Strategy
Our business strategy is designed to drive sales growth, maximize gross margin dollars and operating cash flow, capitalize on cost reduction opportunities and build customer loyalty, which we believe will result in the Company being a leading home healthcare provider. The company will rely on the dedication of its knowledgeable staff for the successful implementation of its business strategy. Key elements of this strategy include:
Diverse Product Selection
We carry a vast number of brand named products that are well recognized by our customers. These products will be well priced value products which are used on a regular basis by our customers.
Strong Customer Service
We believe the best customer is a happy customer and through third parties and directly, we provide a range of services to educate and tailor support to each senior customer.
Health Advance’s Position in the Health Care Industry
Favorable industry trends, such as those described above, provide the Company with continued opportunities to capitalize on its strengths in providing high quality health care services and building trust with its customers while at the same time educating the customer. The Company intends to strengthen its leadership position in this high growth category by improving operations, enhancing the quality of healthcare services provided to its customers and cultivating a professional environment which the Company believes attracts superior health care staff. A key element of this strategy is increased investment in technology to support the growing demand for health care services and reduce the administrative burden on staff, enabling them to dedicate more time to customer care. These initiatives will best position the Company to maximize profits and customer retention. The Company also intends to build market share in the health care category by continuing to offer the added convenience of expedited home delivery.
Driving Sales and Profitability
The Company intends to improve profitability by refining its merchandising mix through the introduction of new product categories and the tactical use of private label products. The focus on an improved product offering is intended to increase customer satisfaction, enhancing the attractiveness of Health Advance web experience as a destination for purchases of all health care needs. Simplifying e-store activities are also key elements of driving retail sales and profitability.
Marketplace
The US Industry
Market National healthcare spending will reach over $4.3 trillion by 2018, up from $1.42 trillion in 2001 and accounting for 20.3% of GDP according to the Centers for Medicare and Medicaid Services (CMS).
Currently, more than 130 million Americans live with a chronic condition, including Alzheimer’s disease, arthritis, cancer, cardiovascular disease, chronic obstructive lung disease, and diabetes. By 2020, about 157 million Americans will be affected by chronic illness, according to the US Department of Health and Human Services.
First Research estimates the number of Americans over 65 will double from 34 million to 62 million between 2000 and 2025. Currently, 90 million Americans live with chronic diseases. The research firm Rand estimates the number of Americans with two or more chronic conditions will increase from 60 to 81 million between the years 2000 and 2020.
Health Advance expects to see continued growth in the health care market driven by advances in medical technology, the growing trend toward shorter hospital stays and an ageing population. The Company believes as the baby boomer population ages, the already flourishing medical supply industry will experience a 20-year explosion in growth. The Company believes that it will be well positioned to participate in the future growth opportunities available in the home health care market.
Industry Trends
Over the next several years, Health Advance expects to benefit significantly from certain favorable demographic and industry trends, including:
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The rising healthcare and prescription drug needs of the ageing population
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A heightened focus on health and wellness by the baby boomers generation and the increasing demand for lifestyle drugs:
This segment of U.S. and Canadian society is also placing a greater emphasis on prevention and early diagnosis of medical conditions
and on the purchase of self-care products.
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Governmental Regulations
We are not subject to any local, state, federal and foreign governmental laws and regulations applicable to the distribution and resale of products. All the products marketed through Health Advance are developed and meet US specifications and stringent criteria by the US Federal Drug and Administration bodies, as well as Medicare and Medicaid US government social security operations.
Canadian Competition
We face competition from many retailers in the home healthcare and prescription drug business as the sale of these products is not restricted to pharmacy outlets. While the Canadian drug-retailing sector continues to be dominated by groups or chains and independents, the competitive environment has changed significantly in recent years with many new entrants targeting price sensitive consumers. The percentage of pharmacy outlets operated by non-traditional competitors, such as mass merchandisers and supermarkets, has increased over the past three years as they added pharmacy departments to their stores.
