UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended October 31, 2016
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______to______.
Commission File Number: 333-177122
HEALTH ADVANCE INC.
(Exact name of registrant as specified in its Charter)
| WYOMING | 46-0525223 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
685 Citadel Drive East, Suite D155
Colorado Springs, CO 80909
(Address of Principal Executive Offices)(Zip Code)
719-466-6699
(Registrants telephone number, including area code)
N/A
(Former name, or former address and former fiscal year if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | ||
| Non-Accelerated Filer | ☐ | (Do not check if a smaller reporting company) | Smaller Reporting Company | ☒ |
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock. As of December 14,March 16, 2016, there were 26,520,00090,320,000 shares of the issuer’s common stock issued and outstanding.
HEALTH ADVANCE INC.
FORM 10-Q
April 30, 2017
INDEX
PART I — FINANCIAL INFORMATION | ||
| Condensed Financial Statements - Unaudited | 3 | |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 | |
| Quantitative and Qualitative Disclosures About Market Risk | 16 | |
| Controls and Procedures | 16 | |
PART II — OTHER INFORMATION | ||
| Legal Proceedings | 17 | |
| Risk Factors | 17 | |
| Unregistered Sales of Equity Securities and Use of Proceeds | 17 | |
| Defaults Upon Senior Securities | 17 | |
| Mine Safety Disclosures | 17 | |
| Other Information | 17 | |
| Exhibits | 18 | |
| 18 | ||
PART I –FINANCIAL INFORMATION
| Item 1. |
HEALTH ADVANCE INC.
CONDENSED FINANCIAL STATEMENTS
April 30, 2017
CONTENTS
| PAGE - 4 | CONDENSED BALANCE SHEETS AS AT |
| PAGE - 5 | CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED |
| PAGE - 6 | CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED |
| PAGE - 7 | NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) |
3
HEALTH ADVANCE INC.
CONDENSED BALANCE SHEETS
AS AT OCTOBER 31, 2016April 30, 2017 (UNAUDITED) AND JULY 31, 2016 (AUDITED)
(Expressed in United States Dollars)
| April 30, | July 31, | |||||||
| 2017 | 2016 | |||||||
| $ | $ | |||||||
| ASSET | ||||||||
| 2,990,000 | — | ||||||
| CURRENT ASSET | 2,990,000 | — | ||||||
| Cash | — | — | ||||||
| TOTAL ASSET | 2,990,000 | — | ||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | 12,291 | 57,062 | ||||||
| Accrued liabilities | 185,080 | 2,575 | ||||||
| Advances from a shareholder (Note 6) | 259 | 94,879 | ||||||
| TOTAL LIABILITIES | 185,339 | 154,516 | ||||||
October 31, | July 31, | |
2016 | 2016 | |
$ | $ | |
| ASSET | ||
| CURRENT ASSET | ||
| Cash | — | — |
| TOTAL ASSET | — | — |
| LIABILITIES AND SHAREHOLDERS' DEFICIENCY | ||
| CURRENT LIABILITIES | ||
| Accounts payable | 57,378 | 58,353 |
| Accrued liabilities | 6,575 | 2,500 |
102,211 | 98,542 | |
| TOTAL LIABILITIES | 166,164 | 159,395 |
| SHAREHOLDERS' DEFICIENCY | ||
| Authorized: | ||
| 24,520,000 common stock as at October 31, 2016 and July 31, 2016 | 24,520 | 24,520 |
| Additional paid-in capital | 186,080 | 186,080 |
67,500 | 67,500 | |
| Accumulated deficit | (444,264) | (437,495) |
| TOTAL SHAREHOLDERS' DEFICIENCY | (166,164) | (159,395) |
| TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY | — | — |
| Going concern (Note 3) | ||
| Subsequent events (Note 9) | ||
| See accompanying notes |
HEALTH ADVANCE INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED OCTOBER 31,April 30, 2017 AND 2016 AND 2015 (UNAUDITED)
(Expressed in United States Dollars)
| Three months | Three months | |||||||
| ended | ended | |||||||
| April 30, | April 30, | |||||||
| 2017 | 2016 | |||||||
| $ | $ | |||||||
| SALES | — | — | ||||||
| COST OF SALES | — | — | ||||||
| GROSS PROFIT | — | — | ||||||
| EXPENSES | ||||||||
| Media Services | 3430 | |||||||
| Professional fees | 5,600 | 5,399 | ||||||
| Office and general | 430 | 677 | ||||||
| Total expenses | 9,460 | 6,076 | ||||||
| Foreign exchange loss | — | — | ||||||
| Loss before income taxes | (9,460 | ) | (6,076 | ) | ||||
| Income taxes | — | — | ||||||
| NET AND COMPREHENSIVE LOSS FOR THE PERIOD | (9,460 | ) | (6,076 | ) | ||||
| Loss per common share, basic and diluted | (0.0006 | ) | (0.0005 | ) | ||||
