UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Post-Effective Amendment No. 5
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLD HEALTH ALTERNATIVES, INC.
Florida
(State or jurisdiction of incorporation or organization)
7375
(Primary Std. Industrial Classification Code Number)
04-3613924
(IRS Employer ID Number)
300 Penn Center Boulevard
Pittsburgh, Pennsylvania 15235
(412) 829-7800
(Address and telephone number of principal executive offices)
300 Penn Center Boulevard
Pittsburgh, Pennsylvania 15235
(Address of principal place of business or intended principal place of business)
Brenda Hamilton, Esq.
2 E. Camino Real, Suite 202
Boca Raton, Florida 33432
(561)416-8956
(Name, address and telephone number of agent for service)
(All communications to)
Brenda Hamilton, Esq.
Hamilton, Lehrer & Dargan, P.A.
2 E. Camino Real, Suite 202
Boca Raton, Florida 33432
(561)416-8956 Telephone
(561)416-2855 Facsimile
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 Registration Statement number of the earlier effective
Registration Statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 Registration Statement number of the earlier effective
Registration Statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The prospectus forming a part of this registration statement combines common
stock offered pursuant to a previously filed and currently effective
registration statement on Form SB-2, Registration No.333-84934 pursuant to Rule
429 (a).
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities Amount Maximum Maximum Amount
to be to be Offering Price Aggregate of
Registered Registered per Share(3) Offering Price Fee(3)
- --------------------------------------------------------------------------------
Common Stock, 1,743,700 (1) $0.075 $130,777.50 $12.03(4)(5)
$0.001 par value:
Common Stock, 1,743,700 (2) $0.075 $130,777.50 $12.03(4)(5)
$0.001 par value:
- --------------------------------------------------------------------------------
TOTAL 3,487,400(3)(5) $0.075 $261,555.00 $24.06(4)(5)
- --------------------------------------------------------------------------------
(1) Consists of the 1,743,700 shares of common stock which were registered on
our original Form SB-2 registration statement that was filed on March 26, 2002
and declared effective by the Securities and Exchange Commission on June 28,
2002.
(2) Consists of the 1,743,700 additional shares of common stock issued as a
result of our October 7, 2002 two (2) for one (1) share forward stock split.
(3) Estimated solely for the purpose of computing the registration fee required
by the Securities Act and computed pursuant to Rule 457.
(4) The Prospectus included in and forming a part of this Registration Statement
includes shares of common stock consisting of (a) the original 1,743,700 shares
of common stock previously registered on our Form SB-2 Registration Statement
filed with the Securities and Exchange Commission on March 26, 2002,
Registration No. 333-84934, declared effective on June 28, 2002; (b) 1,743,700
shares of common stock which we issued as a result of our October 7, 2002 stock
split. A filing fee of $24.06 has previously been paid for the registration of
the 3,487,400 shares of common stock which was computed pursuant to Rule 457
under the Securities Act of 1933.
(5) This Registration Statement shall also cover any additional shares of common
stock which become issuable by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt of
consideration which results in an increase in the number of outstanding shares
of common stock.
Selling shareholders hold all of the shares being registered. Our shares are
quoted on the Over-the-Counter Bulletin Board under the symbol "WHAI". We will
not receive proceeds from the sale of shares from the selling shareholders.
EXPLANATORY NOTE
On March 26, 2002, we filed Registration No. 333-84934 on Form SB-2, which was
declared effective on June 28, 2002. In addition, on October 23, 2002, we filed
Post Effective Amendment Number 2 to the Form SB-2, to provide information
relating to our two (2) for one (1) share forward stock split. On January 13,
2003, we filed Post Effective Amendment Number 3 to the Form SB-2 to provide
information pertaining to an agreement we entered into to acquire Better
Solutions, Inc., a medical staffing company.
We are filing this Post Effective Amendment Number 5 to the Form SB-2
Registration Statement to provide information pertaining to our acquisition of
Better Solutions, Inc. which was completed on February 20, 2003, including:
o Better Solutions, Inc. becoming our wholly owned subsidiary;
o Our previous officers and directors, Edward G. Siceloff and Joseph L. Prugh,
resigning all positions they held with us;
o Richard E. McDonald becoming our President, Principal Financial Officer,
Principal Accounting Officer, and Chairman of the Board of Directors;
o Marc D. Roup becoming our Chief Executive Officer and a Director;
o Issuing 16,500,000 shares of our common stock which represents approximately
41% of our common stock to Richard E. McDonald;
o Issuing 16,500,000 shares of our common stock which represents approximately
41% of our common stock to Marc D. Roup;
o As a result of the issuance of an aggregate amount of 33,000,000 shares of
stock to Marc D. Roup and Richard E. McDonald, a change in the voting
control of our common stock occurring;
o Edward G. Siceloff, our prior president and director, retiring 39,500,000 of
the 40,003,000 shares held by him after which he held 503,000 shares of our
common stock;
o Joseph L. Prugh, our prior director, retiring 8,000,000 of the 8,006,000
shares held by him after which he held 6,000 shares of our common stock; and
o Better Solutions, Inc.'s medical staffing business becoming integrated into
our business.
We hereby amend this Registration Statement on such date or dates as may be
necessary to delay its effective date until we shall file a further amendment
which specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of 1933
or until this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
PROSPECTUS COVER PAGE
WORLD HEALTH ALTERNATIVES, INC.
3,487,400 SHARES OF OUR COMMON STOCK ARE BEING OFFERED BY SELLING SHAREHOLDERS
Our current shareholders are offering 3,487,400 shares of our common stock. Two
of our selling shareholders sold an aggregate of 1,400,000 shares of our common
stock, which were originally registered on our SB-2 Registration Statement, in
private transactions as follows: On October 29, 2002, Tommi Ferguson sold
500,000 shares of her common stock to David Wood for a price of $12,000 in a
private transaction. On November 6, 2002, Tommi Ferguson sold 250,000 shares of
her common stock to David Mehalick for a price of $5,000 in a private
transaction. On October 8, 2002, Barry Gewin sold 500,000 shares of our common
stock to David Wood for a price of $10,000 in a private transaction. On November
18, 2002, Barry Gewin sold 150,000 shares of our common stock to David Mehalick
for a price of $3,000 in a private transaction. We are unaware of any other
Selling Shareholders who sold shares of our common stock which were previously
registered on our Form SB-2 Registration Statement.
Our common stock is quoted on the Over-the-Counter Bulletin Board under the
symbol ("WHAI"). There is no trading market for our common stock.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. Our
selling shareholders may not sell these securities until the Registration
Statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to sell these securities in any state where the offer or sale is not
permitted.
The date of this Post Effective Amendment Number 5 is March 3, 2003.
Underwriting Estimated
Price to Discounts and Offering Proceeds to
Public Commissions Expenses (1) Company (2)
- -----------------------------------------------------------------------------
Per Share $0.075 N/A N/A N/A
- -----------------------------------------------------------------------------
Total $0.0 $0.0 $0.0 $0.0
- -----------------------------------------------------------------------------
(1) Does not include offering costs, including filing, legal, accounting and
miscellaneous fees incurred or expected to be incurred of approximately
$30,524.06. We have agreed to pay all the costs of this offering. Selling
shareholders will pay no offering expenses.
(2) We will not receive proceeds from the sale of shares from the selling
shareholders.
The date of this Post Effective Amendment Number 5 is March 3, 2003.
1
INSIDE FRONT AND OUTSIDE BACK COVER OF PROSPECTUS
Until 90 days after the date of this prospectus, or until _______________, 2003,
all dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealer's obligation to deliver a prospectus when acting as
underwriters and with respect to their sold allotments or subscriptions.
2
TABLE OF CONTENTS
Page
PART I - INFORMATION REQUIRED IN PROSPECTUS
ITEM 1. Front of Registration Statement and Outside Front Cover
of Prospectus....................................................... 1
ITEM 2. Inside Front and Outside Back Cover Pages of Prospectus..............2
ITEM 3. Summary Information and Risk Factors ................................4
If we are unable to obtain funding, we may be unable to implement
the plan of operations for our website business and expansion
plans for our medical staffing business which may cause you to
lose your entire investment; even if we obtain financing, your
investment in our common stock will be diluted.....................7
Because we do not have a recognizable brand name our revenues and
potential profitability may be adversely affected..................7
We face trademark protection risks that may negatively affect our
brand name reputation, revenues and financial condition............7
Because our prior management has no experience in assessing
potential business acquisitions, our acquisition of Better
Solutions, Inc. may not be profitable to our operations............7
Because our new management has limited experience in the medical
staffing business and no experience in our website business,
we may not become profitable and you will lose your investment
in our common stock................................................8
Because we have a limited operating history it will be difficult
for you to evaluate our business...................................8
The replacement of our management with the management of Better
Solutions, Inc. may be detrimental to our operations...............8
All of our management decisions are made by our President/Principal
Financial Officer/Principal Accounting Officer/Chairman of
the Board of Directors, Richard E. McDonald, and our Chief
Executive Officer/Director, Marc D. Roup; if we lose their
services, we will have to cease our operations.....................8
Our management has significant control over stockholder matters,
which may affect the ability of minority stockholders to
influence our activities...........................................8
Our operations are subject to possible conflicts of interest;
there are no assurances that we will resolve these conflicts
in a manner favorable to our minority shareholders.................9
We may be unable to overcome the competitive advantages of our
Internet competitors with websites similar to ours, which will
negatively affect our revenues.....................................9
Our potential customers can purchase the same nutritional
products from our wholesale suppliers which may negatively
affect our sales. The loss of any of our third party suppliers
could lead to increased costs and losses from our website
operations.........................................................9
Federal, state and local government regulations pertaining to
the sale of our website products may lead to increased costs
and decreased revenues, both of which may negatively affect
our potential profitability........................................9
We may be unable to overcome the competitive advantages of our
medical staffing competitors, which may negatively affect our
revenues..........................................................10
Expansion of our existing medical staffing business will require
substantial costs which may lead to losses........................10
Fluctuations in patient occupancy at our clients' hospitals
and healthcare facilities may adversely affect the demand for
our services, reduce our revenues and prevent us from being
profitable........................................................10
If we fail to effectively manage our expanding operations, our
financial condition will be adversely affected....................10
Healthcare reform and other healthcare related measures may
negatively impact our business opportunities, revenues and
price margins.....................................................10
We operate in a highly regulated industry; changes in regulations
or violations of regulations may result in increased costs or
sanctions that could reduce our revenues and profitability........11
If we are unable to attract qualified nurses and healthcare
professionals for our healthcare staffing business, our brand
name reputation, revenues and potential profitability will be
negatively impacted...............................................11
Because our revenues are dependent upon the temporary staffing
needs of our clients and we do not have long term or exclusive
agreements with them, our business is dependent upon our ability
to secure new staffing assignment orders from our clients; if
we fail to successfully secure such orders, our revenues will
be negatively affected............................................11
Our medical staffing business may subject us to damages and
litigation costs which may negatively affect our potential
profitability.....................................................12
Should the proper functioning of our information systems be
adversely affected, our basic business functions and brand
name reputation will be negatively affected.......................12
Our operations may deteriorate if we are unable to continue to
attract, develop and retain our sales personnel...................12
We may not meet the proposed National Association of Security
Dealer exchange listing requirements, which may lead to
increased investment risk and inability to sell your shares.......13
Because our common stock is a penny stock, any investment in
our common stock is a high-risk investment and is subject
to restrictions on marketability; you may be unable to sell
your shares.......................................................13
ITEM 4. Use of Proceeds.....................................................13
ITEM 5. Determination of Offering Price.....................................13
ITEM 6. Dilution............................................................13
ITEM 7. Selling Shareholders................................................13
ITEM 8. Plan of Distribution................................................14
ITEM 9. Legal Proceedings...................................................17
ITEM 10. Directors, Executive Officers, Promoters and Control Persons........17
ITEM 11. Security Ownership of Certain Beneficial Owners.....................19
ITEM 12. Description of Securities...........................................20
ITEM 13. Interest of Named Experts and Counsel...............................20
ITEM 14. Disclosure of Commission Position on Indemnification................21
ITEM 15. Organization Within Last Five Years.................................21
ITEM 16. Description of Business.............................................22
ITEM 17. Management's Discussion and Analysis or Plan of Operation...........39
ITEM 18. Description of Property.............................................46
ITEM 19. Certain Relationships and Related Transactions......................47
ITEM 20. Market for Common Equity and Related Stockholder Matters............48
ITEM 21. Executive Compensation..............................................50
ITEM 22. Financial Statements................................................51
ITEM 23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.................................52
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers...........................52
ITEM 25. Other Expenses of Issuance and Distribution.........................53
ITEM 26. Recent Sales of Unregistered Securities.............................53
ITEM 27. Exhibits............................................................58
ITEM 28. Undertakings........................................................59
3
ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This prospectus contains statements about our future business operations that
involve risks and uncertainties. Our actual results could differ significantly
from our anticipated future operations as a result of many factors, including
those identified under the "Risk Factors" section of this prospectus beginning
on page 4. The prospectus summary contains a summary of all material terms of
the prospectus. You should carefully read all information in the prospectus,
including the Financial Statements and their explanatory notes, under the
Financial Statements section beginning on page 51, prior to making an investment
decision.
HOW WE ARE ORGANIZED
We were incorporated in the State of Florida on February 13, 2002. We were
formed to sell vitamins, minerals, herbs, spices, homeopathic, and aromatherapy
products through our website located at www.worldhealthalternatives.com. Even
though our website has been operational since March 25, 2002, our website has
failed to generate revenues.
On February 20, 2003, we completed our acquisition of 100% of the outstanding
common stock of Better Solutions, Inc. from its two shareholders, Marc D. Roup
and Richard E. McDonald in exchange for newly issued shares of our common stock.
As a result of this transaction:
o Better Solutions, Inc. became our wholly owned subsidiary;
o Our previous officers and directors, Edward G. Siceloff and Joseph L. Prugh,
resigned all positions they held with us;
o Richard E. McDonald became our President, Principal Financial Officer,
Principal Accounting Officer, and Chairman of the Board of Directors;
o Marc Roup became our Chief Executive Officer and Director;
o We issued 16,500,000 shares of our common stock which represents
approximately 41% of our common stock to Richard E. McDonald;
o We issued 16,500,000 shares of our common stock which represents
approximately 41% of our common stock to Marc D. Roup;
o As a result of the issuance of an aggregate amount of 33,000,000 shares of
stock to Marc D. Roup and Richard E. McDonald, a change in the voting
control of our common stock occurred.
o Edward G. Siceloff, our prior president and director retired 39,500,000 of
the 40,003,000 shares held by him after which he held 503,000 shares of our
common stock;
o Joseph L. Prugh, our prior director, retired 8,000,000 of the 8,006,000
shares held by him after which he held 6,000 shares of our common stock;
and
o Better Solutions, Inc.'s medical staffing business became integrated into
our business.
We are authorized to issue 200,000,000 shares of common stock of which
40,595,400 shares are issued and outstanding, taking into account our two (2)
shares for one (1) share forward stock split effective October 7, 2002. We are
authorized to issue 100,000,000 shares of preferred stock, $.0001 par value, of
which no shares are issued and outstanding.
WHERE YOU CAN FIND US
As of February 20, 2003, our principal executive offices are located at 300 Penn
Center Boulevard, Pittsburgh, Pennsylvania. Our telephone number is
(412)829-7800.
ABOUT OUR BUSINESS
We own and operate a website at www.worldhealthalternatives.com. The website
component of our business has had limited operations, no revenues, and sustained
losses since our inception. On March 25, 2002, we established our website at
www.worldhealthalternatives.com which consists of a shopping cart and searchable
database of the products that we offer. We offer approximately 1,500 products
consisting of vitamins, minerals, herbs, spices, homeopathic, and aromatherapy
products. We plan to order our products through third party suppliers who fill
the orders placed on our website.
4
Our current business plans over the next twelve (12) months regarding our
website sales of minerals, herbs, spices, homeopathic, and aromatherapy products
is to update the design, graphics, and functional aspects of our website,
increase the quantity of products that we sell by locating additional suppliers,
establish an incentive program for our repeat customers, conduct limited
advertising, and establish a database of articles about nutritional and
homeopathic subjects. Certain aspects of our plan of operations pertaining to
our website nutritional sales have been delayed due to our lack of financing.
As a result of our acquisition of Better Solutions, Inc., since February 20,
2003, we also conduct a medical staffing business under the name MedTech which
provides staffing services to hospitals and other healthcare related facilities.
These staffing needs include nurses, doctors, pharmacists, and medical
technicians. We currently have branch offices in Pittsburgh, Pennsylvania;
Cleveland, Ohio; and Boca Raton, Florida from which we conduct sales of our
staffing services. Over the next twelve months, we will attempt to expand our
medical staffing business by opening branch offices in Washington, D.C.,
Baltimore, Maryland and Columbus, Ohio and by conducting an advertising,
marketing and branding campaign in the sales regions covered by our branch
offices.
Both our website product sales business and our medical staffing business may
require additional financing. We may experience additional delays in our plan of
operations unless we obtain financing. There are no assurances that we will have
sufficient funds to accomplish our objectives or otherwise develop our business
plans.
THE OFFERING:
This offering is comprised entirely of shares of our common stock held by our
selling shareholders. Our selling shareholders are offering 3,487,400 shares of
our common stock. Of these shares, 3,487,400 shares were previously registered
by us.
Although we have agreed to pay all offering expenses, we will not receive any
proceeds from the sale of the shares by the selling shareholders. We anticipate
offering expenses of approximately $30,524.06.
Our current shareholders are offering 3,487,400 shares of our common stock. Our
common stock is quoted on the Over the Counter Bulletin Board under the symbol
("WHAI"). There is no public market for our common stock.
5
OUR FINANCIAL SUMMARY:
Because this is only a financial summary, it does not contain all the financial
information that may be important to you. Therefore, you should also carefully
read all the information in this prospectus, including the Financial Statements
and their explanatory notes before making an investment decision.
World Health Alternative, Inc.
Summary Pro Forma Data
Historical
WHAI Better Solutions, Inc.
Twelve months Twelve months
ended ended
November 30, 2002 December 31, 2002 Pro forma
----------------- --------------------- ----------
Revenues earned $ - $ 2,796,911 $2,796,911
Cost of revenues earned - 1,781,865 1,781,865
---------- ----------- ----------
Gross profit - 1,015,046 1,015,046
Operating expenses:
Selling, general and admn expense 179,690 865,904 1,045,594
---------- ----------- ----------
Total operating expenses 179,690 865,904 1,045,594
Loss from operations (179,690) 149,142 (30,548)
Other expense
Interest expense, net - 71,041 71,041
---------- ----------- ----------
Net (Loss) Income $ (179,690) $ 78,101 $ (101,589)
========== ============ ==========
Basic net loss per share $ (0.00) $ (0.00)
========== ============ ==========
Weighted average shares
outstanding 50,998,127 37,967,400
========== ============ ==========
Fully diluted net loss per share $ (0.00) $ (0.00)
========== ============ ==========
Balance sheet data:
Working capital (6,599) 117,394 110,795
Total assets 4,227 266,696 270,923
Total long term debt - - -
Stockholders' equity (2,469) 160,754 158,285
6
RISK FACTORS
RISK FACTORS PERTAINING TO OUR ENTIRE OPERATIONS
If we are unable to obtain funding, we may be unable to implement the plan of
operations for our website business and expansion plans for our medical staffing
business which may cause you to lose your entire investment; even if we obtain
financing, your investment in our common stock will be diluted.
Our plans pertaining to our medical staffing business and website product sales
are dependent upon us receiving financing that we may never obtain. If we are
unable to obtain financing, we will have to curtail or cease our operations. We
may have to seek financing through traditional bank financing or a debt or
equity offering. However, financial institutions may not provide us with
financing or we may be unable to conduct a debt or equity offering, in which
case you may lose your entire investment. In addition, even if we obtain
financing through a debt or equity offering, as a result of additional issuances
of our common stock, our shareholders will experience dilution of their
ownership interest.
Because we do not have a recognizable brand name our revenues and potential
profitability may be adversely affected.
Because our website at www.worldhealthalternatives.com was recently developed,
has only limited operations and has not conducted any advertising, it has no
name recognition. Our MedTech name, through which we operate our medical
staffing business, has limited name recognition. In addition, future recognition
of our Medtech name is dependent upon our ability to succeed in our marketing
efforts, provide high quality healthcare professionals to our clients, and
increase our client base. We face significant risks pertaining to establishing a
positive reputation for our brand names, including competing with the
established recognizable trade names of our competitors and having only limited
financial resources to develop recognition of our brand name. Accordingly, we
may be unable to develop our brand name to generate sufficient revenues to make
us profitable.
We face trademark protection risks that may negatively affect our brand name
reputation, revenues and financial condition.