The Company’s competitors in the industry include independent operators, buying/banner groups such as Shoppers Drug Mart Home Health Care, IDA, Guardian, Pharma Plus, mass merchandisers such as Wal-Mart and Zellers, and large supermarket chains with prescription dispensing such as Loblaws, Sobey’s and Real Canadian Superstore.
We believe we will be well positioned to compete against many drug store chains, as well as supermarkets, mass merchandisers and independent drug stores by concentrating on providing high levels of professional service and a diverse product selection. The Company believes that consumers will pay for its value-added services and will be attracted to its large selection of home health care products and home delivery infrastructure.
US Competition
The distribution and manufacture of healthcare supplies and equipment is highly competitive. Many of the healthcare distribution products we sell are available to our customers from a number of other suppliers. In addition, our competitors could obtain exclusive rights from manufacturers to market particular products. Manufacturers also could seek to sell directly to end-users, and thereby eliminate or reduce our role and that of other distributors.
In North America, we compete with distributors, as well as several manufacturers primarily on the basis of price, breadth of product line, customer service and value-added products and services. Our primary competitors in the sale of medical products are the General Medical division of McKesson Corp., PSS World Medical, Inc. and the Allegiance division of Cardinal Health, Inc., which are national distributors.
Significant price reductions by our competitors could result in a similar reduction in our prices. Any of these competitive pressures may materially adversely affect our operating results.
Brick and mortar senior specialty stores - Generally speaking senior supply brick and mortar retail stores focus on high-end expensive equipment. Retails stores catering to seniors also provide very little price comparison or depth of product. They tend to focus on durable medical equipment items from one or two wholesalers and tend to focus on products that are covered by Medicare.
Large Chains - Increasingly with Walgreens, CVS, and Walmart are entering the smaller ticket item Durable Medical Equipment and Products areas, but their brand and product selection at any one store is limited. Many seniors in many States do not live near major cities and don’t have easy access to retail stores for their medical needs. With very little visibility consumers are turning to the internet for their home medical supplies.
Senior Websites - The biggest advantage derived by seniors, their care givers and family from using the internet is price comparison, product selection and reach (i.e. access to seniors who are not able to get to or drive to a retail location nearby). Today there are numerous companies on the web catering to the senior market. They fall or position themselves into four areas:
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Durable Medical Product Companies who cover a wide range of products and predominately are resellers.
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Lifestyle Companies who position themselves as a place to purchase luxury Senior care products
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Specialized web and TV direct response business sites specialize in certain areas such as Diabetes Care or Wheelchair/Power Chair mobility
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Content companies – that provide knowledge, content and care. Companies such as agingcare.com
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Growth Markets
Respiratory Diseases
According to COPD International, over 16 million people in the U.S. have respiratory diseases, including chronic obstructive lung disease, asthma, and chronic bronchitis. In 2002, these diseases had a total estimated cost of over $32.1 billion. In 2001, the NHBLI reports 12.1 million adults 25 and older were diagnosed with these diseases and as many as 14 million remain undiagnosed. These ailments require frequent treatment with oral medications and/or aerosol medications, which require a compressor or atomizing device during preparation.
Diabetes
Diabetes is the seventh leading cause of death among Americans, accounts for $98 billion in medical costs and lost productivity each year, according to the Centers for Disease Control and Prevention (cdc.org). In recent years, cases of type 2 (“adult onset”) diabetes have been on the rise in the United States; it is now considered a national epidemic. According to results of the 1999-2000 National Health and Nutrition Examination Survey, obesity is a major risk factor as more than 80% of people with type 2 diabetes are overweight, and an estimated 63% of US adults aged 20 and older are classified as overweight and almost 17 million Americans are estimated to have diabetes, 7 million of who are people ages 65 or older. We intend to launch an aggressive campaign to build up this sector of our business.
Mastectomy Supplies
Mastectomy supplies typically generate substantial revenues and high gross margins for home health care providers. Mastectomy products include items such as the prosthesis and special bras, sleep and swimwear. According to the National Institute of Health, breast cancer treatment costs nearly $7 billion.
