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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Overview
Health Advance Inc. (the “Company”) operates within the U.S. and Asia-Pacific as a developer and researcher for biotechnology, primarily focused on medical foods to treat pain and other severe illnesses usually treated with pharmaceutical drugs derived from opioids, in addition to developing dietary supplements to serve as alternatives for medicine. Our strategy is to attract opportunities in the health care industry through the development of patented product formulations for medical foods
Cebidofen
and
Polyoxyfen
, and
Gynspeq
, a food additive made from botanical extract blends that include kava and mitrigyna speciosa. Furthermore, the Company will explore ways to use the product formulations through research studies and clinical trials with medical schools, research organizations, hospitals, and government agencies. We believe that we can operate more cost efficiently over the next three years by outsourcing duties of operations within the Company to independent contractors. Our goal is to position the Company for a merger or acquisition with a larger company in the health care industry within the next five years.
From inception to September 30, 2017 the Company incurred a net loss of $59,288. 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. The former business office (virtual office) located at 3651 Lindell Road, Suite D#155, Las Vegas, NV, 89103, 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 99.2: Section 9).
The Company’s primary telephone number 702-943-0309 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.
13
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 99.2: Section 17).
The Company’s founder Jordan Starkman, who served the Company as President, Chairman of the Board of Directors, and Director was placed on a Leave of Absence by the Control Stock Committee of Shareholders on April 19, 2017 and submitted a Letter of Resignation to the Company on November 1, 2017.
Upon the Leave of Absence Notice to former President, Starkman on April 19, 2018, Dr. Muhammad Mukhtar, Ph.D. has served the Company as a (Non-Voting, Interim) Director, Chief Advisor for Control Stock Committee, Special Adviser to the Chairman,, and (Acting) Chief Executive Officer since April 19, 2017 is contracted with the Company through December 31, 2017. On June 6, 2017, Muhktar was appointed as Secretary to the Company on an interim basis.
Gregory Shusterman, who was appointed as Vice Chairman and Board Director on April 8, 2017, has served as ‘Acting Chairman’ and Executive Director since April 19, 2017, as a result to reason specified in Exhibits 99.2, 99.5, 99.6 and 99.7. The Company issued one-million (1,000,000) common stock shares of the Company to Shusterman upon entering an Independent Contractor Agreement as the Executive Director and Acting Chairman for the Company on June 8, 2017. Additionally, around or about November 15, 2017, Shusterman was appointed Chairman of the Board of Directors and Executive Director for the Company, as stated in Form 8-K filed on November 20, 2017.
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 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 foods from organic sources that contain botanical extract blends as an alternative to synthetic drugs and herbal supplements, in efforts to treat pain, cancer, opiates/alcohol withdrawal, epilepsy, PTSD, and other severe illnesses.
June 8, 2017 through August 31, 2017 Dr. Hauke Kolster, Ph.D., served the Company as the (Interim) Vice President (Non-Voting, Interim) Director under an Independent Contractor Agreement.
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In the fiscal year of 2017, the Company plans to build an experienced and highly credentialed executive management and advisory team to support successful results for market research, clinical and regulatory studies, and business development to manufacturer, license, and distribute 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 for fiscal year includes partnerships with universities, hospitals, research organizations, and media relations specialists to raise awareness on the Health Advance products currently in development, which the Company anticipates to introduce to the general marketplace shortly after end of the current fiscal year. A market research study and survey to 3,700 pain medicine specialists in North America was conducted between March and August 2017 by Green Health Advocates, a media relations consultant hired by a stockholder of the Company in effects to raise awareness for Health Advance’s potential product formulations that were acquired by the Company in March 2017.
On October 13, 2016, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Hantian Labs Limited, a corporation existing under the laws of the United Kingdom (“Hantian Labs”), to acquire all of the issued and outstanding shares of Hantian Labs. Pursuant to the Share Exchange Agreement, the Company will acquire from Hantian Labs one hundred percent (100%) interest in Hantian Labs and its controlling subsidiaries. In consideration for the Share Exchange Agreement, the Company shall issue to Hantian Labs 1.5 common shares of the Company for each share of Hantian Labs issued and outstanding at the time of closing. As a closing condition to the Share Exchange Agreement, Hantian Labs is required to complete a financing of a minimum of $250,000 for the marketing of Hantian Labs’ product line. This closing condition has not been met and it was resolved by majority vote at the Board of Directors and Shareholder Minutes of Meeting on June 6, 2017 to terminate the Share Exchange Agreement. The Company and Hantian Labs have since re-negotiated the Share Exchange Agreement and made an addendum to the original agreement executed on January 16, 2017, pursuant to Exhibit 99.4, Section 9, allowing Hantian Labs additional time to complete its audit report for Transition Period between August 1, 2016 through June 30, 2017 and Fiscal Year Ending March 31, 2018.
The Company has made a decision to submit an application to trade on OTQCB exchange before the end of the fiscal year.
The Company expects to start preparing for an online and retail marketing campaigns in the Americas and Europe with sales and marketing affiliates for organic dietary supplements, and herbal foods and beverages derived from non-medicinal botanical extract blends, while awaiting the completed Product Development Report and results from FDA regulatory and clinical testing (e.g.; meeting
Generally Recognized As Safe
federal regulations) on the two patent-pending product formulations for medical foods acquired in March 2017.
The Company expects that these new medicinal and non-medicinal product launches will be outlined and planned within the current fiscal year, once our short-term financing is completed. During the next 24 months following our March 31, 2018 fiscal year-end, the Company plans to work with our manufacturing and distribution partners to increase sales revenue from approved pharmaceutical and nutritional products and raise awareness of ‘Stay Klean’ brand and slogan. In November 2017 the Company entered a Letter of Intent for the ‘KLEAN Program’ supported by a medical college and a government agency in the South Pacific (see Exhibit 99.8). Together with our domestic and foreign government affiliates, sales affiliates, and marketing partners the Company intends to position itself for a merger or acquisition with a mid-cap or large-cap company within five years from the fiscal year ending on March 31, 2018.