Even though we have applied for protection of our MedTech name, our "$2.00
Employee" and our "HR MedTech" names that we use in our medical staffing
business, the United States Patent and Trademark Office may never approve these
trademarks.We have not applied for protection of the World Health Alternatives
name nor do we intend to do so. Development of our brand name reputation depends
on our ability to develop and protect our name, World Health Alternatives,
MedTech, "$2.00 Employee" and HR MedTech. Our use of these names may violate the
proprietary rights of others which may subject us to damage awards or judgments
prohibiting the use of our names. In addition, our failure to apply for
trademark protection of World Health Alternatives may cause our competitors to
adopt company names, products, or service names similar to ours. If we fail to
provide adequate proprietary protection the trade names we use in our business,
our brand name reputation, revenues and financial condition may be negatively
affected.
Because our prior management has no experience in assessing potential business
acquisitions, our acquisition of Better Solutions, Inc. may not be profitable to
our operations.
We relied exclusively upon the judgment of our former Chief Executive Officer,
Edward G. Siceloff, to locate and select possible acquisition candidates for our
business. However, Edward G. Siceloff has no experience in evaluating the
financial, operational and management components of potential business
acquisitions. Accordingly, if our former Chief Executive Officer failed to
conduct adequate due diligence into Better Solutions, Inc., our February 20,
2003 acquisition of Better Solutions, Inc. may be subject to the following
risks:
o Better Solutions, Inc.'s business being uncomplimentary to our current
business;
o Diversion of our new management's attention from our current nutritional
product business as a result of new management focusing on the medical
staffing aspect of our business;
o Assumption of any unforeseen legal claims against Better Solutions, Inc.; and
o Our management's failing to operate our business profitably.
The occurrence of any of these risks will negatively affect our operations and
potential revenues and increase our losses.
7
Because our new management has limited experience in the medical staffing
business and no experience in our website business, we may not become profitable
and you will lose your investment in our common stock.
Apart from operating its current medical staffing business for the past three
years, our management has no other experience in the medical staffing business.
In addition, our current management has no experience in selling vitamins,
minerals, herbs, spices, homeopathic, and aromatherapy products. Accordingly, we
may be unsuccessful in marketing and distributing our medical staffing services
or in selling the nutritional products that we offer on our website, which will
negatively affect our ability to become profitable.
Because we have a limited operating history it will be difficult for you to
evaluate our business.
Our website has only been operational since March 2002 and has generated no
revenues. Although Better Solutions, Inc. has conducted business since December
1999, their medical staffing business did not become part of our business until
February 2003. Accordingly, because we have only a limited operating history,
you will have difficulty evaluating our business and future prospects.
The replacement of our management with the management of Better Solutions, Inc.
may be detrimental to our operations.
The acquisition of Better Solutions, Inc. has resulted in Better Solutions,
Inc.'s management/shareholders, Messrs. Roup and McDonald, obtaining
approximately 78 percent of our common stock and our prior management's has been
replaced with Better Solutions, Inc.'s management. No assurance can be given as
to the experience or qualifications of our new management in our future
operations and whether they will benefit our future financial performance.
All of our management decisions are made by our President/Principal Financial
Officer/Principal Accounting Officer/Chairman of the Board of Directors, Richard
E. McDonald, and our Chief Executive Officer/Director, Marc D. Roup; if we lose
their services, we will have to cease our operations.
The success of our business is dependent upon our President/Principal Financial
Officer/Principal Accounting Officer/Chairman of the Board of Directors, Richard
E. McDonald, and our Chief Executive Officer/Director, Marc D. Roup. Because
Messrs. McDonald and Roup are essential to our operations, you must rely solely
on their management decisions. Although we have "key man" life insurance with
Messrs. McDonald and Roup, we have no agreement with them that would prevent
them from leaving us. There is no assurance that we would be able to hire and
retain another President/Chairman of the Board of Directors/Principal Financial
Officer/Principal Accounting Officer and Chief Executive Officer/Director to
replace Messrs. McDonald and Roup. As a result, the loss of either Mr. McDonald
or Mr. Roup would have a materially adverse affect upon our business.
Our management has significant control over stockholder matters, which may
affect the ability of minority stockholders to influence our activities.
Our Chief Executive Officer, Marc D. Roup, owns approximately 40 percent of our
outstanding common stock. Our President/Principal Financial Officer/Principal
Accounting Officer/Chairman of the Board of Directors, Richard E. McDonald, owns
approximately 38 percent of our outstanding common stock. As such, Messrs. Roup
and McDonald collectively own 78 percent of our common stock and control the
outcome of all matters submitted to a vote by the holders of our common stock,
including the election of our directors, amendments to our certificate of
incorporation and approval of significant corporate transactions. Additionally,
Messrs Roup and McDonald could delay, deter or prevent a change in our control
that might be beneficial to our other stockholders.
8
Our operations are subject to possible conflicts of interest; there are no
assurances that we will resolve these conflicts in a manner favorable to our
minority shareholders.
Although our Chief Executive Officer, Marc D. Roup, is not currently involved in
other business activities, he may become involved in other business activities
in the future. Our President/Principal Financial Officer/Principal Accounting
Officer/Chairman of the Board of Directors, Richard E. McDonald, is currently
involved in other business activities, including his position as the Chief
Financial Officer of Dr. Ice, Inc., a sports and recreation complex under
construction in Pittsburgh, Pennsylvania. Mr. McDonald may be involved in future
business activities. If other business opportunities become available, our
officers/directors may face a conflict in selecting between our business
objectives and their own. We have not formulated a policy for the resolution of
such conflicts. Future transactions or arrangements between or among our
officers, directors and shareholders, and companies they control, may result in
conflicts of interest, which may have an adverse affect on the rights of
minority shareholders, our operations and our financial condition.
RISK FACTORS PERTAINNG TO OUR WEBSITE SALES OF VITAMINS, MINERALS, HERBS,
SPICES, HOMEOPATHIC AND AROMATHERAPY PRODUCTS
We may be unable to overcome the competitive advantages of our Internet
competitors with websites similar to ours, which will negatively affect our
revenues.
Because many of our Internet website competitors have greater financial and
technical resources and larger customer bases than us, we will have difficulties
competing in the sale of nutritional products. We will compete against thousands
of competitors in a highly fragmented market in which cost barriers to entry are
low. If we are unable to overcome these competitive disadvantages, our potential
revenues will be negatively affected.
Our potential customers can purchase the same nutritional products from our
wholesale suppliers, which may negatively affect our sales.
Our potential customers can purchase the same nutritional products that we offer
from our wholesale suppliers. If a substantial percentage of our prospective
clientele make arrangements with our suppliers, our product sales will be
negatively affected.
The loss of any of our third party suppliers could lead to increased costs and
losses from our website operations.
We have three (3) suppliers which provide us with our nutritional products. If
we lose any of our suppliers, we will be forced to seek other suppliers with
different product lines and possibly at greater cost to us. In addition, we will
have additional costs from having to reconfigure the shopping cart describing
the products on our website. Additionally, we could incur increased advertising
costs from introducing new product lines. Should these suppliers cease to
provide us with products, our operations and financial condition will be
negatively affected.
Federal, state and local government regulations pertaining to the sale of our
website products may lead to increased costs and decreased revenues, both of
which may negatively affect our potential profitability.
The Federal Drug Administration and state or local licensing authorities may
impose new government regulations that may impede the sale of vitamins,
minerals, herbs, and homeopathic products. These regulations may increase our
costs or expose us to possible regulatory actions which may negatively affect
our potential profitability.
9
RISK FACTORS PERTAINING TO OUR MEDICAL STAFFING BUSINESS
We may be unable to overcome the competitive advantages of our medical staffing
competitors, which may negatively affect our revenues.
The medical staffing business is highly competitive and includes thousands of
companies located nationally, regionally and locally. Because many of these
competitors have greater financial, marketing, and technical resources and
larger customer bases than us, we will have difficulties competing against these
competitors that are located in such fragmented markets. If we are unable to
overcome these competitive disadvantages, our potential revenues will be
negatively affected.
Expansion of our existing medical staffing business will require substantial
costs which may lead to losses.
We plan to expand our medical staffing business by opening new sales branch
locations. Our ability to open new branches depends on a number of factors,
including identifying, attracting and retaining local management and securing
favorable locations on acceptable terms. If our ability to open new branches is
impaired, our revenues may be adversely affected. In addition, if our existing
locations do not develop as quickly as we anticipate, or if we fail to integrate
our new branches effectively into our business, our results of operations may be
adversely affected. We may not have sufficient funds to implement our expansion
plans and our increased costs may affect our ability to become profitable and
increase our losses.
Fluctuations in patient occupancy at our clients' hospitals and healthcare
facilities may adversely affect the demand for our services, reduce our revenues
and prevent us from being profitable.
The demand for our healthcare staffing services is affected by the general level
of patient occupancy at our clients' hospital and healthcare facilities. As
patient occupancy increases, hospitals and other healthcare facilities often add
temporary employees before full-time employees are hired. In contrast, as
patient occupancy decreases, hospitals and other healthcare facilities typically
reduce their use of temporary employees before undertaking layoffs of their
regular employees. Accordingly, any such patient occupancy decreases will
negatively affect our revenues and potential profitability.
If we fail to effectively manage our expanding operations, our financial
condition will be adversely affected.
Since incorporating the medical staffing business into our operations, we have
increased the number of our employees from 1 to 133. Over the next year, we plan
to grow our medical staffing business by opening up 3 additional branch offices
and adding 230 additional staffing placement personnel. Our growth will place
significant demands on our managerial, financial, operational and information
systems. If our management fails to manage our growth efficiently, our financial
condition will be adversely affected.
Healthcare reform and other healthcare related measures may negatively impact
our business opportunities, revenues and price margins.
The United States Congress has considered several comprehensive healthcare
reform proposals to control increasing healthcare costs through legislation,
regulation and voluntary agreements with medical care providers and drug
companies. These proposals were generally intended to expand healthcare coverage
for the uninsured and reduce the growth of total healthcare expenditures. While
the proposals were not adopted, similar proposals may be approved in the future
which may lead to hospitals and other healthcare facilities reducing their costs
and spending less on healthcare staffing. If this were to occur, we will have
fewer business opportunities and our revenues will be adversely affected. State
governments have attempted to control increasing healthcare costs by proposing
legislation that would limit the amounts that temporary staffing companies may
charge. In addition, several state governments are discussing the implementation
of a sales tax to be imposed upon staffing services such as ours. These laws
would adversely affect our business opportunities, revenues and margins.
10
We operate in a highly regulated industry; changes in regulations or violations
of regulations may result in increased costs or sanctions against us that could
reduce our revenues and prevent us from being profitable.
The healthcare industry is subject to extensive and complex federal and state
laws and regulations related to professional licensure, conduct of operations,
payment for services and payment for referrals. If we fail to comply with the
laws and regulations that are directly applicable to our business, we could
suffer civil and/or criminal penalties or be subject to injunctions or cease and
desist orders. The extensive and complex laws that apply to our hospital and
healthcare facility clients could indirectly affect the demand or the prices
paid for our services. For example, our hospital and healthcare facility clients
could suffer civil and/or criminal penalties and/or be excluded from
participating in certain programs if they fail to comply with the laws and
regulations applicable to their businesses. In addition, our hospital and
healthcare facility clients could receive reduced reimbursements, or be excluded
from coverage, because of a change in the rates or conditions set by federal or
state governments. In turn, violations of or changes to these laws and
regulations that adversely affect our hospital and healthcare facility clients
could also adversely affect the prices that these clients are willing or able to
pay for our services.
If we are unable to attract qualified nurses and other healthcare professionals
for our healthcare staffing business, our brand name reputation, revenues and
potential profitability will be negatively impacted.
We rely significantly on our ability to attract and retain nurses and other
healthcare professionals who possess the skills, experience and licenses
necessary to meet the requirements of our clients. We compete for healthcare
staffing personnel with other temporary healthcare staffing companies and with
hospitals and healthcare facilities. We must continually evaluate and expand our
temporary healthcare professional network to keep pace with our hospital and
healthcare facility clients' needs. Currently, there is a shortage of qualified
nurses in most areas of the United States, competition for nursing personnel is
increasing, and salaries and benefits have risen. Our ability to attract and
retain temporary healthcare professionals depends on several factors, including
our ability to provide temporary healthcare professionals with assignments that
they view as attractive and to provide them with competitive benefits and wages.
The cost of attracting temporary healthcare professionals and providing them
with attractive benefit packages may be higher than we anticipate and, as a
result, if we are unable to pass these costs on to our clients, our
profitability could decline. Moreover, if we are unable to attract and retain
temporary healthcare professionals, the quality of our services to our hospital
and healthcare facility clients may decline and, as a result, we could lose
clients. Accordingly, if we are unsuccessful in any of these areas of our
business, our brand name reputation, revenues and potential profitability will
be negatively affected.
Because our revenues are dependent upon the temporary staffing needs of our
clients and we do not have long term or exclusive agreements with them, our
business is dependent upon our ability to secure new staffing assignment orders
from our clients; if we fail to successfully secure such orders, our revenues
will be negatively affected.
We have no long term or exclusive agreements with our clients. The nature of our
medical staffing business is such that we respond to the temporary needs of our
prospective clients and current clients. Accordingly, our ability to generate
revenues is dependent upon our ability to successfully compete against our
competitors, maintain positive relationships with our clients, promote our brand
name, and provide quality healthcare professionals to our clients. If we fail to
successfully address these factors, our revenues will be negatively affected.
11
Our medical staffing business may subject us to damages and litigation costs
which may negatively affect our potential profitability.
Our placement of healthcare professionals in healthcare facilities may subject
us to possible healthcare related and other litigation claims alleging the
following involving our temporary healthcare professionals:
o Malpractice;
o Negligence;
o Torts or crimes committed by our temporary healthcare professionals; and
o Discrimination and sexual harassment claims by our healthcare professionals
made against us and our clients.
Recently, healthcare providers have become subject to an increasing number of
legal actions alleging malpractice, product liability or related legal theories.
Many of these actions involve large claims and significant defense costs. We may
be subject to claims related to torts or crimes committed by our employees or
temporary healthcare professionals. A failure of any of our employees or
healthcare professionals to observe our and our clients' policies and guidelines
intended to reduce these risks, as well as applicable federal, state or local
laws, rules and regulations, could result in negative publicity, payment of
fines or other damages. Our professional malpractice liability insurance and
general liability insurance coverage may not cover all claims against us or
continue to be available to us at a reasonable cost. If we are unable to
maintain adequate insurance coverage or if our insurers deny coverage we may be
exposed to substantial liabilities. In addition, because we are in the business
of placing our healthcare professionals in the workplaces of other companies, we
are subject to possible claims by our healthcare professionals alleging
discrimination, sexual harassment, negligence and other similar activities by
our hospital and healthcare facility clients. The cost of defending such claims,
even if groundless, could be substantial and the associated negative publicity
could adversely affect our ability to attract and retain qualified healthcare
professionals in the future. Should we be subject to damage awards, our
potential profitability will be negatively affected. Judgments that may be
rendered against us and litigation related costs regarding any such claims, will
negatively affect our potential profitability and may lead to increased losses.
Should the proper functioning of our information systems be adversely affected,
our basic business functions and brand name reputation will be negatively
affected.
We are dependent on the proper functioning of our information systems in the
operation of our medical staffing business. Our information systems are used in
our daily operations to identify and match staffing resources and client
assignments and regulatory credential scheduling and to perform billing and
accounts receivable functions. Our information systems are vulnerable to fire,
storm, flood, power loss, telecommunications failures, physical or software
break-ins and similar events. If our information systems fail or are otherwise
unavailable, these functions would have to be accomplished manually, which could
impact our ability to identify business opportunities quickly, to maintain
billing and clinical records reliably, to pay our staff in a timely fashion and
to bill for services efficiently. Any such occurances will negatively affect our
brand name reputation.
Our operations may deteriorate if we are unable to continue to attract, develop
and retain our sales personnel.
Our success depends upon the performance of our sales personnel, especially
regional directors, branch managers and staffing coordinators. The number of
individuals who meet our qualifications for these positions is limited and we
may experience difficulty in attracting qualified candidates. In addition, we
commit substantial resources to the training, development and support of these
individuals. Competition for qualified healthcare staffing sales personnel is
intense; accordingly, we may be unable to retain our sales personnel after we
have expended the time and expense to recruit and train them.
12
RISKS RELATING TO OUR COMMON STOCK
We may not meet the proposed National Association of Security Dealer exchange
listing requirements, which may lead to increased investment risk and inability
to sell your shares.
Our common stock is quoted on the Over-the-Counter Bulletin Board under the
symbol "WHAI". The National Association of Security Dealers has proposed to the
Securities and Exchange Commission that the Over-the-Counter Bulletin Board be
phased out and eliminated, to be replaced with the Bulletin Board Exchange. If
this occurs, we may not meet the new exchange listing requirements, including
the requirement to have one hundred (100) round lot shareholders and a float of
200,000 shares. Should we fail to meet the new exchange requirements, you will
lose your entire investment.
Because our common stock is a penny stock, any investment in our common stock is
a high-risk investment and is subject to restrictions on marketability; you may
be unable 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 its customers prior to
executing trades in penny stocks. These disclosure requirements may cause a
reduction in the trading activity of our common stock and as a result you may be
subject to the risk of being unable to sell your shares. In addition, our
shareholders will, in all likelihood, find it difficult to sell their
securities. For additional details concerning the disclosure requirements under
the penny stock rules, please see our Penny Stock Considerations Section at
page 49.
ITEM 4. USE OF PROCEEDS
Not Applicable. We will not receive any proceeds from the sale of the securities
by the selling shareholders.
ITEM 5. DETERMINATION OF OFFERING PRICE
Our management has determined the offering price for the selling shareholders'
shares. The offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. Prior to this offering, there
has been no market for our common shares.
ITEM 6. DILUTION
Not Applicable. We are not offering any shares in this Registration Statement.
All shares are being registered on behalf of our selling shareholders.
ITEM 7. SELLING SHAREHOLDERS
The selling shareholders named below are selling the securities. The table
assumes that all of the securities will be sold in this offering. However, any
or all of the securities listed below may be retained by any of the selling
shareholders, and therefore, no accurate forecast can be made as to the number
of securities that will be held by the selling shareholders upon termination of
this offering. We believe that the selling shareholders listed in the table have
sole voting and investment powers with respect to the securities indicated. We
will not receive any proceeds from the sale of the securities by the selling
shareholders. None of the selling shareholders are broker-dealers or affiliates
of broker-dealers. All amounts listed below include shares which were issued
pursuant to our two (2) share for one (1) share forward stock split effective
October 7, 2002.
13
The selling shareholders named below are selling the securities. The table
assumes that all of the securities will be sold in this offering. However, any
or all of the securities listed below may be retained by any of the selling
shareholders, and therefore, no accurate forecast can be made as to the number
of securities that will be held by the selling shareholders upon termination of
this offering. We believe that the selling shareholders listed in the table have
sole voting and investment powers with respect to the securities indicated. We
will not receive any proceeds from the sale of the securities by the selling
shareholders. None of the selling shareholders are broker-dealers or affiliates
of broker-dealers. All amounts listed below include shares to be issued pursuant
to our two (2) share for one (1) share forward stock split effective October 7,
2002.
