Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
THE FOLLOWING DISCUSSION SHOULD BE
READ IN CONJUNCTION WITH OUR UNAUDITED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. THIS DISCUSSION CONTAINS FORWARD-LOOKING
STATEMENTS, SUCH AS STATEMENTS RELATING TO OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS, PLANS, OBJECTIVES, FUTURE PERFORMANCE
AND BUSINESS OPERATIONS. THESE STATEMENTS RELATE TO EXPECTATIONS CONCERNING MATTERS THAT ARE NOT HISTORICAL FACTS. THESE FORWARD-LOOKING
STATEMENTS REFLECT OUR CURRENT VIEWS AND EXPECTATIONS BASED LARGELY UPON THE INFORMATION CURRENTLY AVAILABLE TO US AND ARE SUBJECT
TO INHERENT RISKS AND UNCERTAINTIES. ALTHOUGH WE BELIEVE OUR EXPECTATIONS ARE BASED ON REASONABLE ASSUMPTIONS, THEY ARE NOT GUARANTEES
OF FUTURE PERFORMANCE AND THERE ARE A NUMBER OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. BY MAKING THESE FORWARD-LOOKING STATEMENTS, WE DO NOT UNDERTAKE TO UPDATE
THEM IN ANY MANNER EXCEPT AS MAY BE REQUIRED BY OUR DISCLOSURE OBLIGATIONS IN FILINGS WE MAKE WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE FEDERAL SECURITIES LAWS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM OUR FORWARD-LOOKING STATEMENTS.
THE COMPANY'S FINANCIAL STATEMENTS AS
OF NOVEMBER 30, 2012 INCLUDES A "GOING CONCERN" DISCLOSURE NOTE THAT DESCRIBES SUBSTANTIAL DOUBT ABOUT THE COMPANY'S
ABILITY TO CONTINUE AS A GOING CONCERN.
Corporate History
Wholehealth Products, Inc. formerly Gulf Western
Petroleum Corporation (the Company) was incorporated on February 21, 2006 in the State of Nevada as Georgia Exploration, Inc. The
name was originally changed on March 8, 2007 and recently in July 2012 to Wholehealth Products, Inc. The Company was engaged in
the acquisition, exploration and development of oil and natural gas reserves in the United States.
General Overview
The Company today is in the business of developing,
manufacturing and marketing in vitro diagnostic (IVD) tests for over-the-counter (OTC or consumer), and point-of-care (POC or professional)
use markets. The Company currently manufactures and markets a range of diagnostic test kits for consumer use through over-the-counter
(OTC) sales, and for use by health care professionals, generally located at medical clinics, physician offices and hospitals known
as Points-of-Care (POC), in the United States. These test kits are known as in vitro diagnostic test kits or “IVD”
products.
Revenues
There were no revenues during the nine
month period ended May 31, 2013 and May 31, 2012.
Research and Development
There were no research and development cost
during the nine month period ended May 31, 2013 and May 31, 2012.
Operating Expenses
Total operating expenses for the
nine month period ended May 31, 2013 was $29,859,283 as compared to $18,000 for the nine month period ended May 31, 2012. Current period operating expenses consisted of $90,523 in general and administration fees, $514,909 in
consulting fees and $29,253,851 in connection with issuance of common stock for services rendered.
Liquidity and Capital Resources
As of May 31, 2013, the Company had
a deficiency in working capital of $68.
Off-Balance Sheet Arrangements
We do not have any off-balance
sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk.
You should carefully consider these
factors that may affect future results, together with all of the other information included in this Form 10-Q, in evaluating
the business and the Company. The risks and uncertainties described below are those that the Company currently believes may materially
affect its business and results of operations. Additional risks and uncertainties that the Company is unaware of or that
it currently deems immaterial also may become important factors that affect its business and result of operations. The Company’s
common shares involve a high degree of risk and should be purchased only by investors who can afford a loss of their entire investment.
Prospective investors should carefully consider the following risk factors concerning the Company’s business before
making an investment.
In addition, you should carefully
consider these risks when you read “forward-looking” statements elsewhere in this Form 10-Q. These are statements
that relate to the Company’s expectations for future events and time periods. Generally, the words “anticipate,”
“expect,” “intend,” and similar expressions identify forward-looking statements. Forward-looking
statements involve risks and uncertainties, and future events and circumstances could differ significantly from those anticipated
in the forward-looking statements.
