventually cease our operations.
We are presently dependent to a great extent upon the experience, abilities and continued services of Jordan Starkman, our Company’s Officer and Director. We currently do not have an employment agreement with Mr. Starkman. The loss of his services could have a material adverse effect on our business, financial condition or results of operation.
Our sole officer has a full time job which may interfere with his responsibilities to us.
Jordan Starkman, our sole officer and director and only employee will not be in a position to devote a substantial amount of his time to our company. Mr. Starkman believes that he can perform his duties sufficiently on a part time basis. It is possible that our plan of operations may be materially delayed to his limited work schedule with us.
We are selling our products in a highly competitive market and we are unsure as to whether there will be any consumer demand for our products.
We compete with companies that are larger and more capitalized than we are. Our competitors may be able to seize the same market opportunities that we are targeting. These competitors, either alone or with collaborative partners, may succeed in developing business models that are more effective or have greater market success than our own. The Company is especially susceptible to larger manufacturers that invest more money in marketing. Moreover, the market for our products is large but highly competitive. There is little or no hard data that substantiates the demand for our products or how this demand will be segmented. It is possible that there will be low consumer demand for our products, or that interest in our products could decline or die out, which would cause us to be unable to sustain our operations. The availability of health care supplies at lower or more competitive prices may cause potential customers to purchase products elsewhere which would negatively impact our business.
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The ability to successfully deploy our business model is heavily dependent upon economic conditions in the United States and Canada.
The ability to successfully deploy our business model is heavily dependent upon the general state of the US and Canadian economy. We cannot assure you that favorable conditions will exist in the future. A general economic recession in the United States and Canada could have a serious adverse economic impact on us and our ability to obtain funding and generate projected revenues.
The healthcare industry is experiencing changes that could adversely affect our business.
The healthcare industry is highly regulated and subject to changing political, economic and regulatory influences. In recent years, the healthcare industry has undergone significant change driven by various efforts to reduce costs, including the reduction of spending budgets by government and private insurance programs, such as Medicare, Medicaid and corporate health insurance plans; pressures relating to potential healthcare reform; trends toward managed care; consolidation of healthcare distribution companies; consolidation of healthcare manufacturers; collective purchasing arrangements and consolidation among office-based healthcare practitioners; and changes in reimbursements to customers. Both our own profit margins and the profit margins of our customers may be adversely affected by laws and regulations reducing reimbursement rates for pharmaceuticals and/or medical treatments or services or changing the methodology by which reimbursement levels are determined. If we are unable to react effectively to these and other changes in the healthcare industry, our operating results could be adversely affected. In addition, the enactment of any significant healthcare reforms could have a material adverse effect on our business.
Expansion of group purchasing organizations (“GPO”) or hospital purchasing power and the multi-tiered costing structure may place us at a competitive disadvantage.
The medical-products industry is subject to a multi-tiered costing structure, which can vary by manufacturer and/or product. Under this structure, certain institutions are eligible for favorable pricing of medical products. The multi-tiered costing structure continues to expand as many large integrated healthcare providers and others with significant purchasing power, such as GPOs, demand more favorable pricing terms. This may threaten our ability to compete effectively, which could negatively impact our results of operations. Although we are seeking to obtain similar terms from manufacturers and obtain access to lower prices demanded by GPO contracts or other contracts, we cannot assure such terms will be obtained or contracts will be executed.
Because substantially all of the products that we intend to distribute will not be manufactured by us, we will be dependent upon third parties for the manufacture and supply of substantially all of our products.
We will obtain substantially all of our products from third-party suppliers. We do not expect to enter into long- term contracts with our suppliers. Therefore, suppliers may not provide the products we need in the quantities we request. Because we will not control the actual production of the products we intend to sell, we may be subject to delays caused by interruption in production based on conditions outside of our control. In the event that any of our intended third-party suppliers were to become unable or unwilling to continue to provide the products in required volumes, we would need to identify and obtain acceptable replacement sources on a timely basis. There is no guarantee that we would be able to obtain such alternative sources of supply on a timely basis, if at all. An extended interruption in the supply of any of our intended products, could have an adverse effect on our results of operations, which most likely would adversely affect the value of our common stock.
Increases in the cost of shipping or service issues with our third-party shippers could harm our business.
We pass through our shipping costs directly to our customers. We compete against store-front (retail) locations and if the shipping costs escalate whereby the cost is not prohibitive for the customer to shop online, we could potentially become less competitive thereby affecting our sales. Accordingly, any significant increase in shipping rates could have an adverse effect on our operating results. Similarly, strikes or other service interruptions by those shippers could cause our operating expenses to rise and adversely affect our ability to deliver products on a timely basis.