Beneficial Amount Amount Percentage Owned
Relationship Owned Prior to be Before/After
Name with Issuer to Offering Offered Offering
- --------------------------------------------------------------------------------
Asare, Beadros Edgar Filer 2,000 2,000 <1%/0%
Baker, Jason M. None 4,000 4,000 <1%/0%
Brown, Don None 4,000 4,000 <1%/0%
Clayton, Richard None 4,000 4,000 <1%/0%
Davidson, Juanita G. None 4,000 4,000 <1%/0%
Dell, Sandy L. None 4,000 4,000 <1%/0%
Dell, Christopher R. None 40,000 40,000 <1%/0%
Divich, Kurt None 10,000 10,000 <1%/0%
Ferguson, Dell None 2,400 2,400 <1%/0%
Ferguson, Rosemary None 8,000 8,000 <1%/0%
Ferguson, Tommi Consultant 750,000 750,000 1.8%/0%
Frye, Linc None 6,000 6,000 <1%/0%
Gabri, Hassan El None 2,000 2,000 <1%/0%
Gewin, Brian M. None 2,000 2,000 <1%/0%
Gewin, William E. None 4,000 4,000 <1%/0%
Gewin, Barry Consultant 850,000 850,000 2.1%/0%
Hagen, Cathy Edgar Filer 2,000 2,000 <1%/0%
Hall, Raymond None 4,000 4,000 <1%/0%
Law, Gary C. None 20,000 20,000 <1%/0%
Hamilton, Lehrer &
Dargan, P.A. Attorney 700,000 200,000 1.7%/1.2%
Johnson, Jay F. None 2,000 2,000 <1%/0%
Jones, Alice None 2,000 2,000 <1%/0%
Kinnison, Clark B. None 2,000 2,000 <1%/0%
Lincoln, David None 6,000 6,000 <1%/0%
Malinowski, Cara Jo None 2,000 2,000 <1%/0%
Malits, Vivian L. None 1,000 1,000 <1%/0%
Martincic, Sharon J. None 10,000 10,000 <1%/0%
Martincic, Thomas None 40,000 40,000 <1%/0%
Mehalick, David None 900,000 400,000 2.2%/1.2%
Miller, Geoffrey M. None 2,000 2,000 <1%/0%
One Stop Financial
Group, Inc.(5) None 2,000 2,000 <1%/0%
Price, Rita S. None 20,000 20,000 <1%/0%
Prugh, Joseph L. Director 6,000 6,000 <1%/0%
Siceloff, Edward G. President 503,000 3,000 1.2%/1.2%
Siceloff, Hubert P.(1) Relative to
our former
President 1,000 1,000 <1%/0%
Siceloff, Hubert Relative to
P. Jr.(2) our former
President 1,000 1,000 <1%/0%
Squyres, Shannon None 10,000 10,000 <1%/0%
Steele, Jan R. None 2,000 2,000 <1%/0%
Steil, Kevin Website
Designer 2,000 2,000 <1%/0%
Walker, Clinton F. None 4,000 4,000 <1%/0%
Walston, Norma Jean None 4,000 4,000 <1%/0%
White, Debra M. None 8,000 8,000 <1%/0%
Wood, David A. None 1,866,000 1,008,000 4.6%/2.1%
Xilas, James G. None 5,000 5,000 <1%/0%
Zaffaroni, Phyllis None 2,000 2,000 <1%/0%
Zafran, Nathan None 20,000 20,000 <1%/0%
TOTAL 5,845,400 3,487,400 100%
- --------------------------------------------------------------------------------
14
(1)Hubert P. Siceloff is our former President's father who does not live in the
same household as our former President.
(2)Hubert P. Siceloff Jr. is our former President's brother who does not live
in the same household as our former President.
(3)On October 29, 2002, Tommi Ferguson sold 500,000 shares of our common stock
to David Wood for a price of $12,000 in a private transaction. On November 6,
2002, Tommi Ferguson sold 250,000 shares of our common stock to David Mehalick
for a price of $5,000 in a private transaction.
(4)On October 8, 2002, Barry Gewin sold 500,000 shares of our common stock to
David Wood for a price of $10,000 in a private transaction. On November 18,
2002, Barry Gewin sold 150,000 shares of our common stock to David Mehalick for
a price of $3,000 in a private transaction.
(5) Kenneth Easton is the sole officer, director and shareholder of One Stop
Financial Group, Inc.
We intend to seek qualification for sale of the securities in those states where
the securities will be offered. That qualification is necessary to resell the
securities in the public market. The securities can only be offered if they are
qualified for sale or are exempt from qualification in the states in which the
selling shareholders or proposed purchasers reside. There is no assurance that
the states in which we seek qualification will approve of the security resales.
ITEM 8. PLAN OF DISTRIBUTION
Our selling shareholders are offering 3,487,400 shares of our common stock. We
will not receive proceeds from the sale of shares by the selling shareholders.
Two of our selling shareholders sold an aggregate of 1,400,000 shares of our
common stock, which were originally registered on our SB-2 Registration
Statement, in private transactions as follows: On October 29, 2002, Tommi
Ferguson sold 500,000 shares of her common stock to David Wood for a price of
$12,000 in a private transaction. On November 6, 2002, Tommi Ferguson sold
250,000 shares of her common stock to David Mehalick for a price of $5,000 in a
private transaction. On October 8, 2002, Barry Gewin sold 500,000 shares of our
common stock to David Wood for a price of $10,000 in a private transaction. On
November 18,2002, Barry Gewin sold 150,000 shares of our common stock to David
Mehalick for a price of $3,000 in a private transaction. We are unaware of any
other selling shareholders who sold shares of our common stock registered on our
SB-2 Registration Statement. We have updated our Selling Shareholder list to
reflect the purchasers of these shares.
The securities offered by this prospectus will be sold by the selling
shareholders or by those to whom such shares are transferred. We will file
post-effective amendments to this Registration Statement to identify transferees
to whom the selling shareholders transfer their securities. We are not aware of
any underwriting arrangements that have been entered into by the selling
shareholders. The distribution of the securities by the selling shareholders may
be affected in one or more transactions that may take place in the
over-the-counter market, including broker's transactions, privately negotiated
transactions or through sales to one or more dealers acting as principals in the
resale of these securities.
15
The selling shareholders and any of their pledges, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are then traded or in private transactions. Our Common Shares are quoted
on the Over-the-Counter Bulletin Board under the symbol ("WHAI"). Selling
shareholders may use any one or more of the following methods to sell their
shares:
o Ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o Block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block of shares as
principal to facilitate the transaction;
o Purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o An exchange distribution in accordance with the rules of the applicable
exchange;
o Privately negotiated transactions;
o A combination of any such methods of sale; and
o Any other method permitted pursuant to applicable law.
Any of the selling shareholders, acting alone or in concert with one another,
may be considered statutory underwriters under the Securities Act of 1933 if
they are directly or indirectly conducting an illegal distribution of the
securities on behalf of our corporation. For instance, an illegal distribution
may occur if any of the selling shareholders were to provide us with cash
proceeds from their sales of the securities. If any of the selling shareholders
are determined to be underwriters, they may be liable for securities violations
in connection with any material misrepresentations or omissions made in this
prospectus.
We intend to seek qualification for sale of the securities in those states where
the securities will be offered. That qualification is necessary to resell the
securities in the public market. The securities may only be resold if the
securities are qualified for sale or are exempt from qualification in the states
in which the selling shareholders or proposed purchasers reside. There is no
assurance that the states in which we seek qualification will approve of the
security resales.
In addition, the selling shareholders and any brokers and dealers through whom
sales of the securities are made may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, and the commissions or discounts and
other compensation paid to such persons may be regarded as underwriters'
compensation.
The selling shareholders may pledge all or a portion of their securities as
collateral for margin accounts or in loan transactions, and the securities may
be resold pursuant to the terms of such pledges, accounts or loan transactions.
Upon default by such selling shareholders, the pledgee in such loan transaction
would have the same rights of sale as the selling shareholders under this
prospectus. The selling shareholders may also enter into exchange traded listed
option transactions, which require the delivery of the securities listed under
this prospectus. The selling shareholders may also transfer securities owned in
other ways not involving market makers or established trading markets, including
directly by gift, distribution, or other transfer without consideration, and
upon any such transfer the transferee would have the same rights of sale as such
selling shareholders under this prospectus.
In addition to the above, each of the selling shareholders and any other person
participating in a distribution will be affected by the applicable provisions of
the Securities Exchange Act of 1934, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the securities by
the selling shareholders or any such other person.
16
There can be no assurances that the selling shareholders will sell any or all of
the securities. In order to comply with state securities laws, if applicable,
the securities will be sold in jurisdictions only through registered or licensed
brokers or dealers. In various states, the securities may not be sold unless
these securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
Under applicable rules and regulations of the Securities Exchange Act of 1934,
as amended, any person engaged in a distribution of the securities may not
simultaneously engage in market-making activities in these securities for a
period of one (1) or five (5) business days prior to the commencement of such
distribution.
All of the foregoing may affect the marketability of the securities. Pursuant to
the various agreements we have with the selling shareholders, we will pay all
the fees and expenses incident to the registration of the securities, other than
the selling shareholders' pro rata share of underwriting discounts and
commissions, if any, which is to be paid by the selling shareholders.
Should any substantial change occur regarding the status or other matters
concerning the selling shareholders, we will file a Rule 424(b) prospectus
disclosing such matters.
ITEM 9. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings in which we are
involved.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers are elected annually by our Board of Directors. A
majority vote of the directors who are in office is required to fill vacancies
on the Board. Each director shall be elected for the term of one (1) year or
until his successor is elected and qualified, or until his earlier resignation
or removal. There are no family relationships between any of the directors and
executive officers. Our directors named below will serve until the next annual
meeting of our shareholders which is held within sixty (60) days of our fiscal
year end, or until a successor is elected and has accepted the position. Our
directors and executive officers are as follows:
Name Age Position Term
Marc D. Roup 29 Chief Executive Officer/Director 1 year*
Richard E. McDonald 29 President/Principal Financial 1 year*
Officer/Principal Accounting
Officer/Chairman of the Board
of Directors
*Term expires in February 2004.
Marc D. Roup has been our Chief Executive Officer and a Director since February
20, 2003. From December 1999 to present, Mr. Roup has been the Chief Executive
Officer and Director of our wholly owned subsidiary, Better Solutions, Inc., a
medical staffing firm with its headquarters located in Pittsburgh, Pennsylvania.
From January 1999 to December 1999, Mr. Roup was an account executive with
Robert Half International, Inc., a business consulting firm located in Menlo
Park, California. From January 1995 to January 1999, Mr. Roup was a branch
manager with The Consulting Group of North America, a general staffing business
located in Alexandria, Virginia. In April 1997, Mr. Roup received a Bachelor of
Arts Degree in Human Resources from Robert Morris University located in
Pittsburgh, Pennsylvania.
17
Richard E. McDonald has been our President, Principal Financial Officer,
Principal Accounting Officer and Chairman of the Board of Directors since
February 20, 2003. From November 1999 to present, Mr. McDonald has been the
Chief Financial Officer, Secretary, and Treasurer of our wholly owned
subsidiary, Better Solutions, Inc., a medical staffing firm whose headquarters
is located in Pittsburg, Pennsylvania. From November 1998 to November 1999, Mr.
McDonald was an Account Executive with Robert Half International, Inc., a
business consulting firm located in Menlo Park, California. From January 1996 to
November 1998, Mr. McDonald was the Business Manager for the Day Group, a
Division of General Motors, located in Pittsburgh, Pennsylvania. Mr. McDonald
received the following degrees in Business Administration: (a) in April 1996, a
Bachelor of Science Degree from the University of Pittsburgh located in
Pittsburgh, Pennsylvania; (b) in May 2000, a Masters Degree from Bridgewater
University located in London, England; (c) in May 2001, a Doctoral Degree from
Bridgewater University.
SIGNIFICANT EMPLOYEES
We have the following significant employees:
Sylvia Macerelli has been our Vice President of Sales since February 20, 2003.
From February 2000 to February 2003, Ms. Macerelli served in the same capacity
with Better Solutions, Inc., our wholly owned subsidiary, in Pittsburgh,
Pennsylvania. From December 1998 to February 2000, Ms. Macerelli was a sales
manager for The Mortgage Network, Inc., a mortgage Brokerage firm located in
Pittsburgh, Pennsylvania. Ms. Macerelli attended Duquesne University located in
Pittsburgh, Pennsylvania from September 1994 to December 1999, where she majored
in pharmacology.
Todd B. Fortier has been our Financial Officer since February 20, 2003. As
Financial Officer, he is responsible for overseeing our general day to day
accounting and back office operations. From 1991 to present, Mr. Fortier has
been the part time Chief Financial Officer of PDG Environmental, a publicly
traded environmental firm. From 1991 to present, Mr. Fortier has been the Chief
Financial Officer of Demegen, Inc., a publicly traded bio-tech firm.
Anthony Morocco has been the branch manager of Better Solutions, Inc.'s
Pittsburgh, Pennsylvania office since February 20, 2003. From February 2000 to
February 2003, Mr. Morocco served in the same capacity with Better Solutions,
Inc., a medical staffing firm located in Pittsburgh, Pennsylvania. From February
1998 until February 2000, Mr. Morocco was a staffing coordinator with Robert
Half International, a business consulting firm located in Menlo Park,
California. From April 1997 to February 1998, Mr. Morocco was a Customer Service
Representative with Mellon Bank located in Pittsburgh, Pennsylvania. In April
1997, Mr. Morocco received a Bachelor of Arts Degree in Accounting from Saint
Vincent College located in Latrobe, Pennsylvania.
Deanna Seruga has been our Vice President of Finance since February 20, 2003.
From April 2001 until February 2003, Ms. Seruga served in the same capacity with
Better Solutions, Inc., a medical staffing firm located in Pittsburgh,
Pennsylvania. From May 1998 to May 2001, Ms. Seruga was an Internal Auditor with
Federated Investors, an investment firm located in Pittsburgh, Pennsylvania.
From May 1997 until May 1998, Ms. Seruga was an Auditor with Snodgrass Public
Accounting, a Certified Public Accounting firm located in Pittsburgh,
Pennsylvania. In May 1997, Ms. Seruga received a Bachelor of Arts Degree in
Accounting from Westminster College located in New Wilmington, Pennsylvania.
Other than the aforementioned, we have no other significant employees.
FAMILY RELATIONSHIPS
There are no family relationships among our officers, directors, or persons
nominated for such positions.
18
LEGAL PROCEEDINGS
None of our officers, directors, or persons nominated for such position,
significant employees, or promoters, including Barry Gewin and Tommi Ferguson,
have been involved in legal proceedings that would be material to an evaluation
of their ability or integrity, including:
o involvement in any bankruptcy;
o involvement in any conviction in a criminal proceeding;
o being subject to a pending criminal proceeding;
o being subject to any order or judgment, decree permanently or temporarily
enjoining, barring, suspending or otherwise limiting their involvement in
any type of business, securities or banking activities; and being found by
a court of competent jurisdiction (in a civil action), the Commission or
the Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of the date of this
Registration Statement, of our common stock (a) by each person known by us to be
the beneficial owner of more than five percent (5%) of our outstanding common
stock, and (b) by each of our directors, by all executive officers and our
directors as a group. Our officers and directors are the only beneficial owners
of more than five percent (5%) of our outstanding common stock.
To the best of our knowledge, all persons named have sole voting and investment
power with respect to such shares, except as otherwise noted.
Security Ownership of Management:
- ------------------------------------------------------------------------------
Title
of Class Name & Address Amount Nature Percent
- ------------------------------------------------------------------------------
Common Richard E. McDonald 15,319,000 Direct 37.5%
3007 Wedgewood Court
Murrysville, Pennsylvania 15668
Common Marc D. Roup 16,500,000 Direct 40.4%
1040 Hunt Club Court
Export, Pennsylvania 15632
TOTAL 31,819,000 77.9%
- ------------------------------------------------------------------------------
Security Ownership of Beneficial Owners:
- ------------------------------------------------------------------------------
Title
of Class Name & Address Amount Nature Percent
- ------------------------------------------------------------------------------
Common Richard E. McDonald 15,319,000 Direct 37.5%
3007 Wedgewood Court
Murrysville, Pennsylvania 15668
Common Marc D. Roup 16,500,000 Direct 40.4%
1040 Hunt Club Court
Export, Pennsylvania 15632
TOTAL 31,819,000 77.9%
- ------------------------------------------------------------------------------
19
ITEM 12. DESCRIPTION OF SECURITIES
The following description is a summary of the material terms of the provisions
of our Articles of Incorporation and Bylaws and is qualified in its entirety.
The Articles of Incorporation and Bylaws have been filed as exhibits to the
Registration Statement of which this prospectus is a part.
COMMON STOCK
GENERAL:
We are authorized to issue 200,000,000 shares of common stock with a par value
of $.0001 per share. Effective October 7, 2002, we enacted a two (2) share for
one (1) share forward stock split of our common stock, so that each holder of
our common stock on October 7, 2002 received one additional share of our common
stock for each share of common stock held. As of February 26, 2003, taking into
effect the two for one forward stock split effective October 7, 2002, there were
40,595,400 shares of our common stock issued and outstanding held by 67
shareholders of record. All shares of common stock outstanding are validly
issued, fully paid and non-assessable. We are authorized to issue 100,000,000
shares of preferred stock with a par value of $.0001 per share. As of the date
of this Registration Statement, there were no preferred shares issued and/or
outstanding.
VOTING RIGHTS:
Each share of our common stock entitles the holder to one (1) vote, either in
person or by proxy, at meetings of shareholders. The shareholders are not
permitted to vote their shares cumulatively. Accordingly, the holders of common
stock holding, in the aggregate, more than fifty percent (50%) of the total
voting rights can elect all of our directors and, in such event, the holders of
the remaining minority shares will not be able to elect any such directors. The
vote of the holders of a majority of the issued and outstanding shares of common
stock entitled to vote thereon is sufficient to authorize, affirm, ratify, or
consent to such act or action, except as otherwise provided by law.
DIVIDEND POLICY:
Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available. We
have not paid any dividends since our inception and presently anticipate that
all earnings, if any, will be retained for development of our business. Any
future disposition of dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors.
MISCELLANEOUS RIGHTS AND PROVISIONS:
Holders of our common stock have no preemptive rights. Upon our liquidation,
dissolution or winding up, the holders of our common stock will be entitled to
share ratably in the net assets legally available for distribution to
shareholders after the payment of all of our debts and other liabilities. All
outstanding shares of our common stock are, and the common stock to be
outstanding upon completion of this offering will be, fully paid and
non-assessable. There are not any provisions in our Articles of Incorporation
or Bylaws that would prevent or delay change in our control.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL
Our Financial Statements have been included in this prospectus in reliance upon
Stark Winter Schenkein & Co., LLP, Certified Public Accountants, as experts in
accounting and auditing. Better Solution, Inc.'s financial statements have been
included in this prospectus in reliance upon Daszkal Bolton, LLP., Certified
Public Accountants, as experts in accounting and auditing.
Hamilton, Lehrer & Dargan, P.A. has rendered legal services and assisted in the
preparation of this Form SB-2 Registration Statement. Members of the firm own
700,000 shares of our common stock.
20
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES
Our Bylaws, subject to the provisions of Florida Corporation Law, contain
provisions which allow us to indemnify any person against liabilities and other
expenses incurred as the result of defending or administering any pending or
anticipated legal issue in connection with service to us if it is determined
that person acted in good faith and in a manner which he reasonably believed was
in the best interest of the corporation. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
directors, officers and controlling persons, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
All share amounts listed below include shares of our common stock issued
pursuant to the Company's two (2) share for one (1) share forward stock split
effective October 7, 2002.
On February 1, 2002, our former President, Edward G. Siceloff, paid $16,200 for
legal services rendered to us and $3,800 for our website development. These
funds were donated by our former President. We have no obligation to repay these
funds and our former President, Edward G. Siceloff, does not intend to seek
repayment of these funds. On March 21, 2002, our former President, Edward G.
Siceloff, paid $14,000 for legal services rendered to us. These funds were
donated by Mr. Siceloff. We have no obligation to repay these funds and our
former President, Edward G. Siceloff, does not intend to seek repayment of these
funds. Our former President, Edward G. Siceloff, received no consideration in
exchange for the funds he donated to us.
On February 14, 2002, we issued 40,000,000 (post October 7, 2002, two (2) share
for one (1) share forward stock split) shares of our common stock to our former
President, Edward G. Siceloff, for services rendered in our corporate formation.
On February 14, 2002, we issued 8,000,000 (post October 7, 2002, two (2) share
for one (1) share forward stock split) shares of our common stock to one of our
former directors, Joseph L. Prugh, for services rendered in our corporate
formation.
On March 11, 2002, we sold 6000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to our former director,
Joseph L. Prugh at a price of $.05 per share or $300.
On March 24, 2002, we sold 3000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Edward G. Siceloff, our
former President, at a price of $.05 per share or $150.
In connection with our acquisition of Better Solutions, Inc. on February 24,
2003, the following occurred:
o Edward G. Siceloff, our prior president and director resigned the positions
he held with us and retired 39,500,000 of the 40,003,000 shares of our
common stock held by him. After retiring these shares he owned 503,000
shares of our common stock;
o Joseph L. Prugh, our prior director, resigned his positions with us and
retired 8,000,000 of the 8,006,000 shares held by him. After retiring these
shares, he owned 6,000 shares of our common stock;
o Of the shares cancelled, 16,500,000 shares were issued to Richard E.
McDonald and 16,500,000 shares were issued to Marc Roup.
o As a result of the issuance of an aggregate amount of 33,000,000 shares of
stock to Marc Roup and Richard McDonald, a change in the voting control of
our common stock occurred.
Other than the above transactions, we have not entered into any material
transactions with an aggregate value in excess of $60,000 with any director,
executive officer, and nominee for director, beneficial owner of five percent
(5%) or more of our common stock, or family members of such persons. We are not
a subsidiary of any company.
21
Transactions with Promotors
On March 5, 2002, we entered into an agreement with Barry Gewin, our promoter,
to provide us with the following consulting services:
o Assistance with suppliers;
o Marketing of our products;
o Preparation of information regarding our business;
o Assistance in locating and hiring management and sales personnel; and
o General assistance in the development of our website content.