Regular screening mammographies and self-examinations can result in increased early detection and treatment. With improved diagnostic and treatment technologies, survival rates are increasing, resulting in a rising number of post-mastectomy consumers for longer repeat purchase periods.
Ostomy Products
An ostomy is a surgically created opening in the body, which allows body fluids or excrement to escape into a collection device. Product focus areas including two piece, drainable pouches, cohesive seals, skin barrier protective products, irrigation products, tapes, adhesives and deodorants and accessories. Ostomy and Incontinence products market is expected to reach $11.2 billion by 2015, according to Global Industry Analysts.
Incontinence & Urological
The larger consumer base for adult incontinence, combined with this growth, has created opportunities for new products in the segment that respond to three major requirements—comfort, discretion and ease of use. As sufferers of incontinence seek more active lifestyles, they are demanding products that can work with them as they go about their daily lives.
Durable Medical Equipment
To address the growing senior market, our online site, Health Advance MD, carries a full spectrum of durable medical equipment, including:
Bath related Products key products, include: bidets, portable showers, wheel chair showers, bath traction, bidet accessories, inflatable bidets, inflatable commodes, bath in a bag, high-end bidet system for toilets, and hemorrhoid toilet supports systems.
Bed and Sleeping aids key products, include: bed rails, wedge pillows, mattress protectors, folding bed boards, air mattress overlays, bed protection, incontinence bed products, bed rails, and a range of beds for seniors
Bariatric key products include: obesity aids, bariatric aids, bariatric box-springs, bariatric ring cushions, bariatric home equipment, and extra large blood pressure cuffs.
Power Mobility Sales
As the population ages, people’s ability to walk and move around can be diminished, creating increased demand for power mobility equipment, such as power wheelchairs and scooter.
Operations
Product Sourcing
As sales increase, we believe that we will be in a position to negotiate large discounts from its suppliers indicating manufacturer confidence in our company. We will also source products from FDA approved manufacturers in China for private label purposes. We are also developing direct from manufacturer sourcing programs.
If our supplier is no longer be carrying given product: We may suppress the product altogether. We may keep the product on as a means to attract customers who may be interested in a discontinued product and then we up-sell them to the latest product from the same manufacturer. We have found that in many cases it is good to keep even discontinued older models active on our site. We also learn which products have been discontinued where there is demand and that may result in us considering finding or re developing such product direct from MFG.
We plan to carry a wide selection of products for post-operative and healthcare, and ranging from the following:
Aids To Daily Living, Ambulatory Products, Bath Safety, Bed Accessories, Catheters, Core Wound Care, Diabetic, Diagnostic equipment, Enteral Nutrition-Feeding, Home Diagnostics, Incontinence, Lift Chairs / Geri Chairs, IV Supplies, Needles / Syringes, Orthopedics, Ostomy, Pain Management, Patient Lifts & Acc, Personal Protection / Gloves, Professional Use and Diagnostics, Respiratory, Scooters & Accessories, Seating / Cushions, Specialty Medical Equipment & Accessories, Tracheostomy Care, Urologicals / Collection Device, Specialty Wound Care, Wheelchairs Accessories, and Womens-Infant Products.
Inventory
Currently, we are working on a cash basis with our suppliers and we have multiple suppliers to facilitate our purchases, therefore we do not have any formal agreements with our suppliers. Each supplier will handle the shipping of our product once the order is received. Our suppliers carry in excess of 10,000 products and with the drop-ship arrangements we will be able to operate more efficiently, and easily update and change our product mix based on changes in online demand for our products without having to financial risk of carrying inventory. Currently we have purchase accounts set up with Invacare, Briggs Healthcare and Complete Medical Supplies. As our operations increase we intend to formalize relationships with additional suppliers and will attempt to set up net 30-day terms with most suppliers.
System Management
We currently offer about 3,900 products through our website. In partnership with various vendors we plan to add another 6,000 products over the next 12 months. To optimize and keep current the pricing and product details we are running a routine database extraction mapping and rationalizing program outlined in some detail below.