Our revenues will depend on our relationships with capable sales personnel as well as customers, suppliers and manufacturers of the products that we distribute.
Our future operating results will depend on our ability to maintain satisfactory relationships with qualified sales personnel as well as customers, suppliers and manufacturers. If we fail to maintain relationships with such persons or fail to acquire relationships with such key persons in the future, our business may be adversely affected.
We may incur significant costs to be a public company to ensure compliance with United States corporate governance and accounting requirements and we may not be able to absorb such costs.
We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations.
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There is no assurance of an active public market or that the common stock will ever actively trade on a recognized exchange. Therefore, you may be unable to liquidate your investment in our stock.
There is no established public trading market for our common stock. Our shares are listed or quoted on the OTCPinks under the trading symbol HADV. In the absence of an active trading market, an investor may be unable to liquidate their investment.
We do not intend to pay dividends and there will thus be fewer ways in which you are able to make a gain on your investment.
We have never paid dividends and do not intend to pay any dividends for the foreseeable future. To the extent that we may require additional funding currently not provided for in our financing plan, our funding sources may prohibit the declaration of dividends. Because we do not intend to pay dividends, any gain on your investment will need to result from an appreciation in the price of our common stock. There will therefore be fewer ways in which you are able to make a gain on your investment.
Our common stock is considered a penny stock, which is subject to restrictions on marketability, so you may not be able to sell your shares.
If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.
Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.
The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.
The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder's ability to buy and sell our stock.
In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for its shares.
We face risks related to compliance with corporate governance laws and financial reporting standards.
The Sarbanes-Oxley Act of 2002, as well as related new rules and regulations implemented by the Securities and Exchange Commission and the Public Company Accounting Oversight Board, require changes in the corporate governance practices and financial reporting standards for public companies. These new laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 relating to internal control over financial reporting, referred to as Section 404, have materially increased our legal and financial compliance costs and made some activities more time-consuming and more burdensome.
Other Risks
Trends, Risks and Uncertainties
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.
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ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
ITEM 2. PROPERTIES
Our principal executive office location and mailing address is 3651 Lindell Rd. Suite #D155, Las Vegas, NV, 89103. Currently, this space is sufficient to meet our office and telephone facility needs; however, if we expand our business to a significant degree, we will have to find a larger space. In addition, the Company has sub-let facilities in Toronto, Ontario sufficient to sustain our office in Canada.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
No Public Market for Common Stock
There is no established current public market for the shares of our common stock. Our common stock is quoted on the OTC Pinks under symbol HADV. Minimal trading has occurred through the date of this filing. There can be no assurance that a liquid market for our securities will ever develop. Transfer of our common stock may also be restricted under the securities or blue sky laws of various states and foreign jurisdictions. Consequently, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.
Holders
As of the July 31, 2016, we had 39 stockholders of our common stock.
Dividends
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
Securities Authorized for Issuance under Equity Compensation Plans
As of the end of the fiscal year ended July 31, 2016, we do not have any compensation plan under which equity securities of the Company are authorized for issuance.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
Smaller reporting companies are not required to provide the information required by this item.
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ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below.
During the year ended July 31, 2016 we have incurred a net loss of $29,503 and have an accumulated deficit of $437,495 as of July 31, 2016. 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.
Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
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.
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.
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.
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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.
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.
The above represents our 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.
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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 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 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.
Results of Operations for the years ended July 31, 2016 and
For the years ended July 31, 2016 and July 31, 2015, we had no sales.
Net loss was $29,503 for year ended July 31, 2016 and $67,551 for year ended July 31, 2015, respectively. The decrease in operating expenses from consulting fees was the sole contributing factor for the decreased loss during the year.
Operating expenses for the years ended July 31, 2016 and July 31, 2015 were $29,503 and $67,300, respectively. The operating expenses were primarily attributed to professional fees and general expenses.
Professional fees
Professional fees for the year ended July 31, 2016 was $25,136 compared to $35,032 for the year ended July 31, 2015. The expenses mainly represent legal charges and the professional fees from auditors.
Consulting and management fees
Consulting and management fees for the year ended July 31, 2016 was $nil compared to $20,000 for the year ended July 31, 2015. This mainly represented charge for the estimated shareholder services with a corresponding credit to additional paid-in capital. From the current year no such services were provided by the shareholder due to lack of financing in the Company.