Our agreement with Barry Gewin is for a term of one year and terminates on March
5, 2003. In exchange for the services rendered to us by Barry Gewin, we issued
Barry Gewin 1,500,000 (post October 7, 2002, two (2) share for one (1) share
forward stock split) shares of our common stock which we valued at $75,000.
On October 8, 2002, Barry Gewin sold 500,000 shares of our common stock to David
Wood for a price of $10,000 in a private transaction. On November 18, 2002,
Barry Gewin sold 150,000 shares of our common stock to David Mehalick for a
price of $3,000 in a private transaction. Barry Gewin had a preexisting personal
relationship with David Mehalick and David Wood. David Wood and David Mehalick
each represented that they were accredited and purchasing the shares for
investment.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Barry Gewin, the holder of 850,000 shares of our common stock, entered into an
agreement with Better Solutions, Inc., whereby Barry Gewin agreed to subject his
shares of our common stock to a lock up agreement. Barry Gewin agreed to sell
the 850,000 shares of our common stock held by him only, as follows: a. For the
first full calendar month, after we complete the acquisition of Better
Solutions, Inc., Barry Gewin is allowed to sell 250,000 shares of our common
stock at his discretion. b. Beginning the period from the second month after we
complete the acquisition of Better Solutions, Inc., and until the expiration of
the sixth month, during each respective month of this period, Barry Gewin is
allowed to sell our common stock held by him at his discretion up to an amount
not to exceed twenty five (25) percent of the prior calendar month's trading
volume as reported by the OTC Bulletin Board. c. After expiration of the sixth
month after we complete the acquisition of Better Solutions, Inc., Barry Gewin
can sell the shares of our common stock as he deems fit pursuant to the
agreement.
On March 5, 2002, we entered into an agreement with Tommi Ferguson, our promoter,
to provide us with the following consulting services:
o Locating web site development personnel;
o Development of an incentive program for our customers;
o Advertising of our products; and
o Expansion of our product lines.
Our agreement with Tommi Ferguson is for a term of one year and terminates on
March 5, 2003. In exchange for the services rendered to us by Tommi Ferguson, we
issued Tommi Ferguson 1,500,000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock which we valued at
$75,000.
On October 29, 2002, Tommi Ferguson sold 500,000 shares of her common stock to
David Wood for a price of $12,000 in a private transaction. On November 6, 2002,
Tommi Ferguson sold 250,000 shares of her common stock to David Mehalick for a
price of $5,000 in a private transaction. Tommi Ferguson had a preexisting
personal relationship with Barry Gewin and David Wood. David Wood and David
Mehalick each represented that they were accredited and purchasing the shares
for investment.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Tommi Ferguson, the holder of 750,000 shares of our common stock, entered into
an agreement with Better Solutions, Inc., whereby Tommi Ferguson agreed to
subject her shares of our common stock to a lock up agreement. Tommi Ferguson
agreed to sell the 750,000 shares of our common stock held by her only as
follows: a. For the first full calendar month, after we complete the acquisition
of Better Solutions, Inc., Tommi Ferguson is allowed to sell 250,000 shares of
our common stock at her discretion. b. Beginning the period from the second
month after we complete the acquisition of Better Solutions, Inc., and until the
expiration of the sixth month, during each respective month of this period,
Tommi Ferguson shall be allowed to sell our common stock held by her at her
discretion up to an amount not to exceed twenty five (25) percent of the prior
calendar month's trading volume as reported by the OTC Bulletin Board. c. After
expiration of the sixth month after we complete the acquisition of Better
Solutions, Inc., Tommi Ferguson can sell the shares of our common stock as she
deems fit pursuant to the agreement.
ITEM 16. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
We were incorporated in the State of Florida on February 13, 2002 to sell
vitamins, minerals, herbs, spices, homeopathic, and aromatherapy products on the
Internet. Effective October 7, 2002, we enacted a two (2) share for one (1)
share forward stock split of our common stock so that each holder of our common
stock on October 7, 2002, received an additional share of our common stock for
each share of common stock that they held. We are a development stage company.
Since our formation, we have devoted our efforts to:
o Formulating our business plan;
o Designing and creating our website;
o Enhancing our website;
o Locating suppliers to furnish us with products; and
o Establishing agreements with suppliers.
Our website became operational on March 25, 2002. As of February 27, 2003, we had
no sales of the products offered on our website.
22
On February 20, 2003, we completed our acquisition of 100% of the outstanding
common stock of Better Solutions, Inc. from its two shareholders, Marc D. Roup
and Richard E. McDonald in exchange for newly issued shares of our common stock.
As a result of the transaction:
o Better Solutions, Inc. became our wholly owned subsidiary;
o Our previous officers and directors, Edward G. Siceloff and Joseph L. Prugh,
resigned all positions they held with us;
o Richard E. McDonald became our President, Principal Financial Officer,
Principal Accounting Officer, and Chairman of the Board of Directors;
o Marc D. Roup became our Chief Executive Officer and a Director;
o We issued 16,500,000 shares of our common stock, which represents
approximately 41% of our common stock, to Richard E. McDonald;
o We issued 16,500,000 shares of our common stock, which represents
approximately 41% of our common stock, to Marc D. Roup;
o As a result of the issuance of an aggregate amount of 33,000,000 shares of
stock to Marc D. Roup and Richard E. McDonald, a change in the voting
control of our common stock occurred;
o Edward G. Siceloff, our prior president and director, retired 39,500,000 of
the 40,003,000 shares held by him after which he held 503,000 shares of our
common stock;
o Joseph L. Prugh, our prior director, retired 8,000,000 of the 8,006,000
shares held by him after which he held 6,000 shares of our common stock; and
o Better Solutions, Inc.'s medical staffing business became integrated into
our business.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Barry Gewin, the holder of 850,000 shares of our common stock, entered into an
agreement with Better Solutions, Inc., whereby Barry Gewin agreed to subject his
shares of our common stock to a lock-up agreement. Barry Gewin agreed to sell
the 850,000 shares of our common stock held by him only, as follows: a. For the
first full calendar month, after we complete the acquisition of Better
Solutions, Inc., Barry Gewin is allowed to sell 250,000 shares of our common
stock at his discretion. b. Beginning the period from the second month after we
complete the acquisition of Better Solutions, Inc., and until the expiration of
the sixth month, during each respective month of this period, Barry Gewin is
allowed to sell our common stock held by him at his discretion up to an amount
not to exceed twenty five (25) percent of the prior calendar month's trading
volume as reported by the OTC Bulletin Board. c. After expiration of the sixth
month after we complete the acquisition of Better Solutions, Inc., Barry Gewin
can sell the shares of our common stock as he deems fit pursuant to the
agreement.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Tommi Ferguson, the holder of 750,000 shares of our common stock, entered into
an agreement with Better Solutions, Inc., whereby Tommi Ferguson agreed to
subject her shares of our common stock to a lock-up agreement. Tommi Ferguson
agreed to sell the 750,000 shares of our common stock held by her only as
follows: a. For the first full calendar month, after we complete the acquisition
of Better Solutions, Inc., Tommi Ferguson is allowed to sell 250,000 shares of
our common stock at her discretion. b. Beginning the period from the second
month after we complete the acquisition of Better Solutions, Inc., and until the
expiration of the sixth month, during each respective month of this period,
Tommi Ferguson shall be allowed to sell our common stock held by her at her
discretion up to an amount not to exceed twenty five (25) percent of the prior
calendar month's trading volume as reported by the OTC Bulletin Board. c. After
expiration of the sixth month after we complete the acquisition of Better
Solutions, Inc., Tommi Ferguson can sell the shares of our common stock as she
deems fit pursuant to the agreement.
Other than our acquisition of Better Solutions Inc., we have not been the
subject of any bankruptcy or receivership action and we have had no material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets outside the ordinary course of business.
23
OUR WEBSITE BUSINESS AT WWW.WORLDHEALTHALTERANTIVES.COM
PRINCIPAL PRODUCTS
Our website is located at www.worldhealthalternatives.com. On our site we offer
over 1,500 products. Currently, we offer vitamins, minerals, herbs, spices,
homeopathic, and aromatherapy products on the Internet. These products are
manufactured, supplied and distributed by third parties. Some of the following
products are available on our website.
Vitamins
Vitamin C
Individual B vitamins
B complexes
Folic Acid
Multivitamins
Pantothenic Acid
Vitamin A
Vitamin E
Beta-Carotene
Bioflavanoids
Pynogenols
Minerals
Calcium
Chromium
Copper
Iron
Magnesium
Manganese
Potassium
Selenium
Sulphur
Various trace minerals
Herbs
Alfalfa
Astragalus
Fennel
Feverfew
Garlic
Ginseng
Gingko Biloba
Kava Kava
Nettles
Peppermint
Spearmint
St John's Wort
Tarragon
Tansy
Kitchen Spices
Anise Seed
Black Peppers
Cardomom Seed
Caraway
Fennel Seed
Garlic
Horehound
Mace
Nutmeg
Onion Flakes
Rosemary
Sage
Tarragon
Aromatherapy
Camphor Oil
Cinnamon Oil
Jasmine Oil
Lavender Oil
Peppermint Oil
Rosemary Oil
Spearmint Oil
24
WEBSITE OPERATIONS
We used the services of Kevin Steil doing business as K & L Cyber Solutions to
assist us in developing our initial website. We had a verbal agreement with
Kevin Steil to assist us with our website development for a period of thirty
days beginning February 14, 2002 and ending March 14, 2002. Our former
President, Edward G. Siceloff paid Kevin Steil $3,800 on our behalf and we
issued 1,000 shares of common stock to Mr. Steil for these services. There are
no agreements or arrangements obligating us to repay the $3,800 to our former
President, nor does our former President intend to seek repayment or other
compensation for donating these funds. Additionally, we paid Kevin Steil $520 in
April 2002 and $630 in May 2002 to provide us with additional website
development services. We have no affiliation with Kevin Steil or K & L
Cybersolutions. In addition, we have no other agreement with Kevin Steil or K &
L Cybersolutions to provide any further services.
Our website currently has the following user functions:
Searchable and Browsable Product Catalog - Our product catalog is organized into
various product categories. Within each category a user can search for the
product that he or she wishes to purchase. Currently we have the following
product categories in our catalog:
o Vitamins
o Minerals
o Herbs
o Kitchen Spices
o Aromatherapy
Shopping Cart - Purchasers can securely purchase our products by providing the
product selections which will be recorded in the shopping cart. The shopping
cart will total product purchases and shipping charges. Products may be
purchased by Master Card and Visa credit card.
Member Services - Individuals wishing to purchase products on our website must
first log on to the website and create a customer account. Once logged in, he or
she can save their address, credit card information, and any orders they place.
By saving this information the person does not have to retype their address and
credit card information the next time the site is visited and purchases are
made. More than one address is capable of being saved per individual, as well as
more than one credit card account. Once a person has saved his or her previous
order, the next time he or she visits the site he or she has the ability to see
what was previously ordered and may reorder some or all of the products
previously purchased without going through the shopping cart process.
MATERIAL AGREEMENTS
We plan to purchase products at wholesale prices on an "as needed" basis from
Con Yeager Spice Company and Frontier Herb Co-Op. Con Yeager Spice Company sells
the kitchen spices and Frontier Herb Co-Op sells the herbs offered on our site.
We plan to obtain vitamins, minerals, herbs, spices, homeopathic, and
aromatherapy products from Global Health Trax, Inc. On October 10, 2001, prior
to our incorporation, our president entered into an agreement with Global Health
Trax, Inc. This agreement was transferred to us on April 25, 2002. On April 25,
2002, we became an Authorized Independent Representative for the sale of Global
Health Trax products and have a nonexclusive right to purchase Global Health
Trax products at wholesale prices and resell those products to the public. The
term of the agreement is one (1) year.
This agreement further provides that: (a) we must pay for all products when we
place an order; (b) we may pay by credit card or automatic bank draft; and (c)
we are required to renew our agreement annually and pay the annual membership
fee which may be deducted automatically when due using our payment information
on file with Global Health Trax. All Global Health Trax products are warranted
to be free from defects in material and workmanship under normal use for a
period for twelve (12) months from the date of delivery.
25
Acquisition of Better Solutions, Inc.
On February 20, 2003, we completed our acquisition of 100% of the outstanding
common stock of Better Solutions, Inc. from its two shareholders, Marc D. Roup
and Richard E. McDonald in exchange for newly issued shares of our common stock.
As a result of the transaction:
o Better Solutions, Inc. became our wholly owned subsidiary;
o Our previous officers and directors, Edward G. Siceloff and Joseph L. Prugh,
resigned all positions they held with us;
o Richard E. McDonald became our President, Principal Financial Officer,
Principal Accounting Officer, and Chairman of the Board of Directors;
o Marc D. Roup became our Chief Executive Officer and a Director;
o We issued 16,500,000 shares of our common stock to Richard E. McDonald;
o We issued 16,500,000 shares of our common stock to Marc D. Roup;
o As a result of the issuance of an aggregate amount of 33,000,000 shares of
stock to Marc D. Roup and Richard E. McDonald, a change in the voting
control of our common stock occurred;
o Edward G. Siceloff, our prior president and director, retired 39,500,000 of
the 40,003,000 shares held by him after which he held 503,000 shares of our
common stock;
o Joseph L. Prugh, our prior director, retired 8,000,000 of the 8,006,000
shares held by him after which he held 6,000 shares of our common stock; and
o Better Solutions, Inc.'s medical staffing business became integrated into
our business.
SHIPPING TO OUR CUSTOMERS
All shipping of products to our customers will be done by our suppliers which
will use United Parcel Service or Federal Express. Choice of shipment will be
chosen by our customer through our website shopping cart. Shipping costs will
be assumed by the customer.
INVENTORY
We will not maintain an inventory of products we offer on our website. Products
will be ordered as needed from third parties.
COMPETITIVE BUSINESS CONDITIONS AND OUR PLACE IN THE MARKET
The vitamins, minerals, herbs, spices, homeopathic, and aromatherapy product
markets are increasingly competitive with thousands of competitors on the
Internet alone. In addition, each of these product areas is highly fragmented
and the barriers to market entry are low. Because of the low cost of
establishing a website and variety of market available software, new competitors
can easily establish new websites similar to ours. Accordingly, we expect
competition to increase in the future. Our competitors also cover a wide
spectrum of retail establishments, including:
o Catalog/Mail Order;
o Food Stores and Supermarkets;
o Drug Stores;
o Mass merchandisers;
o Network marketing companies such as Amway and Shaklee;
o Health and natural specialty stores such as General Nutrition Center
and Vitamin World; and
o Wholesalers that sell their products directly such as Rexall Sundown.
Some of our biggest direct Internet competitors are Mothernature.com,
GreenTree.com, Allhealth.com, Healthscout.com, and Healthandage.com. These
companies have substantially longer operating histories, greater name
recognition, larger customer bases and greater financial and technical resources
than us. Because we are financially and operationally smaller than our
competitors, we will encounter difficulties in capturing market share. These
companies are able to conduct extensive marketing campaigns and create more
attractive pricing of their target markets than we are able to. In addition, we
do not have an established brand name or reputation while our competitors have
significantly greater brand recognition, customer bases, operating histories,
and financial and other resources.
26
In addition to our Internet-based retailer competition, we will compete against
large retailers which generate hundreds of millions of dollars from the sale of
our type products, including General Nutrition, Wal-Mart, Target Stores, and
Walgreens. Our competition also includes membership companies such as Shaklee
and Amway that similarly generate revenues of hundreds of millions of dollars.
To meet these competitive conditions, we plan to:
o Conduct research into our competitors' prices, especially our larger more
established retail and Internet competitors;
o Obtain low cost advertising through local publications and the Internet;
o Offer discounts to customers if they order our products on a monthly basis
for an entire year;
o Promote certain products by offering a free bottle of vitamin or herbal
products with the purchase of each identical product;
o Conduct reciprocal marketing campaigns in which we advertise another
website's products or services in exchange for providing advertising to us
on their website; and
o Seek to obtain favorable supplier arrangements to reduce our cost of sales.
There can be no assurance that we will be able to compete in the sale of
products on our website, which could have a negative impact upon our business.
CUSTOMER DEPENDENCY
We currently have no customers. We do not expect our business to be dependent on
one or a few customers.
INTELLECTUAL PROPERTY
We have not applied for trademark protection for our name that we use in our
business with the United States Patent and Trademark Office including the World
Health Alternatives name. There can be no assurance that our use of the World
Health Alternative name will not violate the proprietary rights of others. If
our use of this name is challenged, our use of this name could be prohibited,
and we could be forced to pay claims, litigation, settlement expenses and other
damages. Our competitors may adopt product or service names similar to ours,
which would impede our ability to build brand identity and otherwise negatively
affect our brand name reputation. Should we be unable to protect our trade name,
our business, results of operations, and financial condition will be negatively
affected.
GOVERNMENTAL APPROVAL REQUIREMENTS
Although we are not aware of the need for any government approval of our
principal products, we may be subject to such approvals in the future.
EFFECT OF EXISTING GOVERNMENTAL REGULATIONS
The product suppliers and manufacturers of our website products, to the extent
that they are involved in the manufacturing, processing, formulating, packaging,
labeling and advertising of the products, may be subject to regulations by the
Federal Drug Administration, Federal Trade Commission, United States Department
of Agriculture, and Environmental Protection Agency. The Federal Drug
Administration administers the Federal Food, Drug, and Cosmetic Act and may
initiate enforcement actions against companies that sell, supply, or manufacture
unapproved, adulterated, or misbranded products. The Federal Drug Administration
may bring injunctive action to terminate the sale of such products, impose civil
penalties, criminal prosecutions, product seizures, and voluntary recalls.
Should we or our suppliers become subject to any such orders or actions, our
brand name reputation and that of our website suppliers and products will be
adversely affected and our business would be negatively affected.
We are not aware of any governmental regulations that will affect the Internet
aspects of our business. However, due to increasing usage of the Internet, a
number of laws and regulations may be adopted relating to the Internet covering
user privacy, pricing, and characteristics and quality of products and services.
Furthermore, the growth and development of Internet commerce may prompt more
stringent consumer protection laws imposing additional burdens on those
companies conducting business over the Internet. The adoption of any additional
laws or regulations may decrease the growth of the Internet, which, in turn,
could decrease the demand for Internet services and increase the cost of doing
business on the Internet. These factors may have an adverse affect on our
business, results of operations, and financial condition.
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Moreover, the interpretation of sales tax, libel, and personal privacy laws
applied to Internet commerce is uncertain and unresolved. We may be required to
qualify to do business as a foreign corporation in each such state or foreign
country. Our failure to qualify as a foreign corporation in a jurisdiction where
we are required to do so could subject us to taxes and penalties. Any such
existing or new legislation or regulation, including state sales tax, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse affect on our
business, results of operations and financial condition.
RESEARCH AND DEVELOPMENT
During the period from our inception to the date of this Registration Statement,
we have not spent any funds on research related to our website operations. An
aggregate of $4,950 was paid to Kevin Steil, doing business as K & L Cyber
Solutions, to assist us in developing our initial website and for updating our
website. Of this amount, $3,800 was donated by our former President to pay Mr.
Steil for his services. There are no agreements or arrangements obligating us to
repay $3,800 to our former President, nor does our former President intend to
seek repayment or other compensation for donating these funds.
COSTS ASSOCIATED WITH ENVIRONMENTAL COMPLIANCE
We currently have no costs of our website operations associated with compliance
with environmental regulations. We do not anticipate any costs related to our
website operations associated with environmental compliance because we are not
involved in the manufacturing of our website products. Moreover, the delivery
and distribution of our products will not involve substantial discharge of
environmental pollutants. However, there can be no assurance that we will not
incur such costs in the future.
REVENUE SOURCES FOR OUR WEBSITE
We estimate that all of our proposed revenues resulting from our website will be
from the sale of our products. We plan to sell our products at prices above our
original cost of purchase. Prices for some of our products will be lower than
our competitors, while others will be higher. We expect our product prices to be
lower than network marketing companies, but higher compared with retail
establishments that directly manufacture their own products, such as Vitamin
World. Based on our price research of products offered by larger well known
nationwide establishments, including our Internet competitors, we will attempt
to offer lower prices than these competitors.
TARGET MARKETS
The target markets for sale of our website products primarily are Internet users
between the ages of 18-80 years old, who are based in the United States and are
health conscious.
EMPLOYEES
As of February 20, 2003, our Chief Executive Officer/Director, Marc D. Roup, and
President/Principal Financial Officer/Principal Accounting Officer/Chairman of
the Board of Directors, Richard E. McDonald, are the sole persons employed for
our website operations.