| Weighted average number of | ||||||||
| common stock outstanding, basic and diluted | 64,520,000 | 24,520,000 | ||||||
| See accompanying notes | ||||||||
5
Three months | Three months | |
ended | ended | |
October 31, | October 31, | |
2016 | 2015 | |
$ | $ | |
| SALES | — | — |
| COST OF SALES | — | — |
| GROSS PROFIT | — | — |
| EXPENSES | ||
| Professional fees | 3,835 | 5,406 |
| Office and general | 2,934 | 1,030 |
| Total expenses | 6,769 | 6,436 |
| Foreign exchange loss | — | — |
| Loss before income taxes | (6,769) | (6,436) |
| Income taxes | — | — |
| NET AND COMPREHENSIVE LOSS FOR THE PERIOD | (6,769) | (6,436) |
| Loss per common share, basic and diluted | (0.0,003) | (0.0,003) |
| Weighted average number of | ||
| common stock outstanding, basic and diluted | 24,520,000 | 24,520,000 |
| See accompanying notes |
HEALTH ADVANCE INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED OCTOBER 31,April 30, 2017 AND 2016 AND 2015 (UNAUDITED)
(Expressed in United States Dollars)
Three months | Three months | |
ended | ended | |
October 31, | October 31, | |
2016 | 2015 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net loss for the period | (6,769) | (6,436) |
| Adjustments for non-cash items | ||
| Common stock issued for services | — | — |
| In-kind contribution of services | — | — |
| Net change in non-cash working capital balances: | ||
| Accounts payable | (975) | 7,831 |
| Accrued liabilities | 4,075 | (2,425) |
| Net cash used in operating activities | (3,669) | (1,030) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from issuance of common stock | — | — |
| Advances from a shareholder | 3,669 | 1,030 |
| Net cash provided by financing activities | 3,669 | 1,030 |
| Net decrease in cash during the period | — | — |
| Cash, beginning of period | — | — |
| Cash, end of period | — | — |
| See accompanying notes | ||
| Three months | Three months | |||||||
| ended | ended | |||||||
| April 30, | April 30, | |||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss for the period | (9,460 | ) | (24,624 | |||||
| Adjustments for non-cash items | ||||||||
| Common stock issued for services | — | — | ||||||
| Advancess from a stockholder | 259 | 22,105 | ||||||
| Net change in non-cash working capital balances: | — | |||||||
| Accounts payable and Accrued liabilities | — | 2,519 | ||||||
| Net cash used in operating activities | (9,201 | ) | — | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of common stock | — | — | ||||||
| Advances from a shareholder | 259 | 15,892 | ||||||
| Net cash provided by financing activities | 259 | 15,892 | ||||||
| Net decrease in cash during the period | — | — | ||||||
| Cash, beginning of period | — | — | ||||||
| Cash, end of period | — | — | ||||||
| See accompanying notes | ||||||||
Supplemental cash flow information [Note 8]
6
HEALTH ADVANCE INC.
NOTES TO THE
CONDENSED FINANCIAL STATEMENTSFOR THE THREE MONTHS ENDED OCTOBER 31, 2016April 30, 2017 (UNAUDITED)
(Expressed in United States Dollars)
| 1. | NATURE OF OPERATIONS AND ORGANIZATION |
Health Advance Inc. (the “Company” or “Health Advance”) was incorporated on April 14, 2010 in the State of Wyoming. The Company is an online retailer of home medical products with operations in Canada and the United States of America (“USA”).
| 2. | BASIS OF PRESENTATION |
The condensed financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the USA for interim financial information and the SEC instructions to Form 10Q. Accordingly, they do not include all of the information and notes to the financial statements required by generally accepted accounting principles for complete financial statements. All adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. For further information, refer the financial statements and notes thereto included in the Company’s annual report on Form 10K for the year ended July 31, 2016.
| 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 the ability of the Company to continue as a going concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing to provide continuation of the Company’s operations. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.