Rent and occupancy and office and general
During the year ended July 31, 2016, the shareholder decided to discontinue charging rent and consultancy fees due to lack of financing in the Company.
During the year ended July 31, 2015, the Company carried out its operations from premises sub-let from a shareholder. The rent of this premises and other general and administrative expenses charged by the shareholder during the year ended July 31, 2015 was $8,400, $7,200 classified as rent and occupancy and $1,200 classified under office and general. The decrease in rent and occupancy and office and general expenses is due to lack of financing in the Company.
During the years ended July 31, 2016 and 2015, we had no provision for income taxes due to the net operating losses incurred.
Liquidity and Capital Resources
As of July 31, 2016, we had working capital deficit of $159,395 (July 31, 2015: $129,892).
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 thewww.leadingmedicalproducts.com e-commerce site to the retail community and health care community. To achieve our goals the Company expects to commit the majority of its funding to the advertising of the Company’s web site. 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 to 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 stockholders. 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.
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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.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Smaller reporting companies are not required to provide the information required by this item.
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ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
HEALTH ADVANCE INC.
FINANCIAL STATEMENTS
JULY 31, 2016
CONTENTS
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SRCO Professional Corporation
Chartered Professional Accountants
Licensed Public Accountants
Park Place Corporate Centre
15 Wertheim Court, Suite 409
Richmond Hill, ON L4B7
Tel: 905 882 9500 & 416 671 7292
Fax: 905 882
Email: info@srco.ca
www.srco.ca
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Health Advance Inc.
We have audited the accompanying balance sheets of Health Advance Inc. [the “Company”] as of July 31, 2016, and 2015 and the related statements of operations and comprehensive loss, stockholders' deficiency and cash flows for each of the years in the two-year period ended July 31, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstance, but not for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 31, 2016, and 2015 and the results of its operations and its cash flows for each of the years in the two-year period ended July 31, 2016, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has significant operating losses, is in the development stage with no established source of revenue and is dependent on its ability to raise capital from shareholders or other sources to sustain operations, which raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Richmond Hill, Ontario, Canada
November 29, 2016
/s/ SRCO Professional Corporation
CHARTERED PROFESSIONAL ACCOUNTANTS
Authorized to practise public accounting by the
Chartered Professional Accountants of Ontario
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HEALTH ADVANCE INC.
BALANCE SHEETS
AS AT JULY 31,
(Expressed in United States Dollars)
See accompanying notes
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HEALTH ADVANCE INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED JULY 31, 2016 AND 2015
(Expressed in United States Dollars)
See accompanying notes
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HEALTH ADVANCE INC.
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED JULY 31, 2016 AND 2015
(Expressed in United States Dollars)
See accompanying notes
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HEALTH ADVANCE INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 2016 AND 2015
(Expressed in United States Dollars)
See accompanying notes
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HEALTH ADVANCE INC.
NOTES TO THE FINANCIAL STATEMENTS
AS AT JULY 31, 2016
1. NATURE OF OPERATIONS AND ORGANIZATION
Health Advance Inc. (the "Company" or "Health Advance") was incorporated in the State of Wyoming on April 14, 2010. The Company is an online retailer of home medical products with operations in Canada and the US.
2. BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and are expressed in United States Dollars (“USD”).
3. GOING CONCERN
These financial statements have been prepared assuming the Company will continue on a going concern basis. The Company has incurred losses since inception and as at July 31, 2016 has an accumulated deficit of $437,495 (2015: $407,992) and working capital deficiency of $159,395 (2015: $129,892) 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 (also refer Note 10). 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 become 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.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company are in accordance with accounting principles generally accepted in the United States of America. Presented below are those policies considered particularly significant:
Cash
Cash includes cash on hand and balances with banks.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant estimates and assumptions include: deferred income tax assets and related valuation allowance and accruals. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.
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HEALTH ADVANCE INC.
NOTES TO THE FINANCIAL STATEMENTS
AS AT JULY 31, 2016
Earnings or Loss Per Share
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 stockholders 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 July 31, 2016 and 2015.
Comprehensive Income
The Company follows the guidance in ASC 220, Comprehensive Income. ASC 220 establishes standards for the reporting and presentation of comprehensive income and its components in a full set of consolidated financial statements. Comprehensive income is presented in the statements of changes in stockholders' equity (deficit), and consists of unrealized gains (losses) on available for sale marketable securities and foreign currency translation adjustments. ASC 220 requires only additional disclosures in the financial statements and does not affect the Company's financial position or results of operations.