OUR MEDICAL STAFFING BUSINESS
DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
From December 1999 until August 2000, our wholly owned subsidiary, Better
Solutions, operated as a Pennsylvania limited partnership under the name Symtech
Consulting L.P. Better Solutions, Inc. was incorporated in the State of
Pennsylvania on August 30, 2000. Since December 1999, Better Solutions, based in
Pittsburgh, Pennsylvania, has operating a medical staffing business. On February
20, 2003, we acquired Better Solutions, Inc. and it became our wholly owned
subsidiary.
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OUR MEDICAL STAFFING BUSINESS - SERVICES PROVIDED
We provide hospitals and other healthcare facilities with healthcare related
staffing services. We operate our medical staffing business under the name
MedTech. At least 80% of our staffing placements are for nurses, allied
professionals, and physicians. We currently provide staffing services to over
1000 healthcare facilities in 6 states and Washington, D.C. and operate sales
branches in Pennsylvania, Ohio and Florida. Because the healthcare needs of our
clients such as hospitals require immediate and around the clock needs, we
provide support to our clients 24 hours a day, 365 days a year. We staff the
following positions:
o Registered Nurse o Dentist
o Certified Nursing Assistant o Dental Technician
o Licensed Practical Nurse o Chiropractic Assistant
o Pharmacist o Speech Therapist
o Pharmacist Technician o Physical Therapist
o Clinical Operations Specialist o Occupational Therapist
o Phlebotomist o Radiological Technician
o Physicians Assistant o Cytogenetic Technologist
o Physician o EMT
o Nurse Practitioner o Medlab Assistant
o X-Ray Technician o Paramedic
o Respiratory Therapist o Medical Sonographer
o Medical Assistant o Dialysis Technician
o HEDIS Auditor o Patient Care Assistant
o Surgical Assistant o Chiropractor
o Case Manager o Dietitian
o Home Health Aid
o Dental Assistant
We currently maintain a database of over 3 million of these type healthcare
professionals. Based on a client's needs, we will conduct all interviewing,
staffing and selection of prospective employees. Our services are comprised of
the following components:
Per Diem Staffing of General Medical Personnel
Our per diem staffing provides medical professionals such as licensed registered
nurses with assignments ranging from a single shift to 52 week assignments,
primarily to the following healthcare facilities:
o Acute care hospitals;
o Nursing homes;
o Medical clinics;
o Surgical and ambulatory care centers; and
o Insurance companies.
The average contract length of our per diem staffing is 16 weeks. Our per diem
staffing represents approximately 85% of our revenues.
Allied Staffing
Our allied staffing division specializes in providing allied professionals such
as diagnostic testing technicians, radiology technicians, clinical laboratory
technicians, and pharmacists, primarily to the following healthcare facilities:
o Hospitals;
o Nursing homes; and
o Surgical and ambulatory care centers.
Our allied staffing division represents approximately 10% of our revenues.
Physician Staffing
Our physician staffing business specializes in the placement of board certified
radiologists, anesthesiologists, psychiatrists and other physicians on temporary
to permanent assignments to hospitals, insurance companies, assisting living
centers, and medical practices. Our physician staffing represents approximately
1% of our revenues.
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Service Products
We have branded three "service products" that we offer to potential clients. Our
Try-Before-You Buy Program and HR Medtech Program represent approximately 3% of
our revenues and our $2.00 Employee program represents approximately 1% of our
revenues:
o Try-Before-You-Buy Program
With this program a client may use one of our healthcare professionals on an
hourly basis until such time the client decides to hire the professional on a
full time basis, if ever.
o $2.00 Employee Program
This program permits a client to payroll one of their employees through us to
limit their liability and to decrease their overhead expense. Under this program
we assume responsibility and liability for any one or a combination of the
following: (a) risk management; (b) personnel management; (c) human resources
compliance; or (d) payroll and employee tax compliance.
o HR Medtech Program
With this program, we offer a client a complete human resource service for one
monthly fee, which includes all staffing needs, benefits management, and
payroll.
MATERIAL AGREEMENTS PERTAINING TO OUR MEDICAL STAFFING BUSINESS
Factoring Agreement with AmeriSource Funding, Inc.
On February 8, 2001, we entered into an agreement for Better Solutions, Inc.'s
revenues with AmeriSource Funding, Inc. in which AmeriSource Funding acts as our
factor for the majority of our receivables. This agreement provides that the
fees for accounts receivables purchased by AmeriSource Funding, Inc. include a
flat rate of 3.5% for the first 35 days an account is outstanding with an
additional fee of 0.12% per day beginning on the 36th day the account is
outstanding. Our obligations to AmeriSource Funding, Inc. are collateralized by
substantially all of our assets and our officers, Marc D. Roup and Richard E.
McDonald, provided personal guarantees of our obligations.
Agreement with Consultant C. Dillow & Company, Inc.
On February 21, 2003, we entered into an agreement with Consultant, C. Dillow &
Company, Inc., located in Laguna Beach, California, which provides that C.
Dillow & Company will provide the following services for us: (a) assist us in
developing, creating and providing factual information and in developing a
strong market awareness for us and our business operations; (b) prepare a
comprehensive analytical report that highlights our industry, opportunities,
trends and potential; (c) develop and create a public relations campaign for our
business; (d) aid, advise, and assist us in establishing a means of securing
local and nationwide media interest and coverage regarding us; and (e) aid,
consult, prepare and deliver "due diligence" packages as requested by and
furnished to registered broker-dealers and/or other institutional and/or fund
managers as we request. In return for the C. Dillow & Company's services, we are
required to pay it a total fee of 1,750,000 shares of our common stock.
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Agreement with Media 1 Financial Group LLC/ David Wood
On February 25,2003, we entered into an agreement with Media 1 Financial Group
LLC, a North Carolina limited liability company. We amended this agreement on
February 27, 2003. Media 1 has agreed to provide us with the following services:
(a) Assist us in developing, creating and providing awareness for our business;
(b) develop and create our advertising campaign; (c) aid, advise and assist us
in establishing a means of securing local and nationwide media interest and
coverage of our business; (d) aid and assist us in developing a more "user
friendly" website; (e) aid, consult, prepare and deliver "due diligence"
packages requested by and furnish them to registered broker/dealers and/or other
institutional and/or fund managers as requested by us; (f) create a profile and
investment data sheet and present and deliver them via email/fax to over 50
newsletter writers and editors [newsletter writers and editors shall be provided
by Media 1 Financial Group LLC]; (g) host us at two conventions at the expense
of Media 1 Financial Group LLC; (h) review and prepare summaries of the
financial and non-financial portions of our quarterly and annual reports; (i)
editing and distribution of financial and general press releases; (j) drafting
and distribution of collateral material regarding us; and (k) the development
and distribution to over 500 sources and/or persons of three media articles
regarding the us each month. Media 1 Financial Group LLC agrees to provide one
hundred (100) hours of services each month for a period of twenty-four (24)
months beginning on the date that we request services to commence. We agreed to
pay Media 1 Financial Group LLC 858,000 shares of our common stock for these
services. We have no obligation to register any of the 858,000 shares if we file
a Registration Statement. Media 1 Financial Group LLC entered into the agreement
with us to provide services for a period of two years in exchange for the
issuance of 858,000 shares of our common stock. Media 1 and David Wood own an
aggregate of 1,866,000 shares of our common stock.
Franchise Development Agreement with McGrow® Consulting
We have a December 17, 2002 agreement with McGrow® Consulting, located in
Worchester, Massachusetts, to provide us with the initial development of a
franchise system for Better Solutions, Inc., including: (a) review of the
business/determination of franchise services, policies and strategies; (b)
analyzing the franchise concept and determining the best ways to structure
controls and disclosure documents; (c) provide us with key information for an
operating budget and growth plan; (d) prepare a marketing program to market and
sell franchises; and (e) prepare the following franchise related documents: (i)
uniform franchise offering circular; (ii) franchise agreement; and (iii)
operations control manual. In return for these services, we are required to pay
McGrow® Consulting a $72,000 consulting fee payable with a $12,000 retainer
payment, which has already been paid, and 6 monthly payments of $10,000.
Promissory Note Agreement with PNC Bank
We have a January 8, 2003 promissory note agreement with PNC Bank, NA, located
in Pittsburgh, Pennsylvania, providing for a $250,000 revolving line of credit
with that financial institution. Under the terms of the agreement, we are
required to pay a 6.250 per annum interest rate on any unpaid principal balance.
The note is secured by: (a) our Chief Executive Officer's mortgage on his
residence at 1029 Hunt Club Court, Murrysville, Pennsylvania; and (b) our
President's mortgage on his residence at 307 Wedgewood Court, Murrysville,
Pennsylvania. We currently owe $0 on this line of credit.
TARGET MARKETS PERTAINING TO OUR MEDICAL STAFFING BUSINESS
Our primary target markets are large hospitals, healthcare companies and
insurance companies. Currently, approximately two-thirds of our customers are
concentrated in acute care hospitals, clinics and surgical and ambulatory care
centers.
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OPERATING OFFICES AND OPERATIONAL STRATEGY
We operate the following branch offices which are organized into the following
geographic sales regions and were opened on the following dates:
- --------------------------- -------------------- -------------------------------
LOCATION OPENING DATE STATES COVERED
- --------------------------- -------------------- -------------------------------
Pittsburgh, Pennsylvania* December 16, 1999 Pennsylvania, Virginia, West
Virginia, District of Columbia
- --------------------------- -------------------- -------------------------------
Cleveland, Ohio August 15, 2002 Ohio, Indiana
- --------------------------- -------------------- -------------------------------
Boca Raton, Florida December 15, 2002 Florida
- --------------------------- -------------------- -------------------------------
*Our Pittsburgh, Pennsylvania office also serves as our headquarters office.
Our branch offices serve as our direct contact with our healthcare professionals
and clients, and are responsible for the recruiting, scheduling, sales and
marketing components of our business. We staff each branch with the following
positions:
o Branch Manager - Our branch manager is responsible for developing local
client relations, negotiating agreements with healthcare facilities and
setting prices for our clients and healthcare professionals. We attempt to
hire branch managers with healthcare related experience.
o Staffing Coordinators - Each staffing coordinator is responsible for
managing a portfolio of our healthcare professionals. The primary
responsibility of a staffing coordinator is to interface with our client
facilities and our pool of available personnel. Each branch has an
on-call/after hours staffing coordinator who handles after hours business.
o Administrative Assistant - Our administrative assistance is responsible for
maintaining the billing and payment records and sending data to our
corporate headquarters office.
Our Vice President of Sales serves as the Regional Director for our current
three branch offices.
BRANCH OFFICE OPENING SELECTION AND PROCEDURES
We will attempt to open new branch offices based on the following criteria
pertaining to the geographic area being considered:
o Strong medical need;
o Strong hospital presence;
o Population in excess of 2,000,000; and
o Viable recruiting pool from which to select healthcare professionals.
Our market area is approximately a 100 mile radius of the city in which our
branch office is located. Once we have selected a new branch office, our Vice
President of Sales assists in the opening of the new office for a period of
approximately 3 months and hires 1 branch manager, 3 account executives and 1
support person, as our new branch office employees. A new branch office's
marketing campaign consists of: (a) telephone solicitation of new clients,
prospective candidates and new vendors for new client business and recruitment
of healthcare professionals; (b) recruiting prospective healthcare professionals
and clients at community functions, tradeshows and college fairs; and
(c) attempting to develop and foster relationships with key community groups,
commerce groups and networking groups to bolster name recognition, recruit
healthcare professionals, obtain new clients, and develop existing client
relationships.
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QUALITY ASSURANCE TECHNIQUES
We have attempted to develop quality controls to maintain high standards for
recruiting healthcare professionals by ensuring that our healthcare
professionals have the proper credentials, skills and experience for the
individual assignments of our clients. We attempt to maintain these quality
controls through the following seven step process:
o Preemployment Phone Screen
We conduct a phone screen interview of each healthcare professional to
determine and assess basic logistics, desired skill set, geographic
desires, compensation requirements, and qualifications. We require a
minimum of one year of related work experience. We ascertain the level of
such experience during this phone screen interview.
o Face to Face Interview
If the healthcare professional meets the basic requirements of our phone
screen interview, our local branch manager or in-house industry
professional conducts a face-to-face interview. We request a resume' from
the healthcare professional candidate.
o Skills Testing
We administer a written test of the healthcare professional to test the
specific skills of his or her particular background. We developed each of
these written tests.
o Reference Checking
Our human resource department contacts prior work references furnished by
the healthcare professional to verify the claimed employment and to obtain
comments regarding the candidate's prior performance.
o License Check
Our human resource department contacts the relevant state or federal agency
to verify the candidate's license status, license expiration date and
determine whether there are any prior disciplinary actions or complaints
filed against the candidate.
o Background and Criminal Record Check
Our human resource department submits a criminal records check to ADP
Credential Check, which performs screening and selection services, to
determine whether or nor the candidate has any prior criminal record. our
human resource department also schedules an appointment for the candidate
to go to a local hospital or clinic to have a blood or urine test
administered to determine any drug usage.
o Internal Rating and Ongoing Monitoring
Our database provides a number of internal functions. We assign an internal
competency rating standard for each candidate, based on appearance, skill,
and attitude, into our computer personnel database. We update this rating
throughout the healthcare professional's employment and monitor the
performance of the professional through evaluations from surveys with the
client and weekly calls by our account executives with the employee and
client to obtain feedback from each. Upon hiring the healthcare
professional, we enter data pertaining to the professional's prior work
experience, past job locations and duties, renewal license dates,
continuing educational requirements, past compensation, comments from
references, and desired goals within their career. Thereafter, we track the
license and continuing educational requirement data to ensure that the
professional meets continuing license and educational requirements. Our
database matches our clients' needs with our available pool of
professionals. We attempt to place our professionals in facilities where
they have previously worked in order to enhance the continuity of our
services to our clients; if we are unable to do so, we provide our
professionals with pre-staffing orientation to the facility which consists
of a minimum 8-hour orientation at the facility. Our pre-staffing
orientation is intended to ensure that the healthcare professional is
comfortable with the facility's physical layout, permanent staff and
clinical protocols.
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REVENUE SOURCES
At least 97% of our revenues are derived from the difference between the hourly
rate that we charge our client for the healthcare professional's employment with
the client and the hourly rate we pay that healthcare professional. Less than 3%
of our revenues are derived from: (a) fee based employment services for our
clients that are not derived from our pool of potential candidates; and (b)
conversion fees when a client wishes to retain our healthcare professional after
the initial term of the professional's placement with our client. Approximately
85% of our revenues are derived from placement of healthcare professionals for a
term of employment exceeding 13 weeks. We do not receive any of our revenues
from Medicare or Medicaid reimbursements or any other similar state or federal
reimbursement programs.
SALES AND MARKETING
Our sales personnel market our products to persons in three general different
decision maker categories at healthcare facilities. Each of these persons may
hire and monitor the quality of temporary healthcare staffing services. These
levels are:
o Purchasing Manager, Administrator, or Chief Nursing Officer -
Community-owned hospitals, nursing home chains, and healthcare group
alliances purchase temporary staffing services for their multiple
facilities under a single contract. These facilities typically designate a
single person, such as a purchasing manager, administrator or Chief Nursing
Officer, to select and negotiate agreements with healthcare staffing
companies. Our regional director and branch managers negotiate the
contractual terms and pricing with these types of facilities.
o Director of Nursing or Department Manager - A Director of Nursing or
department manager at a healthcare facility reviews our services to
determine clinical competency of our healthcare professionals and the
quality of our hiring standards. Our regional director and local branch
manager are responsible for establishing, building and maintaining
relationships at this level.
o Facility Staffing Coordinator/After-Hours and Weekend Supervisors - These
positions represent the actual users of our services. Our branch manager
and local staffing coordinators are responsible for regularly contacting
these individuals to coordinate daily staffing and scheduling of personnel.
INFORMATION SYSTEMS
Our information system was designed for our staffing needs by Resumate located
in Alexandria, Virginia. This system was customized for our recruiting,
regulatory credentialing, scheduling, and billing needs and functions in the
following capacities:
o Management tool;
o Used by staffing coordinators to respond to client questions and requests;
o Housing and organizing our client and employee information; and
o Monitoring billing records by using timecards to generate invoices for our
clients.
LIABILITY INSURANCE PERTAINING TO OUR MEDICAL STAFFING BUSINESS
We currently maintain a professional liability and malpractice insurance policy,
which we believe is sufficient for the risks associated with our business. Other
than the clients for our $2.00 Employee Plan, our client agreements provide that
medical malpractice claims against us relating to our healthcare professionals
will be defended by our clients. We have indemnity agreements with 99% of our
clients that have staffing agreements with us which state that we will defend,
indemnify and hold harmless those clients against any act of omission or willful
or reckless acts, including negligence and misconduct. Approximately 99% of
these indemnity agreements are reciprocal, providing for the same
indemnification to us. There are no assurances that our insurance policy and the
indemnity agreements with our clients will be sufficient to protect us from any
claims against us.
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EMPLOYEES
We have 133 full time employees, as follows:
o 14 corporate office staff located in our Pittsburgh, Pennsylvania corporate
headquarters office consisting of: (a) our Chief Executive Officer and
Chairman of the Board/Chief Financial Officer; (b) Vice President; (c)
Financial Officer; (d) Vice President of Finance; (e) Vice President of
Sales; (f) 1 Branch Manager; (g) 2 clerical employees; and (h) 5 account
executives.
o 90 staffing placement personnel located in our Pittsburgh, Pennsylvania
corporate headquarters office;
o 5 staffing placement personnel and 2 account executives located in our Boca
Raton, Florida branch office; and
o 19 staffing placement personnel, 1 branch manager, and 2 account executives
located in our Cleveland, Ohio branch office.
In addition to the foregoing, the healthcare professionals that we place with
our clients are also our employees, because we directly employ these healthcare
professionals. During 2002, we directly placed or assisted in the placement of
at least 5,000 healthcare professionals.
Over the next twelve months, we plan to add approximately three account
executives and one branch manager to our existing office in Pittsburgh,
Pennsylvania. In addition, we plan to add approximately 230 staffing placement
personnel in the following locations: (a) 25 such personnel to each of our
planned additional branch offices in Washington D.C., Baltimore, Maryland and
Columbus, Ohio; and (b) 155 such personnel to our existing branch offices, as
follows: (i) 55 at the Pittsburgh, Pennsylvania branch; (ii) 50 at the Boca
Raton, Florida branch; and (iii) 50 at the Cleveland, Ohio branch. There are no
assurances that we will be successful in these plans.
We have no collective bargaining agreements. We have an employment agreement
with each of our staffing placement personnel. The terms of these employment
agreements vary, depending upon the negotiated terms of these agreements;
however, each employment agreement contains the following terms: (a) the
employment relationship between us and the staffing person is "at will"
employment and may be terminated at any time by either party with or without
cause; (b) the employee is prohibited from making use of any of our confidential
information, including any information regarding our procedures, advertising,
finances, organization, personnel, plans, objectives or strategies; (c) for a
period of 12 months after the employee's termination, he or she is prohibited
from: (i) owning, managing, operating, controlling, being employed participating
in, or begin connected in any manner with the ownership, management operation or
control of any competitor in any part of the area encompassed within a radius of
50 miles of any applicable office; (ii) soliciting the trade or patronage of any
customer or perform services for any customer; and (iii) soliciting in any way
with any competitor.
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OUR GROWTH STRATEGY PERTAINING TO OUR MEDICAL STAFFING BUSINESS
Our growth strategy over the next 12 months will include:
o Continuation of our Existing Business Model With Existing and New Corporate
Offices
We will attempt to expand our client base with our existing branch offices
by offering our prospective clients and current clients solutions and
alternatives to their staffing needs and by actively marketing and
cross-selling our services. We will attempt to expand our pool of qualified
healthcare professionals by employing our seven step quality assurance
process, our competitive benefits package, and encouraging our healthcare
professionals to refer other such professionals to us. We intend to apply
the same expansion methods to our planned branch offices summarized below.
o Planned Branch Offices
We plan to open a fourth, fifth, and sixth branch office from approximately
May 2003 to October 2003, as follows:
o Fourth Operating Office - Washington, D.C. We plan to open a fourth
branch office in the Washington, D.C. area, which includes Virginia
and Maryland within an approximate 50 mile radius. We will attempt to
open this office location in approximately May 2003. The approximate
cost affiliated with the opening and the start-up of this office is
$8,600, excluding salaries and bonuses;
o Fifth Operating Office - Baltimore, Maryland - We plan to open a fifth
branch office in the Baltimore, Maryland area which will include other
parts of Maryland within an approximate 50 mile radius. We will
attempt to open this office location by approximately October 2003.