Early Revenue Stage Company: Generation
of Revenues
The Company is an early revenue stage
company and an investor cannot readily determine if the Company will become profitable. The Company is likely to continue to experience
financial difficulties during this early revenue stage and beyond. The Company may be unable to operate profitably, even if it
generates additional revenues. The Company may not obtain the necessary working capital to continue developing and marketing
its products. Furthermore, the present products may not receive sufficient interest to generate revenues or achieve profitability.
Need for Future Capital: Long-Term
Viability of Company
The Company will need additional capital
to continue its operations.
There can be no assurance that the
Company will generate revenues from present operations or obtain sufficient capital on acceptable terms, if at all. Failure
to obtain such capital or generate such operating revenues would have an adverse impact on the Company’s financial position,
operations and ability to continue as a going concern. The company’s.’ operating and capital requirements during
the next fiscal year and thereafter will vary based on a number of factors, including the level of sales and marketing activities
for its services and products. There can be no assurance that additional private or public financing, including debt or equity
financing, will be available as needed or if available, on terms favorable to the Company. Additionally, any future equity financing
may be dilutive to stockholders present ownership levels and such additional equity securities may have rights, preferences, or
privileges that are senior to those of the Company’s existing common stock.
Furthermore, debt financing, if available,
may require payment of interest and potentially involve restrictive covenants that could impose limitations on the flexibility
of the Company to operate. The Company’s difficulty or failure to successfully obtain additional funding may jeopardize its
ability to continue the business and its operations.
Unpredictability of Future Revenues:
Potential Fluctuations in Operating Results
As a result of the
Company’s limited operating history; the Company is currently unable to accurately forecast its revenues. Current and
future expense levels are based largely on the Company’s marketing and development plans and estimates of future
revenue. Sales and operating results generally depend on volume and timing of orders and on the Company’s ability
to fulfill such orders, both of which are difficult to forecast. The Company Corp. may be unable to adjust spending in
a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in
relation to planned expenditures could have an immediate adverse effect on the Company’s business, prospects, financial
condition and results of operations. Further, as a strategic response to changes in the competitive environment, The Company
may from time to time make certain pricing, service or marketing decisions that could have a material adverse effect on its
business, prospects, financial condition and results of operations.
The Company may experience significant
fluctuations in future operating results due to a variety of factors, many of which are outside the Company’s control. Factors
that may affect operating results include: (i) ability to obtain and retain customers, (ii) attract new customers at
a steady rate and maintain customer satisfaction with products, (iii) the announcement or introduction of new services by
Wholehealth Products, Inc. or its competitors, (iv) price competition, (v) the level of use and consumer acceptance
of its products, (vi) the amount and timing of operating costs and capital expenditures relating to expansion of the business,
operations and infrastructure, (vii) governmental regulations, and (viii) general economic conditions.
Flaws and Defects in Products
Products offered by the Company may
contain undetected flaws or defects when first introduced or as new versions are released. Any inaccuracy or defects may result
in adverse product reviews and a loss or delay in market acceptance. There can be no assurance that flaws or defects will not be
found in the Company’s products. Flaws and defects, if found, could have a materially adverse effect upon the business operations
and financial condition of the Company. Marketing of any of the Company’s potential products may expose the Company
to liability claims resulting from the use of the Company’s products. These claims might be made by consumers, health care
providers, sellers of the Company’s products or others. A claim, particularly resulting from a clinical trial, or a product
recall could harm the Company’s business, results of operations, financial condition, cash flow and future prospects.
Stock Price Volatility
The market price of the Company’s
stock has fluctuated in the past and may continue to fluctuate in the future. The Company believes such fluctuations
will continue as a result of many factors, including US and World markets, financing plans, future announcements concerning the
Company, the Company’s competitors, principal customers regarding financial results or expectations, industry supply or demand
dynamics, new product introductions, governmental regulations, the commencement or results of litigation or changes in earnings
estimates by analysts. In addition, in recent years the stock market has experienced significant price and volume fluctuations
often for reasons outside the control of the particular companies. These fluctuations as well as general economic, political
and market conditions may have an adverse affect on the market price of the Company’s common stock.
Worldwide Economic Conditions
The Company’s financial performance
depends significantly on worldwide economic conditions and the related impact on levels of consumer spending, which has recently
deteriorated significantly in many countries and regions, including the U.S., and may remain depressed for the foreseeable future. Demand
for the Company’s products may be adversely affected by negative macroeconomic factors affecting consumer spending. Substantial
tightening of consumer credit, low consumer liquidity, and extreme volatility in credit and equity markets have weakened consumer
confidence and decreased consumer spending. These and other economic factors have reduced demand for the Company’s
products and harmed the Company’s business, financial condition and results of operations, and to the extent such economic
conditions continue, they could cause further harm to the Company’s business, financial condition and operations.