There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in these financial statements.
These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
| 4. | 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 shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Diluted earnings per share exclude all potentially dilutive shares if their effect is anti-dilutive. There were no potentially dilutive shares outstanding as at October 31, 2016April 30, 2017 and July 31, 2016.
| 5. | RECENT ACCOUNTING PRONOUNCEMENTS |
Recently Issued Accounting Standards
In March 2016, the Company adopted the accounting pronouncement issued by the Financial Accounting Standards Board ("FASB") to update guidance on how companies account for certain aspects of share-based payments to employees. This pronouncement is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. This guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled and changes the presentation of excess tax benefits on the statement of cash flows.
The Company adopted these provisions on a prospective basis. In addition, this pronouncement changes guidance on: (a) accounting for forfeitures of share-based awards and (b) employers’ accounting for an employee’s use of shares to satisfy the employer’s statutory income tax withholding obligation. The adoption of this pronouncement did not have a material impact on Company’s financial position and/or results of operations.
7
HEALTH ADVANCE INC.
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2016April 30, 2017 (UNAUDITED)
(Expressed in United States Dollars)
| 5. | RECENT ACCOUNTING PRONOUNCEMENTS (continued) |
In February 2016, an accounting pronouncement was issued by the FASB to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to current accounting guidance. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption is required to be applied on a modified retrospective basis for each prior reporting period presented. The Company has not yet determined the effect that the adoption of this pronouncement may have on its financial position and/or results of operations.
On January 1, 2016, the Company adopted the accounting pronouncement issued by the FASB to update the guidance related to the presentation of debt issuance costs. This guidance requires debt issuance costs, related to a recognized debt liability, be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. The Company adopted this pronouncement on a retrospective basis, and the adoption did not have a material impact on its financial position and/or results of operations.
In November 2015, an accounting pronouncement was issued by the FASB to simplify the presentation of deferred income taxes within the balance sheet. This pronouncement eliminates the requirement that deferred tax assets and liabilities are presented as current or noncurrentnon-current 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.non current. This pronouncement is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company intend to adopt this pronouncement on January 1, 2017, and the adoption will not have a material impact on its financial position and/or results of operations.
| 6. | RELATED PARTY TRANSACTIONS AND BALANCES |
The transactions with related parties were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the parties. Related party transactions or balances not disclosed elsewhere in these financial statements are as follows:
Advances from a shareholder of the Company as at October 31, 2016April 30, 2017 were $259 and July 31, 2016 were $102,211 and $98,542, respectively. These advances are non-interest bearing, unsecured and have no specific terms of repayment.
| 7. | SHAREHOLDERS’ DEFICIENCY |
COMMON STOCK - AUTHORIZED
As at October 31, 2016,April 30, 2017, the Company has 500,000,000 authorized shares of common stock with a par value of $0.001 per share.
COMMON STOCK - ISSUED AND OUTSTANDING
As at October 31, 2016 of April 30, 2017 the Company has 64,520,000 shares of common stock issued and outstanding
and July 31, 2016, the Company hashad 24,520,000 shares of common stock issued and outstanding.
8
HEALTH ADVANCE INC.
CONDENSED NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2016April 30, 2017 (UNAUDITED)
(Expressed in United States Dollars)
| 7. | SHAREHOLDERS’ DEFICIENCY (continued) |
COMMON STOCK – TO BE ISSUED
The Company’s 6,790,000 common stock ($67,500) to be issued amounting to $67,500 as at October 31, 2016April 30, 2017 and July 31, 2016 consist of the following:
In November 2012, the Company agreed to issue 2,000,000 shares of common stock at an issue price of $0.005 per share for a total cash proceeds of $10,000. These shares were issued in December 2016.
In December 2012, the Company agreed to issue 1,000,000 shares of common stock valued at $0.01 per share for a total value of $10,000 for web design services and repairs.
In January 2013, the Company agreed to issue 500,000 shares of common stock valued at $0.01 per share for a total value of $5,000 for consulting services.