The approximate cost affiliated with the opening and the start-up of
this office is $8,600, excluding salaries and bonuses; and
o Sixth Operating Office - Columbus, Ohio - We plan to open a sixth
branch office in Columbus, Ohio which will include the Columbus, Ohio
area and other parts of Ohio within an approximate 50 mile radius. We
will attempt to open this office location by June 2003. The
approximate cost affiliated with the opening and the start-up of this
office is $8,600, excluding salaries and bonuses.
o Name and Service Branding Campaign
We will attempt to conduct a name and service branding campaign in the
regions that will be covered by our individual branch office locations. In
our attempt to increase the awareness of the MedTech name, our planned
future franchise system, and the services that we offer, this campaign will
consist of healthcare related tradeshows, direct mail to lists of
prospective clients and franchisees, print/cable/radio advertising,
telephone sales, and public relations and brand name marketing consultants.
The estimated cost for each corporate office region is approximately
$25,000 to $50,000.
o Franchise Program
The target markets for our franchise program are United States cities that
have a minimum population of 2,000,000 with an average age of over 45. In
return for a franchise fee paid to us and an annual royalty fee of 7% to
24% of the franchisee revenues, depending upon our level of involvement
with the franchisee, we will provide the following assistance to the
franchise purchaser:
o Providing the MedTech name and business plan;
o Providing our marketing materials;
o Two weeks of training at our corporate headquarters and additional
on-site training on an as-needed basis;
o Access to our nationwide candidate pool;
o Access to volume discounts for insurance and supplies; and
o Use of our proprietary software for franchise operation and office
staff support.
To date, we have not developed our franchise program, including marketing
and training materials, franchise agreements, franchise prospectus or
regulatory compliance. We will attempt to complete the development of our
franchise program by June 2003. The estimated cost for the development of
our franchise system is $72,000. There is no assurance that we will ever:
(a) develop a franchise program; (b) have sufficient funds to develop a
franchise program; and (c) develop a franchise program by June 2003.
o Cross Selling
We plan to cross sell our services between our branch offices. For
instance, if our Pittsburgh, Pennsylvania office was to close a deal with a
client which had affiliate or branch offices in Cleveland, Ohio, our
Cleveland, Ohio corporate office would attempt to obtain an agreement with
that client's Cleveland, Ohio affiliate or branch office.
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COMPETITIVE BUSINESS CONDITIONS AND OUR PLACE IN THE MARKET PERTAINING TO OUR
MEDICAL STAFFING BUSINESS
The medical staffing business is highly competitive and operates in a highly
fragmented market composed of national, regional and local firms. Our
competitors have substantially longer operating histories, greater name
recognition, larger customer bases, and greater financial and technical
resources than we have. More established firms have a greater mass of available
healthcare professional candidates and more substantial word-of-mouth client and
healthcare professional referral programs. Our competitors are able to conduct
extensive marketing campaigns that we are financially unable to conduct. In
addition, these companies may create more attractive pricing to potential
clients. Our ability to compete will be limited by our success in distinguishing
our services from others. We compete with our competitors on two levels: (a)
attracting healthcare professionals to us rather than other healthcare staffing
firms; and (b) attracting hospitals, nursing homes, and other healthcare-related
concerns as clients.
The competitive factors that are considered by healthcare professionals are:
o Quantity of assignments;
o Length of assignment;
o Quality of assignments;
o Diversity of assignments; and
o Compensation and benefits package of assignments.
The competitive factors that will be considered by potential clients are:
o Educational qualifications and work experience and quality of our healthcare
professionals;
o Competitive price considerations; and
o Timely availability and geographic availability of our healthcare
professionals with the requisite skills, quality and scope of services
desired by the potential client.
Some of our competitors include:
o AMN Healthcare;
o Cross Country;
o Medical Staffing Network;
o Adecco;
o Manpower;
o Maxim;
o Carol Harris Staffing;
o Stat Staffing; and
o Nursefinders.
To meet the competitive conditions regarding our healthcare professionals, we
plan to emphasize the following factors pertaining to staffing assignments:
o Flexible staffing assignments - We attempt to provide our professionals
with the flexibility to tailor their staffing schedules to accommodate
their lifestyle through their choice of when or where they work. Our
scheduling systems are designed to place our professionals in facilities
and shifts that they desire in order to promote a productive and positive
work experience.
o Competitive benefits package - We offer our healthcare professionals a
minimum of 160 hours a month for more than 3 months, a savings plan, paid
vacation time, and access to group discounted major insurance benefits such
as health, dental, life, disability, and general liability.
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To meet the competitive conditions regarding our potential clients, we plan to:
o Attempt to establish a strong local/regional presence in the area covered
by our branch offices;
o Conduct our branding campaign;
o Continue to hire branch managers with healthcare related experience; and
o Emphasize the advantages of our services through our attempt to maintain a
pool of high quality healthcare professionals by applying our 7 step quality
assurance process referred to above on page 33.
There can be no assurance that we will be able to compete in the medical
staffing services business, which could have a materially negative impact upon
market awareness and acceptance of our services.
CUSTOMER DEPENDENCY PERTAINING TO OUR MEDICAL STAFFING BUSINESS
During 2001, 10.7% and 12% of our business was derived from South Hills Health
System located in Clairton, Pennsylvania, and Allegheny Personnel, a division of
Venturi Staffing, Inc., a publicly traded company located in Pittsburgh,
Pennsylvania, respectively. During 2002, 10.8% of our business was derived from
Allegheny Personnel. Despite this concentration of business, we currently
provide services to over 1000 healthcare-related facilities. Accordingly, we do
not anticipate becoming dependent upon any one or a few customers; however,
there are no assurances that we will not become so dependent in the future.
INTELLECTUAL PROPERTY PERTAINING TO OUR MEDICAL STAFFING BUSINESS
On March 25, 2002, we applied for trademark protection of our service marks "HR
Medtech" and "$2.00 Employee" with the United States Trademark and Patent
Office. This application is pending and there are no assurances that we will be
granted trademarks of these names. Our business and competitive position are
dependent upon our ability to protect the proprietary process we use in our
business. Despite our efforts to protect such proprietary rights, unauthorized
parties may attempt to obtain and use information that we regard as proprietary.
We will rely on patent and trade secret law and nondisclosure and other
contractual arrangements to protect such proprietary information. Even if we
obtain trademark protection of "HR Medtech" and "$2.00 Employee", there can be
no assurance that others will not independently develop substantially equivalent
proprietary information or product or otherwise gain access to our proprietary
information, that such information will not be disclosed, or that we can
effectively protect our rights to unpatented trade secrets or other proprietary
information.
GOVERNMENT REGULATION
The healthcare industry in general is subject to extensive and complex federal
and state laws and regulations related to professional licensure, conduct of
operations, and payment for referrals. Some states require state licensure for
businesses that employ and/or assign healthcare personnel to provide healthcare
services on-site at hospitals and other healthcare facilities. We are currently
licensed in the states that require such licenses where we conduct business. In
addition, temporary healthcare professionals that we employ are often required
to be individually licensed or certified under applicable state laws. We take
reasonable steps to ensure that our employees possess all necessary licenses and
certifications in all material respects.
EFFECT OF EXISTING GOVERNMENTAL REGULATIONS PERTAINING TO OUR MEDICAL STAFFING
BUSINESS
Although our business is not directly impacted by government regulations, they
do apply to our hospital and healthcare facility clients, which could indirectly
impact our business since we provide services on a contract basis and are paid
directly by our hospital and healthcare facility clients.
38
COSTS ASSOCIATED WITH ENVIRONMENTAL COMPLIANCE
We currently have no costs associated with compliance with environmental
regulations. We do not anticipate any costs associated with environmental
compliance because we are not involved in the manufacturing of our products.
Moreover, the delivery and distribution of our products will not involve
substantial discharge of environmental pollutants. However, there can be no
assurance that we will not incur such costs in the future.
RESEARCH AND DEVELOPMENT PERTAINING TO OUR MEDICAL STAFFING BUSINESS
Since Better Solutions, Inc. became our wholly owned subsidiary on February 20,
2003, we have not spent any funds on research or development pertaining to our
medical staffing business. In addition, Better Solutions has spent no funds on
research and development since its inception as a Pennsylvania limited
partnership in December 1999 or as a corporation since its inception as a
corporation on August 30, 2000.
OUR MEDICAL STAFFING BUSINESS - SERVICES.
REPORTS AND OTHER INFORMATION TO SHAREHOLDERS
We are subject to the information and reporting requirements of the Securities
Exchange Act of 1934 and we are required to file periodic reports and other
information with the Securities and Exchange Commission. We have filed a Form
SB-2 registration statement with the Securities and Exchange Commission. The
following documents may be inspected, without charge, and copies may be obtained
at prescribed rates, at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549: (a) this registration statement and exhibits
thereto; and (b) periodic reports and other information filed with the
Securities and Exchange Commission. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
registration statement and other information filed with the SEC are also
available at the web site maintained by the SEC at http://www.sec.gov.
ITEM 17.
A.PLAN OF OPERATIONS PERTAINING TO OUR WEBSITE PRODUCT SALES
The discussion contained in this prospectus contains "forward-looking
statements" that involve risk and uncertainties. These statements may be
identified by the use of terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates," or expressing this terminology negatively or
similar expressions or by discussions of strategy. The cautionary statements
made in this prospectus should be read as being applicable to all related
forward-looking statements wherever they appear in this prospectus. Our actual
results could differ materially from those discussed in this prospectus.
Important factors that could cause or contribute to such differences include
those discussed under the caption entitled "Risk Factors," as well as those
discussed elsewhere in this prospectus.
Forward-Looking Statements.
This Post Effective Amendment Number 5 to our Form SB-2 Registration Statement
contains forward looking statements. The words "we," "us," and "our" refer to
World Health Alternatives, Inc. The words or phrases "would be," "will allow,"
"intends to," "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project," or similar expressions are intended to
identify "forward-looking statements". Actual results could differ materially
from those projected in the forward looking statements as a result of a number
of risks and uncertainties pertaining to our website product sales, including:
(a) lack of demand for our products; (b) competitive products and pricing;
(c) limited or no amount of resources devoted to advertising; (d) limited
funding to conduct our operations; (e) if we fail to institute methods of
retaining first time users of our services, our revenues will be adversely
affected; and (f) because our management has no relevant experience or
background in our business, we may be unable to develop profitable operations.
We had offering costs of $30,524.06 which consist of legal services, edgarizing,
and accounting fees which were donated by our former President. These costs have
already been paid. We do not have an agreement or arrangement for the repayment
of these funds. Our former President will not seek repayment of these funds.
39
We anticipate total estimated capital expenditures of approximately $6,700 for
our plan of operations in the following areas:
o Entering into agreements with suppliers;
o Updating design, graphics and function of website;
o Establishing database of products on website;
o Advertising;
o Offering incentives to customers to establish repeat business;
o Establishing a database of articles regarding products offered on our
website;
o Conducting viral marketing; and
o Introducing our homeopathic lines.
The total cost of our planned costs are:
o $2,000 - Enter into agreements with additional suppliers for products;
o $3,500 - Update the design, graphics, and functional aspects of our website
(other categories included as part of this estimated cost include
"Establish database of our products" and "Establish database of articles");
and
o $1,200 - Advertising.
We believe that our cash position as a result of our acquisition of Better
Solutions, Inc. will be sufficient to meet $6,700 of capital expenditures
pertaining to our website sales of nutritional products; however, if our cash
and/or revenues are insufficient to conduct our operations, our Chief Executive
Officer or Chairman of the Board of Directors plans to loan us funds through
non-interest bearing loans; however, we have no agreement with either officer to
do so and they are under no obligation to do so. Accordingly, there are no
assurances that, if it becomes necessary, we will receive loans from our
officers.
OUR PLAN OF OPERATIONS PERTAINING TO OUR WEBSITE FROM OUR INCEPTION TO DATE
We were incorporated on February 13, 2002. Since our inception to February 27,
2003, we have accomplished the following in our plan of operations:
Raised Capital
We raised $14,070 for our operations through the sale of a private placement of
our securities.
Established Website
On March 25, 2002, our website, www.worldhealthalternatives.com, became
operational.
Agreement with Ecoquest
April 8, 2002 - We entered into an agreement with EcoQuest International which
allows us to become an authorized dealer of EcoQuest's home environmental
products.
Authorized Independent Representatives for Global Health Trax April 25, 2002 -
We became an Authorized Independent Representative for the sale of Global Health
Trax products.
Research
April 2002 through August 2002 - Our former president, Edward G. Siceloff
researched organizations that conduct research and publish articles pertaining
to vitamins, minerals and herbs and their effects. We intend to publish such
articles on our website; however, to date we have not done so. There is no cost
associated with this research; however, there will be costs if we enter into
agreements or arrangements with such research organizations. We have not yet
determined the specific amount or nature of such costs. In addition, our former
president conducted research on price competition pertaining to the type of
products we sell to ensure that the products we offer are competitively priced.
There is no cost associated with this research.
40
OUR FUTURE PLAN OF OPERATIONS PERTAINING TO OUR WEBSITE
We will attempt to accomplish the following aspects of our plan of operations
over the next twelve (12) months. As indicated below, certain aspects of our
plan of operations have been delayed due to our lack of financial resources.
Enter into Agreements with Suppliers for Products
Throughout our plan of operations, in order to select additional product
suppliers, we will conduct Internet research and review various nutritional
wholesaler publications. Based on this research, we will contact various
companies and make supplier selection based upon cost, delivery requirements,
and product selection. We will also purchase wholesale catalogues and discuss
with company representatives pertinent factors such as product availability,
quality, selection, and delivery.
Update Design, Graphics and Functional Aspects of Website
We plan to update the design, graphics and functional aspects of our website on
an ongoing, continual basis. To accomplish this objective, we plan
to hire website consultants. We will select website consultants based on:
o cost and available funds to pay for consultants;
o determining the quality of past website projects; and
o comparing such projects among website consultants.
We estimate that a $3,500 cost will be associated with hiring website
consultants. We originally planned to complete this aspect of our plan of
operations by late January 2003; however, we presently do not anticipate
completing this aspect of our plan of operations until July 2003.
Advertise our Website
Throughout our plan of operations, we plan to advertise. We plan to seek low
cost advertising of $50 to $150 per month through local publications such as
local newspapers. To date, we have not begun to advertise in any publications.
We plan to begin advertising in March 2003.
Incentives to Our Existing Customers
Originally we planned to commence this aspect of our plan of operations in June
2002; however, this aspect of our plan of operations has been delayed because we
have not yet generated revenues. We now anticipate that beginning in March 2003
if we have revenues at that time, we will provide the following incentives to
our customers:
o Customers that obligate themselves to order a monthly supply of a product
on an annual basis will receive discounts of up to ten percent (10%); and
o Promote some of our products by offering a free bottle of vitamins or herbs
with the purchase of one such identical product.
Because we will provide free bottles of vitamins or herbs, our costs will
increase; however, at the present time the amount of that increased cost is
indeterminable. However, we plan to attempt to obtain samples of small
quantities of vitamins from suppliers at no charge or at a minimal cost to offer
our customers. At this time, we are unaware if we will be able to obtain these
samples.
Establish Database of Specific Product Ingredients, Benefits, and Harmful
Effects
Beginning February 2003 and throughout our plan of operations, we plan to
establish and update a database of products and information about products on
our website, including information pertaining to: (a) a listing of the
ingredients of our products; (b) the potential health benefits of our products;
and (c) the potential harmful effects of our products. The cost affiliated with
this aspect of our plan of operations is related to the $3,500 cost for hiring
website consultants.
41
Establish Database of General Articles of Interest
Originally we planned to commence with this aspect of our plan of operations in
June 2002. This aspect of our plan of operations has been delayed because our
former President was unable to complete a sufficient database of articles, and
our former President's search for these articles has been more time consuming
than we originally anticipated. We now anticipate that an initial database of
articles about our products will not be established on our website until March
of 2003. Thereafter, we anticipate the database will include general subjects
pertaining to:
o Vitamins;
o Minerals;
o Herbs;
o Spices;
o Homeopathy; and
o Aromatherapy.
We will conduct Internet searches for articles written on the products we offer,
as well as the above-mentioned general subject areas. We will also seek
permission from product suppliers that have written articles on the products we
offer to post such articles on our website at no cost. The cost affiliated with
this aspect of our plan of operations is part of the expected $3,500 to hire
website consultants.
Viral Marketing
Originally we planned to commence with this aspect of our plan of operations in
July 2002; however, this aspect of our plan of operations has been delayed due
to our inability to accomplish other aspects of our plan of operations. We now
anticipate that our president will not attempt to exchange advertising with
other websites until April 2003. Because we plan to pursue equal exchanges of
like advertising services between us and other websites, we do not anticipate
any costs affiliated with this aspect of our plan of operations.
Introduce our Homoeopathic Product Line
We will attempt to establish agreements with suppliers of homeopathic products
and to offer such products on our website. Originally, we planned to commence
this aspect of our plan of operations in July 2002. This aspect of our plan of
operations has been delayed until we complete the updating of our website. We
now anticipate these products will not be offered until May 2003. We do not
anticipate any costs affiliated with this aspect of our plan of operations.
B. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS PERTAINING TO BETTER SOLUTIONS, INC.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the "selected financial data" and
our consolidated financial statements and related notes appearing elsewhere in
this prospectus. For purposes of this Management's Discussion and Analysis, the
words "we" or "our" refer to our wholly owned subsidiary, Better Solutions, Inc.
This discussion and analysis contains forward-looking statements based on our
current expectations, assumptions, estimates and projections overview. The words
or phrases "would be," "will allow," "intends to," "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements".
Actual results could differ materially from those projected in the
forward-looking statements as a result of a number of risks and uncertainties
pertaining to our medical staffing business which appear on pages 10-12.
42
OVERVIEW OF OUR COMPANY
We are a specialized medical staffing company and the largest provider of
specialized medical staffing services in the Western Pennsylvania area as
measured by number of employed consultants. More than two-thirds of our clients
are acute care hospitals, clinics, and surgical and ambulatory care centers. We
serve both for-profit and not-for-profit organizations that range in scope from
one facility to national chains. Our clients pay us directly. We do not receive
any portion of our revenues from Medicare or Medicaid reimbursements or similar
state reimbursement programs. In 2002, 95% of our revenues were derived from
providing healthcare staffing services. Approximately 90% of our 2001 revenues
were derived from project based hourly consulting, while permanent placement of
medical professionals represented 10% of our 2001 revenues. Our average contract
length in 2001 was approximately 4 months. Approximately 95% of our organic
revenue growth in 2002 was the result of increased volume, with the balance the
result of increased services. Our average contract length in 2002 was
approximately 16 weeks.
Since 1999, we have opened 3 corporate owned offices and provide our service in
6 states. We intend to continue to identify and develop opportunities to open
new offices as they arise. We also intend to franchise the MedTech name and
business process. However, our ability to continue to open new offices and grant
franchises depends on a number of factors, including identifying, attracting and
retaining local management and securing good locations on acceptable terms. If
our ability to continue to open offices or attract franchisees is impaired, our
revenue growth could be affected.
The following table sets forth, for the periods indicated, certain selected
financial data:
FISCAL YEAR ENDED
---------------------------------
2002 2001
------------ ------------
Service revenues.............................$2,796,911 $2,707,891 100% 100%
Cost of services rendered.....................1,781,865 1,638,882
Gross profit..................................1,015,046 1,069,009
36.3% 39.5%
Selling, general and administrative expenses....872,641 879,696
Income from operations..........................143,955 187,860
Interest expense, net............................72,591 58,959
Income before income taxes.......................71,364 128,901
Provision for income taxes (2)......................-0- 2,913
Net income.......................................71,364 125,988
EBITDA (1)......................................142,405 189,313
(1) We define EBITDA as income before interest, income taxes, depreciation,
amortization and non-recurring recapitalization costs. EBITDA should not be
considered in isolation or as an alternative to net income, cash flows from
operations, investing or financing activities or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. EBITDA, as we define it, is not necessarily comparable to other
similarly titled captions of other companies.
(2) There is no income tax provision for 2002 as the Company elected
S-Corporation status whereby income of the Company is allocated to the
shareholders, who are responsible for the income tax liability.
COMPARISON OF YEAR ENDED DECEMBER 31, 2002 TO YEAR ENDED DECEMBER 31, 2001
SERVICE REVENUES. Our service revenues for 2001 increased $89,000, or 3.5%,
from $2,708,000 in 2001 to $2,797,000 in 2002. The majority of the increase in
revenues in 2002 was attributable to a $154,000 increase in our hourly
consulting service. The reduction in permanent placement service revenues in
2002 from 2001 to $65,000, or 50% was attributable to the change in economic
conditions and the change in utilization of permanent staff to temporary staff
by our clients. The net result was an increase of $89,000.
43
New offices opened in the fourth quarter of 2002 added only 1% of
additional revenue in hourly consulting services revenue over the comparable
quarter in 2001.
Additionally, a small portion of the hourly consulting services growth came
from increased contract obligations among our clients and increased market share
along with additional new third party contract obligations to other local
staffing firms that do not have a specialized medical staffing division but need
to maintain that service to fulfill contractual obligations of their own. The
majority of these increases from contracts will be realized in 2003. The balance
of the increase in sales revenues was the result of price increases.