Dependence on Sales through Retailers
and Distributors
The Company’s business
that depends significantly upon sales through retailers and distributors may be affected if the Company’s retailers and
distributors are not successful. As a result, the Company could experience reduced sales, substantial product returns or
increased price protection, any of which would negatively impact the Company’s business, financial condition and
results of operations. A significant portion of the Company’s sales are made through retailers, either
directly or through distributors. If the Company’s retailers and distributors are not successful, due to weak
consumer retail demand caused by the current worldwide economic downturn, decline in consumer confidence, or other factors,
the Company could continue to experience reduced sales as well as substantial product returns or price protection claims,
which could harm the Company’s business, financial condition and operations.
Limited Management Personnel
Under the Company’s business
plan, significant and material matters of business must be conducted and concluded in a timely fashion. The execution of
the Company’s business plan places a significant strain on the Company’s management while providing little or no immediate
compensation.
There can be no assurance that the
Company’s planned personnel, systems, procedures and controls will be adequate to support its future operations, management
will be able to hire, train, retain, motivate and manage personnel or that its management will be able to successfully identify,
manage and exploit existing and potential market opportunities. If the company is unable to manage growth effectively, the Company’s
business, prospects, financial condition, results and operations could be adversely affected.
Competition
The market in which Wholehealth Products,
Inc. competes is highly competitive, and the Company has no assurance that it will be able to compete effectively, especially against
established industry competitors with significantly greater financial resources. The Company expects it may face competition from
a few competitors with potentially greater financial resources, well-established brand names and large, pre-existing customer bases.
Dependence on Management
The Company’s performance will
be substantially dependent on the continued services and on the performance of the current senior management and other key personnel
of the Company. The Company’s performance will also depend on the Company’s ability to retain and motivate its other
officers and key employees. The Company’s inability to retain its executive officers or other key employees could have
a material adverse effect on the Company’s business, prospects, financial condition and results of operations. The
Company’s future success depends to a great extent on its ability to identify, attract, hire, train, retain and motivate
other highly skilled technical, managerial, merchandising, marketing and customer service personnel. Competition for such
personnel can be intense and there is no assurance the Company will be able to successfully attract, assimilate and retain sufficiently
qualified personnel. The failure to retain and attract the necessary technical and managerial personnel could have a material adverse
effect on the Company’s business, prospects, financial condition and results of operations.
Development of Brand Awareness
For certain market segments that the
company plans to pursue, the development of its brand awareness is essential for it to reduce its marketing expenditures over time
and realize greater benefits from marketing expenditures. If the Company’s brand-marketing efforts are unsuccessful,
growth prospects, financial condition and results of operations would be adversely affected. Wholehealth Products, inc. brand awareness
efforts have required, and will most likely continue to require additional expenses.
Intellectual Property Protection:
Uncertainty of Protection of Proprietary Rights
Wholehealth Products, Inc. currently
relies on a combination of patents, trademarks, trade secret protection, non-disclosure agreements and licensing arrangements to
establish and protect its proprietary rights. Despite efforts to safeguard and maintain the company’s proprietary rights,
there can be no assurance the Company will be successful in doing so or its competitors will not independently develop products
substantially equivalent or superior.
The Company also relies on trade secrets
and proprietary know-how, which the Company seeks to protect by confidentiality and non-disclosure agreements with its employees,
consultants, and third parties. There can be no assurance that these agreements will not be breached, that the Company will
have adequate remedies for any breach, or that certain of the company’s trade secrets and proprietary know-how will not otherwise
become known or be discovered by competitors.
Protecting or defending the Company’s
IP rights, to protect trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity may require litigation. Such litigation, whether successful or unsuccessful, could result
in substantial costs and diversions of management resources, either of which could have a materially adverse effect on the Company.’
business, prospects, financial condition, or operating results.
Availability and Coverage of Insurance
For certain risks, the Company does not maintain
insurance coverage because of cost and/or availability. Because the Company retains some portion of its insurable risks, and
in some cases self-insures completely, unforeseen or catastrophic losses in excess of insured limits could have a material adverse
effect on the Company’s financial condition and operating results.