In March 2013, the Company agreed to issue 800,000 shares of common stock at an issue price of $0.01 per share for a total cash proceeds of $8,000.
In June 2013, the Company agreed to issue 350,000 shares of common stock at an issue price of $0.01 per share for a total cash proceeds of $3,500.
In October 2013, the Company agreed to issue 1,600,000 shares of common stock at an issue price of $0.0025 per share for a total cash proceeds of $4,000.
In April 2014, the Company agreed to issue 40,000 shares of common stock at an issue price of $0.05 per share for a total cash proceeds of $2,000.
In August 2014, the Company agreed to issue 500,000 shares of common stock at an issue price of $0.05 per share for a total cash proceeds of $25,000.
| 8. | SUPPLEMENTAL CASH FLOW INFORMATION |
During the three months ended October 31,April 30, 2017, and 2016, and 2015, there were no interest or taxes paid by the Company.
| 9. | SUBSEQUENT EVENTS |
The Company’s management has evaluated subsequent events up to December 14, 2016,June 31, 2017, the date the financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following subsequent events to report.
In December 2016,March 2017, the Company issued 2,000,00040,000,000 shares of common stock from the Company at an issue price of $0.005$0.075 per share, in addition to 40,000,000 warrant options for 40,000,000 shares of common stock from the Company at an issue price of $0.075 per share for a total cash proceedspayment of $10,000,$3,000,000.00 for License Agreement between Company and Micro Medtech Ltd. for product formulations for medical foods known aspolyoxyfen andcebidiofen (derived from botanical extract blends containing kava, mitragyna speciosa, and cannabidiol) in patent pending status, which were received on March 7, 2017.
April 30, 2017
(Unaudited)
Note 3. License Agreement Costs, Net
License agreement costs, net, consists of:
| April 30, 2017 | January 31, 2017 | |||||||
| 40 Million Shares of Company Stock due to Licensor | $ | 3,000,000 | — | |||||
| Less accumulated amortization | (10,000 | ) | — | |||||
| License agreement costs, net | $ | 2,990,000 | — | |||||
The Company recorded amortization expense of $10,000 for the two months ended April 30 2017 compared to $0 in 2012.
9
| Item 2. |
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Overview
Health Advance Inc. (the “Company”) was incorporated on April 14, 2010 in Wyoming. The Company is an on-line retailer of home medical products with operations in Canada and the United States, and with administration and infrastructure supported globally. Our strategy is to attract opportunities in the health care industry through the development and growth of our existing web site www.leadingmedicalproducts.com. We believe we can operate more cost efficiently and compete as a discounter that delivers value and low cost branded lines of home medical care products together with valuable customer care that is currently missing in the marketplace. Our goal is to become our customers’ single source for low cost health care supplies, by meeting all of our customer’s needs.
From inception to October 31, 2016 we haveApril 30, 2017 the Company incurred a net loss of $444,264.$185,339. The ability of the Company to continue as a going concern depends upon its ability to raise adequate financing and develop profitable operations. If we cannot generate sufficient revenues from our services, we may have to delay the implementation of our business plan. Management is actively targeting sources of additional financing to provide continuation of the Company’s operations. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.
The Company is actively seeking financing for its current business operation. The Company is optimistic that the financing will be secured and the going concern risk will be removed. We are in discussions with various parties and believe a successful financing is likely. Any capital raised will be through either a private placement or a convertible debenture and will result in the issuance of shares of common stock from the Company’s authorized capital. In addition, the Company is also seeking acquisitions within the health space as a means to grow the Company.
On February 14, 2014, the Company affected a 10-for-1 forward split of the Company’s issued and outstanding common shares. The Company’s issued and outstanding common shares were therefore increased from 2,452,000 to 24,520,000. All per share amounts have been restated to reflect this stock split.
Plan of Operation
The Company was incorporated on April 14, 2010 in Wyoming. OurThe former business office is(virtual office) located at 3651 Lindell Road, Suite D#155, Las Vegas, NV, 89103. Our89103, which has changed to a physical office location 685 Citadel Drive East - Suite 290, Colorado Springs, CO 80909 as result to resolution(s) entered at the Board of Directors and Shareholder Minutes of Meeting on June 6, 2017 (Exhibit 98.1: Section 9).