COST OF SERVICES RENDERED. Cost of services rendered increased $143,000, or
8.7%, from $1,639,000 in 2001 to $1,782,000 in 2002. The increase was partially
attributable to the 3.5% increase in service revenues with the remainder due to
competitive pricing pressures experienced in the marketplace, which resulted in
a decrease in our hourly average margin.
GROSS PROFIT. Gross profit decreased $54,000, from $1,069,000 in 2001 to
$1,015,000 in 2002, representing gross margin percentages of 39.5% in 2001 and
36.3% in 2002. The decrease in gross margin percentage in 2002 is the result of
competitive pricing pressures experiences in the market and the mix of services
offered.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $7,000, or 1.1%, from $880,000 in 2001 to
$873,000 in 2002. As a percentage of revenue, selling, general and
administrative expenses decreased from 32.8% in 2001 to 31.1% in 2002. The
increased cost of administrative personnel in 2002 was more than offset by a
significant decrease in legal expenses as a litigation matter was resolved in
2001 and a number of other operating expenses were decreased.
EBITDA. As a result of the above, EBITDA decreased $40,000, or 21.1% from
$182,000 in 2001 to $142,000 in 2002. As a percentage of revenue, EBITDA
decreased from 6.8% in 2001 to 4.8% in 2002.
INCOME FROM OPERATIONS. As a result of the above, income from operations
decreased $43,000, or 22.2%, from $187,000 in 2001 to $144,000 in 2002. As a
percentage of revenue, income from operations decreased from 6.6% in 2001 to
4.3% in 2002.
INTEREST EXPENSE, NET. Interest expense increased $12,000, or 19.0% from
$62,000 in 2001 to $74,000 in 2002. This increase is due to the increased use of
our factoring agreement to fund operations as a result of increases in revenues.
INCOME BEFORE INCOME TAXES. Income before income taxes decreased $58,000,
from $129,000 to $71,000 in 2002 due to the aforementioned reasons.
PROVISION FOR INCOME TAXES. Our provision for income taxes was $3,000 in
2001 and $0 in 2002. No income tax provision was required for 2002 as the
Company elected S-Corporation status whereby the income of the Company is
allocated to the shareholders, who are responsible for the income tax liability.
NET INCOME (LOSS). Net income decreased $55,000 from net income of from
$126,000 to $71,000 in 2002.
44
Liquidity and Capital Resources
Year Ending December 31, 2002
During the year ended December 31, 2002 ("2002"), we experienced an increase in
liquidity of $94,000 as cash and cash equivalents increased from $5,802 at
December 31, 2001 to $65,000 at December 31, 2002. The increase in liquidity in
2002 was attributable to cash provided by operating activities of $82,309 and
cash provided by financing activities of $16,000 partially offset by cash
utilized by investing activities of $38,000.
Cash inflows from operating activities were generated by net income of $71,000,
depreciation of $10,000 and a $35,000 increase in accounts payable. These cash
inflows were partially offset by cash outflows of $12,000 to fund a decrease in
accrued liabilities due to the timing of payments.
Cash inflows from financing activities were $16,000.
Investing activities consumed $38,000 for the purchase of property, plant and
equipment to equip our offices.
Year Ending December 31, 2001
During the year ended December 31, 2001 ("2001"), we experienced an decrease in
liquidity of $38,000 as cash and cash equivalents decreased from $9,000 at
December 31, 2000 to $5,802 at December 31, 2001. The decrease in liquidity in
2001 was attributable to cash utilized by financing activities of $194,000 and
cash utilized by investing activities of $20,000 partially offset by cash
provided by operating activities of $210,000.
Cash inflows from operating activities were generated by net income of $126,000
and an increase in accrued liabilities of $79,000 due to the timing of payments.
Investing activities consumed $20,000 for the purchase of property, plant and
equipment.
Cash outflows used by financing activities were $194,000 for distributions to
shareholders.
Our senior credit facility consists of a $250,000 line of credit
arrangement under revolving line of credit terms. Interest rates with a weighted
average interest rate of 6.2% as of December 31, 2002, and is due in monthly
installments based on the amount used and is computed on an annual basis.
Installments begin February 15, 2003 through its maturity in October 2005. The
facility is collateralized by a small portion of our assets and does not require
us to comply with any financial covenants. Additionally, we have a second short
term credit facility of $250,000 approved credit, with an additional $250,000
available for fluctuations in sales, for short term factoring of our receivables
on an as needed basis. This is a ninety-day revolving line of credit with a 3.5%
initial factoring charge and is collateralized by the specific receivables
against which the money was loaned. We may repurchase the factored receivables
at any time and must repurchase receivables once they age ninety days.
As of December 31, 2002 we had no outstanding indebtedness to our senior
credit facility and $289,000 of customer receivables assigned to the factor
providing the secondary credit facility.
We believe that our current cash balances, together with our existing
credit lines and other available sources of liquidity and expected cash flows
from our operating activities, will be sufficient for us to meet our current and
future financial obligations, as well as to provide us with funds for working
capital, anticipated capital expenditures and other needs for at least the next
12 months at our current growth rate. No assurance can be given, however, that
this will be the case. In the longer term, we may require additional equity and
debt financing to meet our working capital needs, or to fund our acquisition
activities and increased growth if any. There can be no assurance that
additional financing will be available when required or, if available, will be
available on satisfactory terms.
45
RECENTLY ISSUED ACCOUNTING STANDARDS
In November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Guarantees of Indebtedness of Others." Disclosures related
to this interpretation are effective for 2002 annual reports, and the accounting
requirements are effective January 1, 2003, and require all guarantees and
indemnifications within its scope to be recorded at fair value as liabilities,
and the maximum possible loss to the Corporation under these guarantees and
indemnifications to be disclosed. As of December 31, 2002, the Company has not
guaranteed any indebtedness.
The FASB has issued Interpretation No. 46, "Consolidation of Variable Interest
Entities," (FIN No. 46), which addresses consolidation of certain variable
interest entities (also commonly referred to as "special purpose entities"). FIN
No. 46, is effective Jan 1, 2003. In the opinion of management, adoption of FIN
No. 46 will not have a significant effect on the Company's financial position or
liquidity.
In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of the FASB Statement No. 13, and Technical Corrections.
SFAS 145 rescinds the provision of SFAS No. 4 that requires companies to
classify certain gains and losses from debt extinguishments as extraordinary
items, eliminates the provisions of SFAS No. 44 regarding transition to the
Motor Carrier Act of 1980 and amends the provisions of FASB No. 13 to require
that certain lease modifications be treated as sale leaseback transactions. The
provisions of FASB 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. The provisions of SFAS
145 related to lease modifications is effective for transactions occurring after
May 15, 2002. Earlier application is encouraged.
On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 requires certain
disclosures related to stock-based compensation plans of the Company. At
December 31, 2002 The Corporation has applied the recognition and measurement
provisions of APB 25 and related interpretations in accounting for stock options
granted to employees. No stock-based employee compensation expense is reflected
in net income in 2002, 2001 or 2000, as all options granted under those plans
had an exercise price equal to the market value of the underlying common stock
on the date of grant. In the opinion of management, adoption of SFAS No.148 will
not have a significant effect on the Company's financial position or liquidity.
ITEM 18. DESCRIPTION OF PROPERTY
Our executive offices are located at 300 Penn Center Boulevard, Suite 201,
Pittsburgh, Pennsylvania. We have a 5 year term lease agreement under the Better
Solutions, Inc. name with the Penn Center Management Corporation. This lease
agreement expires in January 2005. We pay monthly rent of $3,225. Our offices
comprise approximately 3,328 square feet, which is sufficient for our operations
at this time.
We have a 12 month lease agreement under the MedTech name with HQ Global
Workplaces which expires in August 2004 for our corporate office located at 600
Superior Road, Cleveland, Ohio. We pay monthly rent of $2,785. Our Cleveland,
Ohio office comprises approximately 850 square feet and 2,500 square feet of
shared common space, which is sufficient for our Cleveland, Ohio based
operations at this time.
We have a 12 month lease agreement under the MedTech name with HQ Global
Workplaces which expires in August 2004 for our corporate office located at 2255
Glades Road, Boca Raton, Florida. We pay monthly rent of $5,913. Our Boca Raton,
Florida Office comprises approximately 900 square feet and 2,600 square feet of
common area, which is sufficient for our Boca Raton, Florida based operations at
this time.
46
We do not own any property nor do we have any plans to own any property in the
future. We do not intend to renovate, improve, or develop properties. We are not
subject to competitive conditions for property and currently have no property to
insure. We have no policy with respect to investments in real estate or
interests in real estate and no policy with respect to investments in real
estate mortgages. Further, we have no policy with respect to investments in
securities of or interests in persons primarily engaged in real estate
activities.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All share amounts listed below include shares of our common stock issued
pursuant to the Company's two (2) share for one (1) share forward stock split
effective October 7, 2002.
On February 1, 2002, our former President, Edward G. Siceloff paid $16,200 for
legal services rendered to us and $3,800 for our website development. These
funds were donated by our former President. We have no obligation to repay these
funds and our former President does not intend to seek repayment of these funds.
On March 21, 2002, our former President, Edward G. Siceloff, paid $14,000 for
legal services rendered to us. These funds were donated by our former President.
We have no obligation to repay these funds and our former President does not
intend to seek repayment of these funds. Our former President Edward G. Siceloff
received no consideration in exchange for the funds he donated to us.
On February 14, 2002, we issued 40,000,000 (post October 7, 2002, two (2) share
for one (1) share forward stock split) shares of our common stock to our former
President, Edward G. Siceloff, for services rendered in our corporate formation.
On February 14, 2002, we issued 8,000,000 (post October 7, 2002, two (2) share
for one (1) share forward stock split) shares of our common stock to one of our
former directors, Joseph L. Prugh, for services rendered in our corporate
formation.
On March 11, 2002, we sold 6000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Joseph L. Prugh, our
former director, at a price of $.05 per share or $300.
On March 24, 2002, we sold 3000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Edward G. Siceloff at a
price of $.05 per share or $150.
In connection with our acquisition of Better Solutions, Inc. on February 24,
2003, the following occurred:
o Edward G. Siceloff, our prior president and director resigned the positions
he held with us and retired 39,500,000 of the 40,003,000 shares of our
common stock held by him. After retiring these shares he owned 503,000
shares of our common stock;
o Joseph L. Prugh, our prior director, resigned his positions with us and
retired 8,000,000 of the 8,006,000 shares held by him. After retiring these
shares, he owned 6,000 shares of our common stock;
o Of the shares cancelled, 16,500,000 shares were issued to Richard E.
McDonald and 16,500,000 shares were issued to Marc Roup.
o As a result of the issuance of an aggregate amount of 33,000,000 shares of
stock to Marc Roup and Richard McDonald, a change in the voting control of
our common stock occurred.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, and nominee for director,
beneficial owner of five percent (5%) or more of our common stock, or family
members of such persons with an aggregate value in excess of $60,000. We are not
a subsidiary of any company.
47
Transactions with Promotors
On March 5, 2002, we entered into an agreement with Barry Gewin, our promoter,
to provide us with the following consulting services:
o Assistance with suppliers;
o Marketing of our products;
o Preparation of information regarding our business;
o Assistance in locating and hiring management and sales personnel; and
o General assistance in the development of our website content.
Our agreement with Barry Gewin is for a term of one year and terminates on March
5, 2003. In exchange for the services rendered to us by Barry Gewin, we issued
Barry Gewin 1,500,000 (post October 7, 2002, two (2) share for one (1) share
forward stock split) shares of our common stock which we valued at $75,000.
On October 8, 2002, Barry Gewin sold 500,000 shares of our common stock to David
Wood for a price of $10,000 in a private transaction. On November 18, 2002,
Barry Gewin sold 150,000 shares of our common stock to David Mehalick for a
price of $3,000 in a private transaction. Barry Gewin had a preexisting personal
relationship with David Mehalick and David Wood. David Wood and David Mehalick
each represented that they were accredited and purchasing the shares for
investment.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Barry Gewin, the holder of 850,000 shares of our common stock, entered into an
agreement with Better Solutions, Inc., whereby Barry Gewin agreed to subject his
shares of our common stock to a lock up agreement. Barry Gewin agreed to sell
the 850,000 shares of our common stock held by him only, as follows: a. For the
first full calendar month, after we complete the acquisition of Better
Solutions, Inc., Barry Gewin is allowed to sell 250,000 shares of our common
stock at his discretion. b. Beginning the period from the second month after we
complete the acquisition of Better Solutions, Inc., and until the expiration of
the sixth month, during each respective month of this period, Barry Gewin is
allowed to sell our common stock held by him at his discretion up to an amount
not to exceed twenty five (25) percent of the prior calendar month's trading
volume as reported by the OTC Bulletin Board. c. After expiration of the sixth
month after we complete the acquisition of Better Solutions, Inc., Barry Gewin
can sell the shares of our common stock as he deems fit pursuant to the
agreement.
On March 5, 2002, we entered into an agreement with Tommi Ferguson, our promoter,
to provide us with the following consulting services:
o Locating web site development personnel;
o Development of an incentive program for our customers;
o Advertising of our products; and
o Expansion of our product lines.
Our agreement with Tommi Ferguson is for a term of one year and terminates on
March 5, 2003. In exchange for the services rendered to us by Tommi Ferguson, we
issued Tommi Ferguson 1,500,000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock which we valued at
$75,000.
On October 29, 2002, Tommi Ferguson sold 500,000 shares of her common stock to
David Wood for a price of $12,000 in a private transaction. On November 6, 2002,
Tommi Ferguson sold 250,000 shares of her common stock to David Mehalick for a
price of $5,000 in a private transaction. Tommi Ferguson had a preexisting
personal relationship with Barry Gewin and David Wood. David Wood and David
Mehalick each represented that they were accredited and purchasing the shares
for investment.
As an inducement for the shareholders of Better Solutions, Inc. to enter into
the agreement for us to acquire Better Solutions, Inc., on December 27, 2002,
Tommi Ferguson, the holder of 750,000 shares of our common stock, entered into
an agreement with Better Solutions, Inc., whereby Tommi Ferguson agreed to
subject her shares of our common stock to a lock up agreement. Tommi Ferguson
agreed to sell the 750,000 shares of our common stock held by her only as
follows: a. For the first full calendar month, after we complete the acquisition
of Better Solutions, Inc., Tommi Ferguson is allowed to sell 250,000 shares of
our common stock at her discretion. b. Beginning the period from the second
month after we complete the acquisition of Better Solutions, Inc., and until the
expiration of the sixth month, during each respective month of this period,
Tommi Ferguson shall be allowed to sell our common stock held by her at her
discretion up to an amount not to exceed twenty five (25) percent of the prior
calendar month's trading volume as reported by the OTC Bulletin Board. c. After
expiration of the sixth month after we complete the acquisition of Better
Solutions, Inc., Tommi Ferguson can sell the shares of our common stock as she
deems fit pursuant to the agreement.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for our securities. Management has
not discussed market making with any market maker or broker-dealer. No market
exists for our securities and there is no assurance that a regular trading
market will develop, or if developed will be sustained. A shareholder in all
likelihood, therefore, will not be able to resell his or her securities should
he or she desire to do so when eligible for public resale. Furthermore, it is
unlikely that a lending institution will accept our securities as pledged
collateral for loans unless a regular trading market develops. Currently, we
have no plans, proposals, arrangements, or understandings with any person with
regard to the development of a trading market in any of our securities. Our
common stock is quoted on the Over-the-Counter Bulletin Board under the symbol
("WHAI"). Our stock was approved for quotation on September 26, 2002; however,
to date no shares have been traded in market transactions.
We currently have no shares of preferred stock outstanding.
There are 9,026,400 shares of our common stock held by non-affiliates and
31,819,000 shares of our common stock held by affiliates that Rule 144 of the
Securities Act of 1933 defines as restricted securities. (Taking into account
our two (2) share for one (1) share forward stock split effective on October 7,
2002).
SHARES ELIGIBLE FOR FUTURE SALE
The 3,487,400 shares being offered by our selling shareholders are freely
tradable without restrictions under the Securities Act of 1933, except for any
shares held by our "affiliates," which will be restricted by the resale
limitations of Rule 144 under the Securities Act of 1933.
48
In general, under Rule 144 as currently in effect, any of our affiliates and any
person or persons whose sales are aggregated who has beneficially owned his or
her restricted shares for at least one (1) year, may be entitled to sell in the
open market within any three (3) month period a number of shares of common stock
that does not exceed the greater of (i) one percent (1%) of the then outstanding
shares of our common stock, or (ii) the average weekly trading volume in the
common stock during the four calendar weeks preceding such sale. Sales under
Rule 144 are also affected by limitations on manner of sale, notice
requirements, and availability of current public information about us.
Non-affiliates who have held their restricted shares for one year may be
entitled to sell their shares under Rule 144 without regard to any of the above
limitations, provided they have not been affiliates for the three (3) months
preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited resales
of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in a public market, if developed, beginning ninety
(90) days after the date of this prospectus. The availability for sale of
substantial amounts of common stock under Rule 144 could adversely affect
prevailing market prices for our securities.
Options.
We have no shares of our common equity that are subject to outstanding options
to purchase.
Penny Stock Considerations.
Our shares are "penny stocks" as that term is generally defined in the
Securities Exchange Act of 1934 as equity securities with a price of less than
$5.00. Our shares may be subject to rules that impose sales practice and
disclosure requirements on broker-dealers who engage in certain transactions
involving a penny stock. Under the penny stock regulations, a broker-dealer
selling a penny stock to anyone other than an established customer or
"accredited investor" must make a special suitability determination regarding
the purchaser and must receive the purchaser's written consent to the
transaction prior to the sale, unless the broker-dealer is otherwise exempt.
Generally, an individual with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 individually or $300,000 together with his or her
spouse is considered an accredited investor. In addition, under the penny stock
regulations the broker-dealer is required to:
Deliver, prior to any transaction involving a penny stock, a disclosure schedule
prepared by the Securities and Exchange Commission relating to the penny stock
market, unless the broker-dealer or the transaction is otherwise exempt;
Disclose commissions payable to the broker-dealer and its registered
representatives and current bid and offer quotations for the securities;
Send monthly statements disclosing recent price information pertaining to the
penny stock held in a customer's account, the account's value and information
regarding the limited market in penny stocks;
49
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, prior to conducting any penny stock transaction in the
customer's account.
Because of these regulations, broker-dealers may encounter difficulties in their
attempt to sell shares of our common stock, which may affect the ability of
selling shareholders or other holders to sell their shares in the secondary
market and have the effect of reducing the level of trading activity in the
secondary market. These additional sales practice and disclosure requirements
could impede the sale of our securities if our securities become publicly
traded. In addition, the liquidity for our securities may be adversely affected,
with a corresponding decrease in the price of our securities. Our shares may
someday be subject to such penny stock rules and our shareholders will, in all
likelihood, find it difficult to sell their securities.
Holders.
As of February 26, 2003, we had 67 holders of record of our common stock. We
have one class of common stock outstanding.
Dividends.
We have not declared any cash dividends on our common stock since our inception
and do not anticipate paying such dividends in the foreseeable future. We plan
to retain any future earnings for use in our business. Any decisions as to
future payment of dividends will depend on our earnings and financial position
and such other factors as the Board of Directors deems relevant.
ITEM 21. EXECUTIVE COMPENSATION
The following Executive Compensation Chart highlights the terms of compensation
for our Executives.
Summary Compensation Chart
Annual Compensation Long-Term Compensation
------------------------------- ----------------------------------
Restricted Stock Options L/TIP All
Name & Position Year Salary ($) Bonus ($) Other ($) Awards ($) ($) Other
- --------------------------------------------------------------------------------------------------------------
Marc D. Roup 2002 $187,500 0 0 0 0 0
Chief Executive
Officer 2003 $187,500 0 0 0 0 0
Richard E. McDonald 2002 $187,500 0 0 0 0 0
President/Principal
Financial Officer/ 2003 $187,500 0 0 0 0 0
Principal Accounting
Officer/ Chairman of
the Board of Directors
We also pay annual key man life insurance premiums of $1,230 and $746 for our
Chief Executive Officer and Chairman of the Board of Directors, respectively. We
also pay car lease payments on behalf of Marc D. Roup, our Chief Executive
Officer, in the amount of $871.88 monthly and car lease payments on behalf of
Richard E. McDonald, our President/Principal Financial Officer/Principal
Accounting Officer/Chairman of the Board of Directors, in the amount of
$1,170.09 monthly.
50
ITEM 22. FINANCIAL STATEMENTS
World Health Alternatives, Inc.
(A Development Stage Company)
51
World Health Alternatives, Inc.