Penny Stock Regulation
The Company’s securities sold
as part of financing provided to the Company may be subject to “penny stock rules” that impose additional sales requirements
on broker-dealers who sell such securities to persons other than established customers and accredited investors, the latter of
which are generally people with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly. For transactions
covered by these rules, the Company and/or broker-dealer must make a special suitability determination for the purchase of such
securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally,
for any transaction involving a penny stock, unless exempt, the “penny stock rules” require the delivery, prior to
the transaction, of a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The
broker-dealer must also disclose the commissions payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market
in penny stocks. Consequently, the “penny stock rules” may restrict the ability of broker-dealers to sell the Company’s
securities. The foregoing required penny stock restrictions will not apply to the Company’s common stock if such securities
maintain a market price of $5.00 or greater. Therefore the challenge for the Company is that the market price of the Company’s
common stock may not reach or remain at such a level.
Item 4. Controls and Procedures.
The Company’s upper Management, including
the Chief Executive, Chief Financial, and Chief Operating Officers, as of the end of the period covered by this Quarterly Report
on Form 10-Q, have concluded our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934) were not effective as described in the act, although efforts were made to do so and to ensure information
required to be disclosed in reports we file or submit under the Exchange Act are recorded, processed, summarized and reported within
the time periods specified in SEC rules and forms. As we continue to expand, we aim to become effective in the areas of disclosure
controls and procedures in order to move the Company forward successfully.
Management, including the Chief Executive Officer/Chief
Financial Officer and Chief Operating Officer, do not expect its present disclosure controls and procedures nor will its internal
controls allow nor prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute assurance the objectives of the control system are met. Further, the design of a control system must reflect the fact
that resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance all control issues and instances of fraud, if
any, have been detected. To address the material weaknesses, management performed additional analysis and other post-closing procedures
in an effort to ensure its consolidated financial statements included in this quarterly report have been prepared in accordance
with generally accepted accounting principles and are as free of fraud as best as can be determined. Accordingly, management believes
the financial statements included in this report fairly present in all material respects our financial condition, results of operations
and cash flows for the periods presented.
Changes in Internal Controls.
There were no significant changes in our internal
controls or other factors that could significantly affect these controls subsequent to the date of their evaluation. There were
no deficiencies or material weaknesses recognized as of February 28, 2013, and therefore no corrective actions were deemed necessary.
However, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and
there is no certainty that any design will succeed in achieving its stated goal under all potential future considerations, regardless
of how remote. It is management’s plan however, to work toward better assessment of any and all necessary internal controls
and thereby to increase the capability to recognize errors and prevent fraud as the Company strives for bettering itself from this
point. We have already initiated discussions to study, assess and create everything necessary throughout the remainder of the year
to achieve effective disclosure controls and procedures. Nonetheless, this will remain a potential material weakness until such
activities have been fully integrated.
Management’s Report on Internal Control
Over Financial Reporting.
Management is responsible for establishing
and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act,
as amended. Internal control over financial reporting refers to a process designed by, or under the supervision of, our Chief Executive/Chief
Financial, and Chief Operating Officers, effected by our Board, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in connection
with GAAP, including those policies and procedures that:
- pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
- provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and
directors; and
- provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect
on our consolidated financial statements.
Because of its inherent limitations, internal
control over financial reporting cannot provide absolute assurance of the prevention or detection of misstatements. In addition,
projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In connection with the preparation of this
Quarterly Report on Form 10-Q for the period ended May 31, 2013, management, with the participation of our Chief Executive Officer/Chief
Financial Officer, and Chief Operating Officer, have evaluated the effectiveness of our internal controls over financial reporting,
pursuant to Rule 13a-15 under the Exchange Act, as of May 31, 2013 in order to determine the potential for or the existence of
material weaknesses, defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility a material misstatement of the company's annual or interim financial statements will not
be prevented or detected on a timely basis. Our Chief Executive, Chief Financial, and Chief Operating Officer, have concluded the
design and operation of our internal controls and procedures are not effective as of May 31, 2013.
Because of these material weaknesses, Management
has concluded the Company did not maintain effective internal control over financial reporting as of May 31, 2013, based on the
criteria established in "Internal Control-Integrated Framework" issued by the COSO, criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. It is the
intention of the present Management to continue to study and establish COSO Control-Integrated Framework within Wholehealth Products,
Inc. during the coming year as we begin to expand our present number of personnel and activities.
There were no significant changes previously
in our internal controls over financial reporting that occurred during the fourth fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal controls over financial reporting.