We do not have any formal agreements in place with our suppliers. Currently, we have accounts set up with multiple wholesale distributors enabling us to make purchases with them. Since there are various vendors that we can make purchases from, we do not believe it is necessary to formalize any long-term contracts with any particular vendor.
We map the Health Advance MD Website to our preferred suppliers products’ database that contain a total of more than 10,000 unique products with all the latest pricing. This database is updated monthly by the supplier. Our programs extract the latest pricing and flag which products have been discontinued.
During our weekly product and pricing reviews we make decisions based on our database scan of our vendors systems. Each situation is unique and we assess the best strategy in terms of merchandising optimization. Scenarios that we evaluate and decision we make, include the following:
Optimizing Margins and Pricing
As a discounter we will need to make at least 23 % gross margin on any order after paying back the supplier and the paying other transaction costs. We use a rules based system to track and optimize profits and margins. We create and model numerous profitability scenarios daily by product, brand, region and inventory.
New Product Uploads: Our multi-vendor database is designed to correctly manage wholesalers data feeds to our database and shopping cart template, as well as upload data files and images feeds from third party FTP sites. These business rules enable us to categorize product correctly, guaranteeing that all products and images are properly visible and place correctly, and key word search terms are added on a timely basis to optimize search engine marketing.
Website Daily Maintenance & Support
We outsource our Website’s daily maintenance including new product uploading, shipping code management and updates from various vendors, management of our Access database, daily website HTML support and various updates and edits to the front-end of the website as needed.
Website Product Management
To streamline operations we have a strategic partner responsible for uploading data files and image feeds manually and from third party FTP sites to the Health Advance MD website. Their responsibilities include categorizing product correctly, guaranteeing that all products and images are properly visible and located in correct sub-categories on our website, making sure that the correct key word search terms are added in our shopping cart for each product, and matching correct shipping code and rates provided by different vendor.
Customer Service
There is a knowledge gap and fear today as elder citizens and their families fend for themselves through a range of medical complications. This provides an opportunity for a trusted knowledge service provider who will take the time to listen and solve problems specific to each customer’s unique product needs and concerns. Many medical needs for senior citizens are chronic, and life-long but are not life threatening. This creates a long term annuity business opportunity.
Customer Inquiry Management
We plan to establish an operating team to handle inbound customer calls in the US and Canada during the working hours from 8-8 pm Pacific. We will begin extended hours and provide support service for International inquiries in the second half of our operating year once we develop quality level standards that are consistent across multiple markets. We also plan to launch a live 24-hour nursing service hotline and 24-hour global customers handling by phone, email and chat within the first six months of operations once funding has been obtained.
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Level 1 - Simple questions that can be answered on the spot – i.e. order status, delivery costs, etc.
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Level 2 - More complex (Needs Analysis) questions – that require research with the wholesaler about availability, color, dimensions etc
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Level 3 - Product inquiries (Problem Solving) that for items we do not carry on our site, but may be able to source.
This requires significant research and may or may not be worth the investment. Within one-hour from receiving customer call,
we will complete research from various vendors if needed, confirm product availability and verify and product questions from
the prospective customer
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Customer - Privacy and Security
Health Advance has created this privacy statement in order to demonstrate our firm commitment to privacy. The following discloses our information gathering and dissemination practices for this web site.
We do not sell customer e-mail address or related information to third parties and unless customers join our mailing list they will not receive advertising e-mails from us. We track IP addresses for security reasons to discourage fraudulent activity attempts. By doing this we are making our customer shopping experience more safe and secure.
Our site uses cookies to keep track of customers shopping cart for multiple purchases while our customers are shopping with us. We do not require our customers to open an account with us in order to shop so each purchase session usually means you may need to re-enter your information.