The Company’s primary telephone number is 702-943-0309. We were founded702-943-0309 has been changed to 719-466-6699 as result to resolution(s) entered by a majority vote from the Board of Directors and Shareholder Minutes of Meeting on June 6, 2017.
The Company’s primary website and email domain name ‘healthadvanceinc.com’ has been changed to ‘hadvinc.com’ as result to resolution(s) entered at the Board of Directors and Shareholder Minutes of Meeting on June 6, 2017 (Exhibit 98.1: Section 17).
The Company’s founder Jordan Starkman, who servesserved the Company as our President, Chairman of the Board of Directors, and Director. Director, has be removed and has been replaced by Dr. Muhammad Mukhtar, Ph.D. who will serve the Company as the (Interim) Secretary, (Non-Voting, Interim) Director, Chief Advisor for Control Stock Committee, and (Acting) Chief Executive Officer until July 31, 2017, or until a permanent replacement for Secretary and President of Company is hired, collectively are results to resolution(s) entered at the Board of Directors and Shareholder Minutes of Meeting on June 6, 2017 (Exhibit 98.1: Section 4,5, 6 and Exhibit 99.1). In addition, Mr. Starkman has been removed as Chairman and replaced by Gregory Shusterman, who was appointed as Vice Chairman in April 2017 and has served as ‘Acting Chairman’ since April 19, 2017 as a result to reason specified in Exhibit Y.
Christian Diesveld, who served the Company as a Director, has be removed and has been replaced by Dr. Hauke Kolster, Ph.D.. who will serve the Company as the (Interim) Vice President (Non-Voting, Interim) Director, collectively are results to resolution(s) entered at the Board of Directors and Shareholder Minutes of Meeting on June 6, 2017 (Exhibit 98.1: Section 8).
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.
The Company formerly operated as 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.
On June 6, 2017 it has been resolved by a majority vote from the Board of Directors and Shareholder Minutes of Meeting on June 6, 2017 that the Company will change its Industry Classification to offer health care professionals,Research and Development in Biotechnology (541714 ) in efforts to prepare for new business ventures, partnerships, business development as a developer and manufacturer of cost-effective dietary supplements and medical distributorsfoods from organic sources that contain botanical extract blends as an alternative to synthetic drugs and consumers the highest quality brandsherbal supplements, in efforts to treat pain, cancer, opiates/alcohol withdrawal, epilepsy, PTSD, and products at the most affordable prices. We expect to achieve this by forming relationships with suppliers that will be able to provide us with preferred prices once we are able to make bulk purchases.
10
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
In the fiscal year of 2017, we planthe Company plans to build ouran experienced and highly credentialed executive management and advisory team to support successful results for market research, clinical and regulatory studies, and business across four key product categories including: (1) respiratory, (2) diabetes, (3) ostomy,development to manufacturer, license, and (4) mastectomy supplies. Ourdistribute cost effective, organic solutions for pain, nutrition, and severe illness through the use of uniquely developed medical foods and dietary supplements. In addition, the Company’s growth plan isfor fiscal year includes partnerships with universities, hospitals, research organizations, and media relations specialists to achieve net revenues withinraise awareness on the first 12 months following our July 31, 2016 year–end.
On October 13, 2016, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Hantian Labs Limited., accorporationa 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.
Before close of the fiscal year of 2017. We have not yet entered into any agreements with any parties with respect2017 the Company plans to obtaining financingfile SEC Forms S-3 and S-6 registration statements to secure payments for related investments to the Company.
The Company expects to start preparing for an online and retail marketing campaign our financing has secured. The Company has a relationshipcampaigns in the Americas and Europe 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.
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.
11
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
Between February and June 6, 2017 the Company has received $23,390 in form of a loan for operating expenses (e.g.; professional services, website development, communications, office space and equipment; etc.) from a stockholder who hired Green Health Advocates in 2017 for an additional $35,835 for market research studies, digital media service, video production, and related media services to attempting to achieve supply chain optimization byraise awareness for 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,Company. 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.