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 raise awareness for the Company. and the year following our July 31, 2017 year-end in order to maintain our business operations. The Company will attempt to complete a financing for a minimum of $3,961,680 within the 12-month period following the Company’s 2017 year-end. Any capital raised will be through either a product sales, product licensing, private placement, or a convertible debenture and will result in the issuance of common shares from the Company’s authorized capital.
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Marketing & Business Development
|
|
$
|
221,000
|
|
|
Professional Services
|
|
$
|
560,000
|
|
|
Salaries and Independent Contractor Fees
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$
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1,154,000
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|
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Advertising and Marketing
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$
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325,000
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|
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Research & Development
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$
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872,000
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|
|
Logistics & Inventory
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$
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871,000
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|
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Office Space Related Facilities
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$
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33,600
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|
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Working Capital (e.g.; Business Travel, Events, Cash On-hand; etc.)
|
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$
|
250,000
|
|
|
Total Expenses
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$
|
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 March 31, 2018 year-end.
If we are able to complete a financing through a private offering for a minimum of $3,961,680 within the 12 month period following our March 31, 2018 year-end, we expect to broaden our market research, clinical, and regulatory studies and business development with the healthcare marketplace and resellers of nutritional products, in addition to increasing the investment into agricultural material needed to manufacturer goods more cost effectively, which would allow the Company to remain competitive among its relevant industries.
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Results of Operations
For the three months ended September 30, 2017 and 2016
For the three months ended September 30, 2017 did not have any sales. The Company is currently working with Micro Medtech Ltd.; who has been conducting market research studies and surveys on and offline with pain medicine specialist in North America and is working with research organizations to development medical foods, nutritional beverages, and dietary supplements that are derived from botanical extract blends containing kava, mitragyna speciosa, or cannabidiol that will meet local and/or federal regulations to sufficiently generate sales revenue from product sales and licensing.
Operating expenses for the three months ended September 30, 2017 were $74,288, as compared to $9,460 the three months ended April 30, 2017.
During the three months ended September 30, 2017 and April 30, 2017, we had no provision for income taxes due to the net operating losses incurred.
The Company has hired two welly-credentialed independent contractors as (non-voting) Directors and (Acting) Officers of the Company on an interim basis in hopes to turnaround less-than marginal productivity of the Company’s goals and establish more lucrative business relationships.
On November 20, 2017 filed Form 8-K announcing that Mr. Jordan Starkman has resigned from the Board of Directors of HADV (the 'Board'), as well as from the position of Board Executive, President, and Director with his resignation taking effect from November 1, 2017. Mr. Starkman has been a Board Executive, Director and President since the Company's inception. Additionally, the Form 8-K filed on November 20, 2017 by the Company states that it has appointed Vice Chairman and Director, Gregory Shusterman as interim Chairman/Executive Director, Christian Diesveld as a voting Director of the Board, and Dr. Muhammad Mukhtar as the Special Advisor to the Chairman and shall be the appointed (Interim) Chief Executive Officer and a non-voting Director of the Board.
Mr. Shusterman is a Canadian citizen who has worked previously in various senior leadership positions for a number of companies in the healthcare industry and has work experience as the Vice Chairman and ‘Acting Chairman’ for the Company since being elected in April of this year.
Mr. Diesveld is a Canadian citizen and UK resident who has worked previously in various senior leadership positions for a number of companies, including, but not limited to, Hantian Labs Limited, a recent acquisition of the Company, where Mr. Diesveld was recently named UK CEO of the Year – Small Enterprise in the Health and Wellness sector
Dr. Mukhtar has served as a professor at the American University of Ras Al Khaimah (AURAK), United Arab Emirates. Before his arrival at AURAK, he served as Vice Chancellor/Professor of three Universities in Pakistan concomitantly – a unique honor for any academic leader. Through his wise academic leadership and innovative governance, he converted a regional higher education institution in Pakistan to one of the top-ranked in the country. Mukhtar received his Master and MPhil in the field of Biochemistry from Pakistan and his Ph.D. in biosciences from the Drexel University of Philadelphia, USA, and also completed a Graduate Certificate in Research Management from Thomas Jefferson University in Philadelphia, USA. He served in various academic/administrative positions in the USA on an outstanding scientist (O-1) visa.
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.
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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.
Liquidity and Capital Resources
As of September 30, 2017, the Company had a cash balance and a working capital deficiency of $283,118.
The Company is currently seeking funding for our continued operations. The Company intends to raise a minimum of $3,961,680 and a maximum of $10,000,000 in order to continue the awareness and branding campaign for
K.L.E.A.N.
(staycleanmed.org). There is no assurance that the Company will be able to raise the capital required to complete its goal and objectives and the Company is currently seeking capital to further its business plan. We will likely raise funds through either debt or issuing shares of our common stock in order to achieve our business goals. The issuance of additional shares or securities convertible into any such shares by us, any shares issued would dilute the percentage ownership of our current shareholders. There are no agreements with any parties at this point in time for additional funding; however, we are in discussions with potential accredited investors, private financiers, government funding sources in the United States, Canada, Australia, Europe, and United Arab Emirates.
The Company cannot assure investors that adequate revenues will be generated and there are no formal commitments with the Company, its shareholders, or Board of Directors to finance the Company in the state of an emergency or financial crisis. However, the success of the Company’s operations is dependent on attaining adequate revenue. In the absence of our projected revenues, the Company 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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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.