Our site's registration form requires users to give us contact information, like their name and email address, and unique identifiers. We use customer contact information from the registration form to send the user information about purchases that have been processed. The customer's contact information is also used to contact the visitor when necessary if they have subscribed to the mail list. Users may opt-out of receiving future mailings by choosing to unsubscribe.
This site may contain links to other sites. We are not responsible for the privacy practices or the content of such web sites.
Order Fulfillment
Our order fulfillment is handling systematically when we are working with vendors whose systems can integrate with Health Advance MD. However, there are a number of product vendors and wholesalers with whom we have not integrated our systems.
Currently, management will process any order received. The order fulfillment process entails, checking and monitor for incoming orders (during US business Hours), verifying product inventory availability by calling wholesalers and checking their online catalogue and handling any clarifications with customer before charging their credit card.
Returns
We have a general set of standards we use to manage our returns process. Returns are accepted for the full product credit if received at our vendors warehouse within 30 days form the date of purchase. After 30 days, a minimum restocking fee of 15% will be applied to all returns. Merchandise returns are not accepted after 60 days from the date of purchase. Shipping cost refunds will not include reimbursing of the original shipping fees. The return process begins by calling our 1-800-386-4616 number or sending an email to info@healthadvanceinc.com. Return without an authorized number or an expired authorization number will not be accepted. Return merchandise must be in the same unit of measure as originally purchased. Refunds will not be granted for merchandise unsuitable for resale.
Sterile items, incontinence, underwear, etc and product that are made unsuitable for resale once opened are not returnable. Defective merchandise will be repaired or replaced based on the manufacturer’s policy. Our close-out and special orders are not returnable.
Shipping
We will have different drop-ship arrangements with each supplier. Generally we will allow each of our suppliers to decide which shipping company to use for a particular shipment. For domestic shipment orders our suppliers ship via Fedex, UPS Ground or United States Postal Service Priority Mail depending on the size and weight of the order. Small orders generally ship Priority Mail. Large orders generally ship by Fedex. Very small orders, at our discretion, may be sent via First Class Mail with a reduced shipping and handling charge. Health Advance offers “auto-ship” on frequently consumed items and we currently have an auto-ship program running for Incontinence products. At this time we do not offer free shipping as part of a plan to be as upfront as possible about our pricing while many companies build the shipping price into their products while supposedly offering free shipping. We would like to offer the lowest possible product price therefore we charge separately for shipping so the customer knows the exact cost of the product and the exact cost of the shipping.
International Shipments
Shipping charges for international orders vary greatly. For international shipping we have requested that customers email us with the items they are interested in buying with their address and the destination country. We email back international customers with information on ordering, including shipping and handling charges.
The Health Advance MD website is also planning to partner with Bongo International Parcel and mail forwarding to service our international customers. Bongo International provides its customers with their very own US address (not a P.O. Box). Once customers have a US address, they will be able to make purchases at our website as well as other US based online retailers. Bongo receives customer orders and logs them into their online system where they are consolidated with other orders. This process saves international customers up to 82% off typical international shipping rates.
Payment Handling
We accept payments today on a cash and carry basis that means we do not accept or process Medicare or Medicaid payments. For our website business, Health Advance has a merchant account and processes American Express, Visa, MasterCard, and Discover through the merchant service provider Merchant Warehouse, Inc.
Warranties
We act as a reseller and as such our product liability is mitigated through the warranty and liability coverage provided by the product manufacturers and distributors we work with. Each of our supplier and manufacturers who sell on our site provide a minimum of a one-year warranty on the products that we sell to protect the consumer from product defects. Health Advance will be an authorized dealer for all of the home medical equipment we sell. This means our customers can buy with knowing that the manufacturers provide their manufacturer’s warranty behind all the products we sell. Customers receive full warranties from the manufacturers when a customer purchases a product from Health Advance.
Typically the product manufacturers offer one-year warranty and product coverage parts & labor on any internal-wear of components & control-panel components. Any other product defects are addressed on an as-is basis. Customers can call our Toll-Free telephone number and we will direct them to the needed manufacturer to resolve their product warranty claims within the first year. After the first year we direct our customers directly to the manufacturers.