Fair Value of Financial Instruments
ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
●
Level 1 - Valuation based on quoted market prices in active markets for identical assets or liabilities.
●
Level 2 - Valuation based on quoted market prices for similar assets and liabilities in active markets.
●
Level 3 - Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments or interest rates that are comparable to market rates. These financial instruments include cash and accounts payable. The Company's cash, which is carried at fair value, is classified as a Level 1 financial instrument. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk.
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HEALTH ADVANCE INC.
NOTES TO THE FINANCIAL STATEMENTS
AS AT JULY 31, 2016
Income Taxes
The Company accounts for income taxes in accordance with ASC 740. The Company provides for federal and provincial income taxes payable, as well as for those deferred because of the timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The effect of a change in tax rates is recognized as income or expense in the period of the change. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount that is more likely than not to be realized.
Foreign Currency Translation
The functional currency of the Company is USD. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net income (loss) for the year. The translation gains and losses resulting from the changes in exchange rates are reported in accumulated other comprehensive gain (loss).
Stock-Based Compensation
The Company accounts for share-based payments in accordance with the provision of ASC 718, which requires that all share-based payments issued to acquire goods or services, including grants of employee stock options, be recognized in the statement of operations based on their fair values, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense related to share-based awards is recognized over the requisite service period, which is generally the vesting period.
The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the guidelines in ASC 505-50. The Company issues compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services.
Recent Accounting Pronouncements
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.
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HEALTH ADVANCE INC.
NOTES TO THE FINANCIAL STATEMENTS
AS AT JULY 31, 2016
Recent Accounting Pronouncements (continued)
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 the financial position and/or results of operations.
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 the 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 the 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 intends to adopt this pronouncement on January 1, 2017, and the adoption will not have a material impact on the financial position and/or results of operations.
5. RELATED PARTY TRANSACTIONS
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 not disclosed elsewhere in these financial statements are as follows:
a.
The Company recorded $nil and $7,200 as rent and occupancy expense charged by a shareholder for the years ended July 31, 2016 and 2015, respectively. The Company also recorded $nil and $1,200 as office and general expense charged by a shareholder in respect of certain administrative services for the years ended July 31, 2016 and 2015, respectively. In addition, the Company has recorded $nil and $18,000 as consulting expense charged by a shareholder for the years ended July 31, 2016 and 2015, respectively. These consulting charges have been debited to consulting and management fees with corresponding credit to additional paid in capital. No consulting charges were recorded during the year ended July 31, 2016 due to lack of financing during the year.
b.
Advances from a shareholder of the Company as at July 31, 2016 and 2015 were $98,542 and $72,774, respectively. No amount was repaid during the year (2015: nil). These advances are non-interest bearing, unsecured and with no specific terms of repayment.
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HEALTH ADVANCE INC.
NOTES TO THE FINANCIAL STATEMENTS
AS AT JULY 31, 2016
6. STOCKHOLDERS’ DEFICIENCY
COMMON STOCK - AUTHORIZED
As at July 31, 2016 and 2015, 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
Company’s outstanding 24,520,000 shares of common stock ($24,520) as at July 31, 2016 and July 31, 2015 consisted of the following:
On April 14, 2010, the Company issued 14,000,000 shares of common stock at $0.0001 per share to the founding shareholder for total cash proceeds of $1,400.
During fiscal 2011, the Company completed non-brokered private placements of 920,000 shares of common stock at $0.01 per share for total cash proceeds of $9,200.
During fiscal 2011, the Company issued 6,500,000 common stock for legal, consulting and web design services and directors fees. These services were valued at $0.01 per share.
On November 1, 2011, the Company issued 1,500,000 shares of common stock for professional services rendered. These services were valued at $15,000.
On July 18, 2012 the Company issued 1,600,000 shares at $0.01 per share for a total cash proceeds of $16,000.
COMMON STOCK - TO BE ISSUED
The Company’s 6,790,000 common stock to be issued amounting to $67,500 as at 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 total cash proceeds of $10,000.
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 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 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 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 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 total cash proceeds of $25,000.
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HEALTH ADVANCE INC.
NOTES TO THE FINANCIAL STATEMENTS
AS AT JULY 31, 2016
7. SUPPLEMENTAL CASH FLOW INFORMATION
During the years ended July 31, 2016 and 2015, there were no interests or taxes paid by the Company.
8. INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740-20. ASC 740-20 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated.
Under ASC 740-20 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes.