12
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
| Marketing & Business Development | $ | 221,000 | ||
| Professional Services | $ | 560,000 | ||
| Salaries and Independent Contractor Fees | $ | 1,154,000 | ||
| Advertising and Marketing | $ | 325,000 | ||
| Research & Development | $ | 872,000 | ||
| Logistics & Inventory | $ | 871,000 | ||
| Office Space Related Facilities | $ | 33,600 | ||
| Working Capital (e.g.; Business Travel, Events, Cash On-hand; etc.) | $ | 250,000 | ||
| Total Expenses | $ | 3,961,680 |
The above represents managements’ best estimate of our cash requirements based on our business plans and current market conditions. The above is based on our ability to raise sufficient financing and generate adequate revenues to meet our cash flow requirements. The actual allocation between expenses may vary depending on the actual funds raised and the industry and market conditions over the next 12 months following our July 31, 20162017 year-end.
If we are able to complete a financing through a private offering for a minimum of $500,000$3,961,680 within the 12 month period following our July 31, 20162017 year-end, we expect to replacebroaden our market research, clinical, and expand any existing major wholesaler relationships we currently workregulatory studies and business development with by the beginninghealthcare marketplace and resellers of July 31, 2017 year-end. Further, during this expected time frame, we plannutritional products, in addition to establish direct-from-manufacturer programs for our four key growth markets in orderincreasing the investment into agricultural material needed to achieve improved margin of between 25-35%. We will continue, however, to run our durable medical products business through the existing wholesaler relationships given the large range of product SKUs in the durable medical product category where we carry no less than a selection of nearly 2,000 products. In addition,manufacturer goods more cost effectively, which would allow the Company is also seeking acquisitions within the health space as a means to grow the Company.remain competitive among its relevant industries.
13
Results of Operations
For the three months ended October 31,April 30, 2017 and 2016 and 2015
For the three months ended October 31,April 30, 2017 and 2016 and 2015 we did not have any sales. The Company is currently working with Micro Medtech Ltd.; who has launched a new e-commerce platform, leadingmedicalproducts.com. The site features a new vibrant designbeen conducting market research studies and surveys on and offline with a fresh look,pain medicine specialist in North America and offers quickis working with research organizations to development medical foods, nutritional beverages, and easy accessdietary supplements that are derived from botanical extract blends containing kava, mitragyna speciosa, or cannabidiol that will meet local and/or federal regulations to essentialsufficiently generate sales revenue from product information that provides a more comprehensive understanding of the Company’s product lines. In addition, the Company has not been successful in completing the required financing to begin its advertising campaignsales and promotion of www.leadingmedicalproducts.com. We expect to generate increased sales once our advertising campaign begins.
Operating expenses for the three months ended October 31, 2016April 30, 2017 were $6,769,$14,117, as compared to $6,436$6,796 the three months ended October 30, 2015.
During the three months ended October 31, 2016,April 30, 2017, we recorded $3,835,$12,300, as professional fees following written notification of past and present fees due to auditor (three months ended October 31, 2015, $5,406)April 30, 2016, $3,835) and $2,934, as$167 for office and general expensesaccording to billing statement from virtual office provider in Las Vegas (three months ended October 31, 2015, $1,030)April 30, 2016, $2,934).
During the three months ended October 31,April 30, 2017 and 2016, and 2015, we had no provision for income taxes due to the net operating losses incurred.
Mukhtar is an avid researcher also. His laboratory developed an in-vitro model of the human blood-brain barrier to study viral neuropathogenesis. Dr. Mukhtar as Principal or Co-Investigator has received several awards from organizations including American Diabetes Association, American Society for Microbiology, Diabetes Trust Foundation, US National Institutes of Health, Pfizer Pharmaceuticals (NYSE: PFE), and the Higher Education Commission of Pakistan. Human blood-brain barrier model developed in his laboratory is extensively used to understand ferrying of viruses into the brain and finding cures for neurological ailments.
Dr. Mukhtar holds specialized Certificates in Public Health and Bioinformatics. Committed to the role of technology in biomedical research, he serves as managing editor of Frontiers in Bioscience and is on the editorial board of several research journals. He feels pride in mentoring researchers, scientists, teachers and administrators and committed professionals aspiring to excel in their practical life. He has several research publications, including peer-reviewed research, review articles, invited articles, book chapters, commissioned articles and critiques to his credit. A book describing accomplishments of Dr. Mukhtar’s educational leadership has been published in Urdu language entitled “Hayat Zauq e Safar Kay Siwa Kuch Aur Naheen” and it’s English Version “The Making of a Best National University” is in progress.