At this time we do not sell or offer any extended product warranties on any product we sell. These programs may exist with individual suppliers and from time to time we investigate this option for a customer.
Marketing and Sales
Marketing and Brand Recognition
Strategic communications are central to building and reinforcing the Health Advance brand. The Health Advance advertising, marketing and public relations strategy are expected to be established by the Company’s management and, where appropriate, implemented with the support of industry professionals. The Company’s marketing communications strategy will focus on both brand awareness as well as more traditional product/price advertising. Brand awareness advertising will focus on the Company’s health care services and private label products and is used to communicate to consumers that Health Advance is a market leader in terms of understanding consumer needs and bringing innovative products and services to market.
Market Segments
We have two distinct market channel segments: B2B – hospitals, elderly care facilities, hospitals, nursing facilities, clinics, schools, and private business practices. B2C - nurse practitioners, adult children of senior citizens and increasingly the senior citizens themselves.
Internet Sales and Home Delivery
Health Advance believes it can position itself to capitalize on e-commerce opportunities through its user friendly, state of the art website with the added benefit of the next day home delivery infrastructure. Health Advance’s e-commerce initiative will encompasses a dynamic web site configured to provide a comprehensive shopping experience for both professionals and customers. The web site is designed utilizing the latest in technology web software and high-end graphics providing pictures and descriptions of all items available for sale. Professionals will be able to either make purchases at a wholesale level or refer clients to make their own purchases. Health Advance will offer “auto-ship” on frequently consumed items.
We are also developing targeted marketing tie-ins with content providers to create and distribute co-produced content for blog spots, videos, webinars and internet direct response Infomercials. We also advertising on major search engines, affiliate markets and link exchanges, and social media sites that reach our target audiences. We are also increasingly using comparison shopping sites such as Amazon, Shopzilla, Nextag, and Shopping.com.
Sales Force
Health Advance will implement a strong sales force to call on our B2B channels. B2B – hospitals, elderly care facilities, hospitals, nursing facilities, clinics, schools, and private business practices. We believe success can be attained through an aggressive promotional campaign tailored to the medical profession. Fast delivery, great prices, and professional customer service will be our focus.
Sales reps will handle inbound calls to establish initial contact, qualify the consumer, identify the need and close the sale. Aggressive contact management efforts, outbound mailings and outbound phone calls by sales reps on active leads and established customers results in re-orders, cross selling opportunities and higher conversion rates than traditional mail-order businesses.
Telemarketing
Health Advance will also use telemarketing to reach out to its B2C customers and generate repeat sales within each market segment. We are in the process of launching a number of outreach marketing programs targeting nurse practitioners, adult children of senior citizens and increasingly the senior citizens themselves.
Web Site
We are looking at 6 approaches to the overall marketing. Health Advances’ first priority to drive web traffic organically through search engine optimization, online PR and social networking campaigns and sustained initiative. We will also evaluate the value of making key word purchases when we run campaign for a specific line of products. Thirdly, we will evaluate and test the return on investment from both direct email marketing and affiliate marketing.
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Search Engine Optimization
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Online PR – blogging and other online events and media
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Social Networking
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Direct - email marketing
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Media buys – keyword
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Affiliate marketing
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Along with other sales and marketing channels, successful search engine optimization is a key approach to drive web traffic and improve conversion for our web based property Health Advance MD.
Target the right search terms and phrases that are getting typed into search engines when consumers and professionals are looking for products that we carry. The strategy we are employing is a niche targeted marketing model. This requires a niche marketing approach where we focus in on a number of verticals and invest in marketing and driving traffic to those specific product lines.
We will link our web pages together so the search engine spiders can navigate easily through our website. Key word anchor text linking helps search engine spiders understand what we are offering from our website and will give you the advantage in ranking in natural search results. Keyword anchor text linking will be used as one of the methods of improving search engine optimization.