The Company has income tax losses available to be applied against future years’ income as a result of the losses incurred since inception. However, due to the losses incurred in the period and expected future operating results, management determined that it is more likely than not that the deferred tax asset resulting from the tax losses available for carry forward will not be realized through the reduction of future income tax payments. Accordingly a 100% valuation allowance has been recorded for income tax losses available for carry forward.
The provision for income taxes reconciles to the amount obtained by applying the statutory income tax rate of approximately 38% (2015: 38%) to income before provision for taxes as follows:
Deferred tax assets
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of July 31:
As at July 31, 2016, the Company has approximately $249,204 (2015 - $237,992) of non-capital losses available to offset future taxable income. These losses are expected to expire by the year 2036.
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HEALTH ADVANCE INC.
NOTES TO THE FINANCIAL STATEMENTS
AS AT JULY 31, 2016
9. FINANCIAL INSTRUMENTS
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company is not significantly exposed to this risk as generally it does not have any significant amount of cash.
Currency Risk
The Company is exposed to financial risk related to the fluctuation of foreign exchange rates. The Company's functional currency is U.S. dollars. A significant change in the currency exchange rates between the U.S. dollar relative to the Canadian dollar could have an effect on the Company's results of operations, financial position and cash flows. However, due to limited number of transactions, the Company is not exposed to this risk.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an ongoing basis and its expansionary plans. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash.
Fair Values
The Company's financial instruments consist of cash, bank indebtedness and accounts payable and accrued liabilities and advances from a stockholder. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values due to the short-term maturity of these instruments.
10. SUBSEQUENT EVENTS
The Company’s management has evaluated subsequent events up to November 29, 2016, the date the financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following material subsequent events to report:
On October 2, 2016, the Company signed a definitive agreement ("Definitive Agreement") to acquire 100% interest in the web domain www.discountseniorsupply.com. As a result of the acquisition, Health Advance will also have the license to the interspire e-commerce shopping cart, the supplier relationships, a team located in India that would manage the e-commerce web business and provide customer support along with marketing reports and updates. Pursuant to the Definitive Agreement, on closing the Company will issue 400,000 shares of common stock of Health Advance and a one-time cash payment of $10,000 representing the total purchase price of DiscountSeniorSupply. The Company expects the transaction to close by December 15, 2016.
On October 7, 2016, the Company announced it is launching its first private label product. The Company will begin to market Tamanu Oil under discounttamanuoil.com and bestoiloftamanu.com starting October 11, 2016. Furthermore, the Company expects to enter into distribution agreements with national and international distributers in the coming months.
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.
On October 31, 2016, the Company entered into a non-binding 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.
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ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. 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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting 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 CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure, due to the material weaknesses identified below.
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.
Report of Management on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to the Company's annual or interim financial statements will not be prevented or detected.
In the course of management's assessment, we have identified the following material weaknesses in internal control over financial reporting:
●
Segregation of Duties - As a result of limited resources, we did not maintain proper segregation of incompatible duties, namely the lack of an audit committee, an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial information in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of the lack of segregation of duties potentially affects multiple processes and procedures.
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Report of Management on Internal Control over Financial Reporting (continued)
●
Maintenance of Current Accounting Records -We may from time to time fail to maintain our records that in reasonable detail accurately and fairly reflect the transactions of the Company. This weakness specifically affects the payments and purchase cycle and therefore we failed to maintain effective internal controls over the completeness and cut off of accounts payable, expenses and other capital transactions.
●
Application of GAAP - We did not maintain effective internal controls relating to the application of generally accepted accounting principles in accounting for transactions in a foreign currency.
We are in the continuous process of improving our internal control over financial reporting in an effort to eliminate these material weaknesses through improved supervision and training of our staff, but additional effort is needed to fully remedy these deficiencies. Management has engaged a Certified Public Accountant as a consultant to assist with the financial reporting process in an effort to mitigate some of the identified weaknesses. The Company is still in its development stage and intends on hiring the necessary staff to address the weaknesses once revenue has been realized.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Controls
No change in our system of internal control over financial reporting occurred during the fiscal year ended July 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The details of our executive officers and directors are as follows:
JORDAN STARKMAN, 46, President. Mr. Starkman brings over twenty years of experience in sales, financial consulting, and investor and client relations to the Health Advance team. He is a co-founder of Pay By the Day Company Inc. and was VP Operations from June 2003 prior to becoming President in January 2006. In addition to being President of Pay By The Day Company Inc., Mr. Starkman is the President of Rimrock Gold Corp (formerly Pay By The Day Holdings) and was a director of Pacific Green Technologies Inc. until his resignation on November 1, 2016. Mr. Starkman spends the majority of his time overseeing the operations of Rimrock Gold Corp., a junior mining/exploration company and handles business development for TerraPave Construction Corp. Prior to forming Pay By The Day Company Inc. in 2003, Jordan was a sales person from January 2002 to February 2003 at The Buck A Day Company, an Ontario based direct sales company focused on sales of computers and consumer electronics, and was President of Guardians of Gold from November 2005 to October 2011. Jordan has an extensive background in finance and business development. He worked for 10 years as an independent consultant for various publicly traded companies responsible for initiating new business and developing long-term relationships with customers. Jordan also holds a BA in Statistics from the University of Western Ontario.