Dr. Hauke Kolster Ph.D., the newly appointed Vice President of the Company has an employment history and biography as follows:
Kolster is an innovative scientist and engineer with outstanding quantitative and analytical skills. Technically versed professional with progressive experience in coordinating projects as well as working in cross-functional teams in multiple disciplines. Goal oriented individual who excels in problem-solving and managing complex projects with strict timelines and multiple stakeholders.
Since 2012 Kolster has owned and operated Windmiller Kolster Scientific in California offering scientific and research consulting, technology and software for the neuroimaging sector. Supported leading neuroscientific research groups at top domestic and international universities. Previously Kolster served as a Research Assistant Professor at KU Leuven Medical School (Leuven) and Research Assistant Professor at Department of Neuroscience since 2007.
Dr. Kolster's professional training includes research fellowship program at Harvard Medical School, in addition to working as a senior post-doctoral associate at Massachusetts Institute of Technology at Cambridge.
Kolster studied and graduated at LMU Munich, Munich for his Ph.D. and Bonn University (Bonn, Germany) for a master’s degree. in physics.
14
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
Liquidity and Capital Resources
As of October 31, 2016, weApril 30, 2017, the Company had nila cash balance and a working capital deficiency of $166,164.
The Company is currently seeking funding for our continued operations. The Company intends to raise a minimum of $500,000$3,961,680 and a maximum of $1,000,000$10,000,000 in order to continue the introduction of the
The Company cannot assure investors that adequate revenues will be generated and there isare no current loan commitment in place betweenformal commitments with the Company, and Jordan Starkman.its shareholders, or Board of Directors to finance the Company in the state of an emergency or financial crisis. However, the success of ourthe Company’s operations is dependent on attaining adequate revenue. In the absence of our projected revenues, wethe Company may be unable to proceed with our plan of operations or we may require financing to achieve our profit, revenue, and growth goals.
15
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
Recently Issued Accounting Standards
As explained in note 5 to the condensed financial statements, the Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.
Off-Balance Sheet Arrangements
The Company does not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts.
| Item 3. | Quantitative and |
Not required for Smaller Reporting Companies.
| Item 4. |
Evaluation of disclosure controls and procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were not effective as of October 31, 2016April 30, 2017 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in internal controls
No change in our system of internal control over financial reporting occurred during the nine months ended October 31, 2016April 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
16
PART II - OTHER INFORMATION
| Item 1. |
The Company currently not involved in any litigation that we believeis believed could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
The Company has received a default judgment order against the Company in favor of Anslow & Jaclin in the amount of $8,737.00 plus interest for previous legal fees. The Company expectsis will hire legal counsel to negotiateprepare and file an Interpleader Action with Wyoming Superior Court by or before end of current fiscal year for common stock shares of the Company and resolution to cure court judgment in favor of the dissolved entity due to the fact that Anslow and Jaclin LLP was dissolved before June 13, 2017 and is not longer active.
The Company filed a settlement in the coming weeks.
| Item 1A. |
Not required for Smaller Reporting Companies.
| Item 2. |
No recent sales of equity securities.
| Item 3. |
None
| Item 4. |
Not Applicable
| Item 5. |
None
| Item 6. |
| Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | |
| Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 99.1 | Board of Directors and Shareholder - Control Stock Committee Minutes of Meeting, June 6, 2017 |
| 99.2 | Leave of Absence Notice, April 19, 2017 |
FORWARD-LOOKING STATEMENTS :
Pursuant with the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, this Current Report on Form 10-Q contains forward-looking statements about the Company's business affairs affiliate partners for research and development, marketing, production, and sale of medical equipment and nutritional and pharmaceutics products, in additional to pertinent intellectual properties. These statements involve risks and uncertainties, and actual results may differ materially from the Company's expectations. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, whether the Company will be able to complete and fulfill actions specified within agreements with affiliated parties. Other risks and uncertainties that can affect the Company's performance are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report on Form 10-K for the year ended July 31, 2016 which is on file with the Securities and Exchange Commission (SEC) and are available on the SEC’s website at www.sec.gov and on the Company websites (www.hadvinc.com). All information provided in this Current Report on Form 10-q is as of June 13, 2017, and the Company undertakes no duty to update this information unless required by law.
17
S
IGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Health Advance, Inc. | |||
| Dated: | By: | /s/ Gregory Shusterman | |
18