We have a consultant working with us on a range of online PR initiatives including writing producing, news articles, blogs, forums and press releases that highlight new product developments across the range of products line we carry. Online PR is another avenue for sending highly targeted visitors directly to our site and compliment our search engine optimization strategy.
Employees
As of July 31, 2012, we had one employee and two pat-time consultants to the Company.
ITEM 1A. RISK FACTORS
Much of the information included in this annual report includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections and estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
Such estimates, projections or other “forward looking statements” involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward looking statements”.
We have a limited operating history that you can use to evaluate us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company.
We were incorporated in Wyoming in April 14, 2010. With the exception of $1,202 in cash, and $1,164 in prepaid expenses, we have no significant financial resources and nominal revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities.
We will require financing to achieve our current business strategy and our inability to obtain such financing could prohibit us from executing our business plan and cause us to slow down our expansion of operations.
We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our capital requirements to implement our business strategy will be approximately $200,000. Moreover, in addition to monies needed to continue operations over the next twelve months, we anticipate requiring additional funds in order to implement our plan of operations. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if and when it is needed on terms we deem acceptable.
If we are unable to obtain financing on reasonable terms, we could be forced to delay or scale back our plans for expansion. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results, or financial condition.
Our auditor has expressed substantial doubt as to our ability to continue as a going concern.
Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. From inception to July 31, 2012 we have incurred a net loss of $177,333 and an accumulated deficit of $177,333. If we cannot generate sufficient revenues from our services, we may have to delay the implementation of our business plan.
Our future success is dependent, in part, on the performance and continued service of Jordan Starkman, our sole officer. Without his continued service, we may be forced to interrupt or eventually cease our operations.
We are presently dependent to a great extent upon the experience, abilities and continued services of Jordan Starkman, our Company’s Officer and Director. We currently do not have an employment agreement with Mr. Starkman. The loss of his services could have a material adverse effect on our business, financial condition or results of operation.
Our sole officer has a full time job which may interfere with his responsibilities to us.
Jordan Starkman, our sole officer and only employee will not be in a position to devote a substantial amount of his time to our company. Mr. Starkman believes that he can perform his duties sufficiently on a part time basis. It is possible that our plan of operations may be materially delayed to his limited work schedule with us.
We are selling our products in a highly competitive market and we are unsure as to whether there will be any consumer demand for our products.
We compete with companies that are larger and more capitalized than we are. Our competitors may be able to seize the same market opportunities that we are targeting. These competitors, either alone or with collaborative partners, may succeed in developing business models that are more effective or have greater market success than our own. The Company is especially susceptible to larger manufacturers that invest more money in marketing. Moreover, the market for our products is large but highly competitive. There is little or no hard data that substantiates the demand for our products or how this demand will be segmented. It is possible that there will be low consumer demand for our products, or that interest in our products could decline or die out, which would cause us to be unable to sustain our operations. The availability of health care supplies at lower or more competitive prices may cause potential customers to purchase products elsewhere which would negatively impact our business.
The ability to successfully deploy our business model is heavily dependent upon economic conditions in the United States and Canada.
The ability to successfully deploy our business model is heavily dependent upon the general state of the US and Canadian economy. We cannot assure you that favorable conditions will exist in the future. A general economic recession in the United States and Canada could have a serious adverse economic impact on us and our ability to obtain funding and generate projected revenues.
The healthcare industry is experiencing changes that could adversely affect our business.
The healthcare industry is highly regulated and subject to changing political, economic and regulatory influences. In recent years, the healthcare industry has undergone significant change driven by various efforts to reduce costs, including the reduction of spending budgets by government and private insurance programs, such as Medicare, Medicaid and corporate health insurance plans; pressures relating to potential healthcare reform; trends toward managed care; consolidation of healthcare distribution companies; consolidation of healthcare manufacturers; collective purchasing arrangements and consolidation among office-based healthcare practitioners; and changes in reimbursements to customers. Both our own profit margins and the profit margins of our customers may be adversely affected by laws and regulations reducing reimbursement rates for pharmaceuticals and/or medical treatments or services or changing the methodology by which reimbursement levels are determined. If we are unable to react effectively to these and other changes in the healthcare industry, our operating results could be adversely affected. In addition, the enactment of any significant healthcare reforms could have a material adverse effect on our business.