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Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. We have not compensated our Directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our Board of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors’ fees and reimburse Directors for expenses related to their activities.
None of our officers and/or directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past five (5) years.
Committees
We do not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S-B is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.
We have not formed a Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report.
Certain Legal Proceedings
No director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.
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.
Compliance With Section 16(A) Of The Exchange Act.
We do not have a class of equity securities registered pursuant to section 12 of the Securities Exchange Act and therefore our directors, officers and persons who beneficially own more than 10% of a registered class of our equity securities are not required to file reports of ownership and changes in ownership with the SEC or furnish us with copies of these reports.
Code of Ethics
We currently do not have a code of ethics that applies to our officers, employees and director, including our Chief Executive Officer.
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ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Executive Officers and Directors
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended July 31, 2016 and 2015 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
SUMMARY COMPENSATION TABLE
Employment Agreement
We do not have any employment agreements in place with our sole officer and director.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our ordinary shares, the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding common stock of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. ordinary shares subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on 24,520,000 shares of common stock issued and outstanding as of July 31, 2016.
(1)
Includes (1) 4,000,000 shares of common stock owned by Jordan Starkman; and (ii) 10,000,000 shares of common stock held by 2237815 Ontario Ltd., of which Jordan Starkman is the sole shareholder and in sole control.
(2)
Jordan Starkman is the sole owner and in sole control of 2237815 Ontario Ltd., and therefore has voting and dispositive control over securities held by 2237815 Ontario Ltd.
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Securities Authorized for Issuance under Equity Compensation Plans
None.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
In April 2010, we issued 14,000,000 founder shares of common stock to Jordan Starkman pursuant to the exemption from registration set forth in section 4(2) of the Securities Act of 1933. The total purchase price of the Shares was $1,400.
The Company recorded $nil and $7,200 as rent and occupancy expense charged by a shareholder for the years ended July 31, 2016 and 2015, respectively. The Company also recorded $nil and $1,200 as office and general expense charged by a shareholder in respect of certain administrative services for the years ended July 31, 2016 and 2015, respectively. In addition, the Company has recorded $nil and $18,000 as consulting expense charged by a shareholder for the years ended July 31, 2016 and 2015, respectively. These consulting charges have been debited to consulting and management fees with corresponding credit to additional paid in capital. No consulting charges were recorded during the year ended July 31, 2016 due to lack of financing.
Advances from a shareholder of the Company as at July 31, 2016 and 2015 were $98,542 and $72,774, respectively. No amount was repaid during the year (2015: nil). These advances are non-interest bearing, unsecured and with no specific terms of repayment.
Director Independence
We are not required to have a majority of independent directors on our Board of Directors. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the Board of Directors would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
For the Company’s fiscal years ended July 31, 2016 and 2015, we were billed approximately $12,500 for professional services rendered for the audit and review of our financial statements.
Tax Fees
For the Company’s fiscal years ended July 31, 2016 and 2015, we were not billed for professional services rendered for tax compliance, tax advice, or tax planning.
All Other Fees
The Company did not incur any other fees for the fiscal years ended July 31, 2016 and 2015.
Pursuant to the requirements of Section 13 or 15(d) 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.
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PART IV
ITEM 15.
ITEM 15. EXHIBITS AND SIGNATURES
EXHIBITS
a) Documents filed as part of this Annual Report
1. Consolidated Financial Statements
2. Financial Statement Schedules
3. Exhibits
31.1
Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Las Vegas of Nevada on November 29, 2016.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated in the capacity and on the dates indicated.
Name
Position
Date
/s/ Jordan Starkman
President, Chief Financial Officer and Director
November 29, 2016
Jordan Starkman
(Principal Executive Officer and Principal Financial Officer)
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