Expansion of group purchasing organizations (“GPO”) or hospital purchasing power and the multi-tiered costing structure may place us at a competitive disadvantage.
The medical-products industry is subject to a multi-tiered costing structure, which can vary by manufacturer and/or product. Under this structure, certain institutions are eligible for favorable pricing of medical products. The multi-tiered costing structure continues to expand as many large integrated healthcare providers and others with significant purchasing power, such as GPOs, demand more favorable pricing terms. This may threaten our ability to compete effectively, which could negatively impact our results of operations. Although we are seeking to obtain similar terms from manufacturers and obtain access to lower prices demanded by GPO contracts or other contracts, we cannot assure such terms will be obtained or contracts will be executed.
Because substantially all of the products that we intend to distribute will not be manufactured by us, we will be dependent upon third parties for the manufacture and supply of substantially all of our products.
We will obtain substantially all of our products from third-party suppliers. We do not expect to enter into long- term contracts with our suppliers. Therefore, suppliers may not provide the products we need in the quantities we request. Because we will not control the actual production of the products we intend to sell, we may be subject to delays caused by interruption in production based on conditions outside of our control. In the event that any of our intended third-party suppliers were to become unable or unwilling to continue to provide the products in required volumes, we would need to identify and obtain acceptable replacement sources on a timely basis. There is no guarantee that we would be able to obtain such alternative sources of supply on a timely basis, if at all. An extended interruption in the supply of any of our intended products, could have an adverse effect on our results of operations, which most likely would adversely affect the value of our common stock.
Increases in the cost of shipping or service issues with our third-party shippers could harm our business.
We pass through our shipping costs directly to our customers. We compete against store-front (retail) locations and if the shipping costs escalate whereby the cost is not prohibitive for the customer to shop online, we could potentially become less competitive thereby affecting our sales. Accordingly, any significant increase in shipping rates could have an adverse effect on our operating results. Similarly, strikes or other service interruptions by those shippers could cause our operating expenses to rise and adversely affect our ability to deliver products on a timely basis.
Our revenues will depend on our relationships with capable sales personnel as well as customers, suppliers and manufacturers of the products that we distribute.
Our future operating results will depend on our ability to maintain satisfactory relationships with qualified sales personnel as well as customers, suppliers and manufacturers. If we fail to maintain relationships with such persons or fail to acquire relationships with such key persons in the future, our business may be adversely affected.
The offering price of the shares should not be used as an indicator of the future market price of the securities. The offering price bears no relationship to the actual value of the company, and may make our shares difficult to sell.
Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $.10 for the shares of common stock was determined based on the price of shares sold in our private offering. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities.
We may incur significant costs to be a public company to ensure compliance with United States corporate governance and accounting requirements and we may not be able to absorb such costs.
We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations.
There is no assurance of a public market or that the common stock will ever trade on a recognized exchange. Therefore, you may be unable to liquidate your investment in our stock.
There is no established public trading market for our common stock. Our shares are not and have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with the National Association of Securities Dealers, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.
Our common stock is considered a penny stock, which is subject to restrictions on marketability, so you may not be able to sell your shares.
If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.
Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.
Other Risks
Trends, Risks and Uncertainties
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Our principal executive office location and mailing address is 3651 Lindell Rd. Suite #D155, Las Vegas, NV, 89103. Currently, this space is sufficient to meet our office and telephone facility needs; however, if we expand our business to a significant degree, we will have to find a larger space. In addition, the Company has facilities in Toronto, Ontario sufficient to sustain our office in Canada at a rental cost of $1,400 per month.
ITEM 3. LEGAL PROCEEDINGS
We are not presently parties to any litigation, nor to our knowledge and belief is any litigation threatened or contemplated.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.