(A Development Stage Company)
Balance Sheet
November 30, 2002
(Unaudited)
Assets
Current assets
Cash $ 97
---------
Other assets:
Web site 4,130
---------
$ 4,227
=========
Liabilities and Stockholders' (Deficit)
Current liabilities
Accounts payable $ 6,696
---------
Stockholders' (deficit)
Preferred Stock, $.0001 par value,
100,000,000 shares authorized -
Common stock, $.0001 par value,
200,000,000 shares authorized,
51,487,400 shares issued and outstanding 5,149
Additional paid-in capital 209,572
Deferred compensation (37,500)
(Deficit) accumulated during the development stage (179,690)
---------
(2,469)
---------
$ 4,227
=========
F-1
See the accompanying notes to the financial statements.
World Health Alternatives, Inc.
(A Development Stage Company)
Statements of Operations
Three Months and Nine Months Ended November 30, 2002 and
Period From Inception (February 13, 2002) to November 30, 2002
(Unaudited)
Three Months Nine Months
Ended Ended Inception to
November 30, 2002 November 30, 2002 November 30, 2002
----------------- ----------------- -----------------
Revenue $ - $ - $ -
----------- ----------- -----------
Operating Costs and Expenses:
Non cash stock compensation 37,500 112,500 114,910
General and administrative 8,380 48,574 64,780
----------- ----------- -----------
45,880 161,074 179,690
----------- ----------- -----------
Net (loss) $ (45,880) $ (161,074) $ (179,690)
=========== =========== ===========
Per Share Information - basic
and fully diluted:
Weighted average common shares outstanding 51,487,400 51,487,400 50,898,127
=========== =========== ===========
(Loss) per share $ (0.00) $ (0.00) $ (0.00)
=========== =========== ===========
F-2
See the accompanying notes to the financial statements.
World Health Alternatives, Inc.
(A Development Stage Company)
Statements of Cash Flows
Nine Months Ended November 30, 2002 and
Period From Inception (February 13, 2002) to November 30, 2002
(Unaudited)
Nine Months
Ended Inception to
November 30, 2002 November 30, 2002
----------------- -----------------
Cash flows from operating activities:
Net cash (used in) operating activities $ (29,108) $ (29,114)
----------- -----------
Cash flows from investing activities:
Net cash (used in) investing activities (1,150) (1,150)
----------- -----------
Cash flows from financing activities:
Net cash provided by financing activities 29,311 30,361
----------- -----------
Increase (decrease) in cash and cash equivalents (947) 97
Cash and cash equivalents, beginning of period 1,044 -
----------- -----------
Cash and cash equivalents, end of period $ 97 $ 97
=========== ===========
Supplemental cash flow information:
Cash paid for interest $ - $ -
=========== ===========
Cash paid for income taxes $ - $ -
=========== ===========
F-3
See the accompanying notes to the financial statements.
World Health Alternatives, Inc.
(A Development Stage Company)
Notes to Financial Statements
November 30, 2002
(Unaudited)
(1) Basis Of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP") for interim financial information. They do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the financial statements of the Company as of February 28,
2002 and the period from inception to February 28, 2002 including notes thereto.
(2) Earnings Per Share
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During the periods presented common stock
equivalents were not considered as their effect would be anti dilutive.
(3) Stockholders' (Deficit)
During October 2002 the Company affected a 2 for 1 forward stock split. All
share and per share amounts have been restated to reflect this split.
During the period from March 1, 2002 through March 24, 2002 the Company issued
241,000 shares of common stock for cash aggregating $12,050 and collected
receivables for stock issued aggregating $970.
During the nine months ended November 30, 2002 a shareholder directly paid
certain obligations of the Company aggregating $14,000 for legal fees. This
amount was contributed to the capital of the Company.
During the nine months ended November 30, 2002 shareholders contributed $16,291
in cash and $2,250 in services to the capital of the Company.
On March 5, 2002 the Company entered into two one year consulting agreements. As
compensation the consultants received a total of 3,000,000 shares of common
stock valued at the fair market value of the shares issued of $150,000. This
amount will be classified as deferred compensation and charged to operations
over the period in which the services are provided. Through November 30, 2002
the Company charged $112,500 to operations related to these services.
F-4
(4) Going Concern
The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
The Company has experienced a significant loss from operations as a result of
its investment necessary to achieve its operating plan, which is long-range in
nature. From inception to November 30, 2002, the Company incurred a net loss of
$179,690 and has no revenue generating operations.
The Company's ability to continue as a going concern is contingent upon its
ability to attain profitable operations and secure financing. In addition, the
Company's ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the Company
operates.
The Company is pursuing equity financing for its operations and is seeking a
merger with an operating entity. Failure to secure such financing, to raise
additional capital or borrow additional funds or merge with an operating entity
may result in the Company depleting its available funds and not being able pay
its obligations.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
(5) Subsequent Event
On January 2, 2003, the Company entered into an agreement that if completed will
result in a change in control. The Company and certain shareholders and the
shareholders of Better Solutions, Inc. entered into an agreement whereby the
Company agreed to acquire 100% of the issued and outstanding shares of the
common stock of Better Solutions, Inc. in exchange for unissued shares of the
Company's common stock (the "Exchange Offer") so that Better Solutions, Inc.
will become a wholly owned subsidiary.
In connection with the Exchange Offer, the Agreement provides that certain of
the Company's shareholders agreed to retire 47,500,000 shares of common stock
held by them thereby reducing their holdings to 509,000 shares of the Company's
common stock.
In exchange for all of the issued and outstanding shares of Better Solutions,
Inc.'s common stock, the Company agreed to issue 33,000,000 shares [which after
issuance shall represent 90% of the Company's outstanding common stock] of
common stock to the shareholders of Better Solutions, Inc. After the issuance of
the 33,000,000 shares of common stock the Company will have approximately
36,987,400 shares of common stock outstanding.
F-5
World Health Alternatives, Inc.
(A Development Stage Company)
Period From Inception (February 13, 2002) to February 28, 2002
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
World Health Alternatives, Inc.
We have audited the accompanying balance sheet of World Health Alternatives,
Inc. (A Development Stage Company) as of February 28, 2002, and the related
statements of operations, stockholders' equity and cash flows for the period
from inception (February 13, 2002) to February 28, 2002. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Health Alternatives, Inc.
(A Development Stage Company) as of February 28, 2002, and results of its
operations and its cash flows for the period from inception (February 13, 2002)
to February 28, 2002, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company has suffered a loss from operations and is in
the development stage. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to this
matter are also discussed in Note 4. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Stark Winter Schenkein & Co., LLP
Denver, Colorado
March 22, 2002, except for Note 5 as to which the date is October 7, 2002
F-1
World Health Alternatives, Inc.
(A Development Stage Company)
Balance Sheet
February 28, 2002
Assets
Current assets
Cash $ 1,044
Receivable for common shares issued 970
--------
Total current assets 2,014
--------
Other assets:
Web site 3,800
--------
$ 5,814
========
Liabilities and Stockholders' Equity
Current liabilities
Total current liabilities $ -
--------
Stockholders' equity
Preferred stock, $.0001 par value,
100,000,000 shares authorized -
Common stock, $.0001 par value, 200,000,000 shares authorized,
48,246,400 shares issued and outstanding 4,825
Additional paid-in capital 19,605
(Deficit) accumulated during the development stage (18,616)
--------
5,814
--------
$ 5,814
========
F-2
See the accompanying notes to the financial statements.
World Health Alternatives, Inc.
(A Development Stage Company)
Statement of Operations
Period From Inception (February 13, 2002) to February 28, 2002
Revenue $ -
-----------
Operating Costs and Expenses:
Non cash stock compensation 2,410
General and administrative 16,206
-----------
18,616
-----------
Net (loss) $ (18,616)
===========
Per Share Information - basic and fully diluted:
Weighted average common shares outstanding 48,246,400
===========
(Loss) per share $ (0.00)
===========
F-3
See the accompanying notes to the financial statements.
World Health Alternatives, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
Period From Inception (February 13, 2002) to February 28, 2002
(Deficit)
Accumulated
During the
Common Stock Additional Development
Shares Amount Paid in Capital Stage Total
Balance at inception - $ - $ - $ - $ -
Common shares issued for services
at inception at $.00005 per share 48,206,000 2,410 - - 2,410
Common shares issued for cash
at $.05 per share 21,000 1 1,049 - 1,050
Common shares issued for receivable
at $.05 per share 19,400 1 969 - 970
Reclassification of Paid in Capital - 2,413 (2,413) - -
Capital contribution by shareholder - - 20,000 - 20,000
Net (loss) for the period - - - (18,616) (18,616)
----------- ----------- ----------- ----------- -----------
Balance, February 28, 2002 48,246,400 $4,825 $ 19,605 $ (18,616) $ 5,814
=========== =========== =========== =========== ===========
F-4
See the accompanying notes to the financial statements.
World Health Alternatives, Inc.
(A Development Stage Company)
Statement of Cash Flows
Period From Inception (February 13, 2002) to February 28, 2002
Cash flows from operating activities:
Net (loss) $ (18,616)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Operating expenses paid by shareholder 16,200
Non cash stock compensation 2,410
---------
Net cash (used in) operating activities (6)
---------
Cash flows from investing activities:
Net cash provided by (used in) investing activities -
---------
Cash flows from financing activities:
Common shares issued for cash 1,050
---------
Net cash provided by financing activities 1,050
---------
Increase in cash and cash equivalents 1,044
Cash and cash equivalents, beginning of period -
---------
Cash and cash equivalents, end of period $ 1,044
=========
Supplemental cash flow information:
Cash paid for interest $ -
=========
Cash paid for income taxes $ -
=========
Non cash investing and financing activities:
Common shares issued for receivable $ 970
=========
Non cash capital contribution $ 20,000
=========
F-5
See the accompanying notes to the financial statements.
World Health Alternatives, Inc.
(A Development Stage Company)
Notes to Financial Statements
February 28, 2002
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on February 13, 2002 in the State of Florida. The
Company is in the development stage and its intent is to conduct business as an
internet based provider of vitamins, minerals, herbs, spices homeopathic and
aromatherapy products. The Company has chosen February 28 as a year end and had
no significant activity from inception to February 28, 2002.
Revenue Recognition
The Company recognizes revenue when services are provided or products are
shipped.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
Financial Instruments
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of February 28, 2002. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash. Fair
values were assumed to approximate carrying values for these financial
instruments because they are short term in nature and their carrying amounts
approximate fair values.
Net Income (Loss) Per Common Share
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During periods in which the Company incurs
losses common stock equivalents, if any, are not considered, as their effect
would be anti dilutive.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Segment Information
The Company follows SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information." Certain information is disclosed, per SFAS No. 131,
based on the way management organizes financial information for making operating
decisions and assessing performance. The Company currently operates in a single
segment and will evaluate additional segment disclosure requirements as it
expands its operations.
F-6
World Health Alternatives, Inc.
(A Development Stage Company)
Notes to Financial Statements
February 28, 2002
Income Taxes
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision for
income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than not that some
portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferred tax assets to the amount that is
more likely than not to be realized. Future changes in such valuation allowance
are included in the provision for deferred income taxes in the period of change.
Web Site Development Costs
The Company's web site will comprise multiple features and offerings. It is
anticipated that the offerings will require future development and refinement.
In connection with the development of its site, the Company will incur external
costs for hardware, software, and consulting services, and internal costs for
payroll and related expenses of its technology employees directly involved in
the development. All hardware costs will be capitalized. Purchased software
costs will be capitalized in accordance with Statement of Position 98-1
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use". All other costs will be reviewed for determination of whether
capitalization or expense as product development cost is appropriate in
accordance with Statement of Position 98-1. The Company's web site will be
amortized over its estimated useful life of 3 years.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees for services
based on the fair value of the equity instruments issued and accounts for equity
instruments issued to other than employees based on the fair value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.
The Company accounts for stock based compensation in accordance with SFAS No.
123, "Accounting for Stock-Based Compensation." The provisions of SFAS No. 123
allow companies to either expense the estimated fair value of stock options or
to continue to follow the intrinsic value method set forth in APB Opinion 25,
"Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro forma
effects on net income (loss) had the fair value of the options been expensed.
The Company has elected to continue to apply APB 25 in accounting for its stock
option incentive plans.
Recent Pronouncements
In December 1999, the Securities and Exchange Commission issued Bulletin No. 101
("SAB 101"). SAB 101 provides guidance on applying accounting principles
generally accepted in the United States of America to revenue recognition in
financial statements. The implementation of SAB 101 did not have an impact on
the Company's operating results.
F-7
World Health Alternatives, Inc.
(A Development Stage Company)
Notes to Financial Statements
February 28, 2002
In July, 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS
142, Goodwill and Intangible Assets. SFAS 141 is effective for all business
combinations completed after June 30, 2001. SFAS 142 is effective for the year
beginning January 1, 2002; however certain provisions of that Statement apply to
goodwill and other intangible assets acquired between July 1, 2001, and the
effective date of SFAS 142. The Company does not believe the adoption of these
standards will have a material impact on the Company's financial statements.
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This Statement applies to all
entities. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. This Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company is evaluating
the impact of the adoption of this standard and has not yet determined the
effect of adoption on its financial position and results of operations.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of. The provisions of the statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company is evaluating the impact of the adoption of this
standard and has not yet determined the effect of adoption on its financial
position and results of operations.
Note 2. STOCKHOLDERS' EQUITY
At inception, the Company issued 48,206,000 shares of its common stock for
services provided to the Company of which 48,000,000 were issued to officers and
directors. These shares have been valued at $.00005 per share, which approximates
the fair market value of the services provided. Accordingly, the Company has
recorded a charge to operations of $2,410 during the period.
During February 2002 the Company issued 40,400 shares of common stock for cash
aggregating $1,050 and a receivable of $970 pursuant to a private placement.
This receivable was paid during March 2002 and has been recorded as a current
asset in the accompanying financial statements.
During February 2002 a shareholder directly paid certain obligations of the
Company aggregating $16,200 for legal fees and $3,800 for the development of the
web site. These amounts were contributed to the capital of the Company.
Note 3. INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting for Income Taxes", which requires use
of the liability method. FAS 109 provides that deferred tax assets and
liabilities are recorded based on the differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting
purposes, referred to as temporary differences. Deferred tax assets and
liabilities at the end of each period are determined using the currently enacted
tax rates applied to taxable income in the periods in which the deferred tax
assets and liabilities are expected to be settled or realized.
F-8
World Health Alternatives, Inc.
(A Development Stage Company)
Notes to Financial Statements
February 28, 2002
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:
Income tax provision at
the federal statutory rate 34 %
Effect of operating losses (34)%
-----
As of February 28, 2002, the Company has a net operating loss carryforward. This
loss will be available to offset future taxable income. If not used, this
carryforward will expire in 2022. The deferred tax asset relating to the
operating loss carryforward has been fully reserved at February 28, 2002.
Note 4. BASIS OF REPORTING
The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
The Company has experienced a loss from operations during its development stage
as a result of its investment necessary to achieve its operating plan, which is
long-range in nature. For the period from inception to February 28, 2002, the
Company incurred a net loss of $18,616 . In addition, the Company has no
significant assets or revenue generating operations.
The Company's ability to continue as a going concern is contingent upon its
ability to attain profitable operations by securing financing and implementing
its business plan. In addition, the Company's ability to continue as a going
concern must be considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the competitive
environment in which the Company operates.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
Note 5. SUBSEQUENT EVENTS
During the period from March 1, 2002 through March 24, 2002 the Company issued
241,000 shares of common stock for cash aggregating $12,050.
On March 5, 2002 the Company entered into two one year consulting agreements. As
compensation the consultants will receive a total of 3,000,000 shares of common
stock which will be valued at the fair market value of the shares issued. This
amount will be classified as deferred compensation and charged to operations
over the period in which the services are provided.
During March 2002 a shareholder directly paid certain obligations of the Company
aggregating $14,000 for legal fees. This amount was contributed to the capital
of the Company.
On October 7, 2002, the Company effected a 2 for 1 forward stock split. All
share and per share amounts have been restated to give effect to the split.
F-9
BETTER SOLUTIONS INCORPORATED
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
TABLE OF CONTENTS
Independent Auditor's Report................................................. 1
Financial Statements:
Balance Sheets at December 31, 2002 and 2001............................ 2
Statements of Income for the years ended December 31, 2002 and 2001..... 3
Statements of Changes in Shareholders' Equity for the years ended
December 31, 2002 and 2001.............................................. 4
Statements of Cash Flows for the years ended December 31, 2002 and 2001. 5
Notes to Financial Statements.............................................. 6-8
DaszkalBolton LLP
Certified Public Accountants
Michael I. Daszkal, CPA, P.A. 2401 N.W. Boca Raton Boulevard
Jeffery A. Bolton, CPA, P.A. Boca Raton, FL 33431
Timothy R. Devlin, CPA, P.A. t: 561.367.1040
Michael S. Kridel, CPA, P.A. f: 561.750.3236
Marjorie A. Horwin, CPA, P.A. www.daszkalbolton.com
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Better Solutions Incorporated
We have audited the accompanying balance sheets of Better Solutions Incorporated
as of December 31, 2002 and 2001, and the related statements of income, changes
in shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Better Solutions Incorporated
at December 31, 2002 and 2001, and the results of their operations and their
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/DASZKAL BOLTON LLP
Boca Raton, Florida
February 12, 2003
BETTER SOLUTIONS INCORPORATED
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
2002 2001
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 64,864 $ 5,802
Accounts receivable 157,957 166,736
Other current assets 515 2,876
---------- ----------
Total current assets 223,336 175,414
---------- ----------
Property, plant and equipment, net 43,360 16,379
---------- ----------
Total assets $ 266,696 $ 191,793
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,720 $ 4,049
Accrued liabilities 40,222 87,012
Income taxes payable 27,000 33,737
---------- ----------
Total current liabilities 105,942 124,798
---------- ----------
Shareholders' equity:
Common stock, no par value per share;
1,000,000 shares authorized, 20,000
shares issued and outstanding 15,858 200
Retained earnings 144,896 66,795
---------- ----------
Total shareholders' equity 160,754 66,995
---------- ----------
Total liabilities
and shareholders' equity $ 266,696 $ 191,793
========== ==========
See accompanying notes to financial statements.
-2-
BETTER SOLUTIONS INCORPORATED
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
----------- -----------
Sales $ 2,796,911 $ 2,707,891
Cost of sales 1,781,865 1,638,882
----------- -----------
Gross profit 1,015,046 1,069,009
Selling, marketing, warehouse
and administrative expenses 865,904 879,696
----------- -----------
Operating income 149,142 189,313
Other income (expense):
Interest expense (74,146) (61,765)
Interest income 588 242
Other income (expense) 2,517 1,111
----------- -----------
(71,041) (60,412)
----------- -----------
Net income before income tax 78,101 128,901
Income tax - 36,650
----------- -----------
Net income $ 78,101 $ 92,251
=========== ===========
See accompanying notes to financial statements.
-3-
BETTER SOLUTIONS INCORPORATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Common Stock Retained
Shares Amount Earnings Total
------- -------- --------- ---------
Balance, December 31, 2000 20,000 $ 200 $ 168,285 $ 168,485
Dividends - - (193,741) (193,741)
Net income - December 31, 2001 - - 92,251 92,251
------- -------- --------- ---------
Balance, December 31, 2001 20,000 200 66,795 66,995
Capital contributions, net - 15,658 - 15,658
Net income - December 31, 2002 - - 78,101 78,101
------- -------- --------- ---------
Balance, December 31, 2002 20,000 $ 15,858 $ 144,896 $ 160,754
======= ======== ========= =========
See accompanying notes to financial statements.
-4-
BETTER SOLUTIONS INCORPORATED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
---------- ----------
Cash flows from operating activities:
Net income $ 78,101 $ 92,251
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation of property, plant
and equipment 11,924 3,619
(Increase) decrease in:
Accounts receivable 8,779 3,466
Other current assets 2,361 1,784
Increase (decrease) in:
Accounts payable 34,671 (3,219)
Accrued liabilities (46,790) 79,099
Income taxes payable (6,737) 33,737
---------- ----------
Net cash provided by operating activities 82,309 210,737
---------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment (38,905) (19,998)
---------- ----------
Cash flows from financing activities:
Shareholders contributions 15,658 -
Dividends - (193,741)
Loan proceeds, related party 56,104 -
Loan repayment, related party (56,104) -
---------- ----------
Net cash provided by (used in)
financing activities 15,658 (193,741)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 59,062 (3,002)
Cash and cash equivalents, beginning of year 5,802 8,804
---------- ----------
Cash and cash equivalents, end of year $ 64,864 $ 5,802
========== ==========
Supplementary disclosure of cash activities:
- --------------------------------------------
Cash paid for interest $ 74,146 $ 61,765
========== ==========
Cash paid for income taxes $ 6,737 $ 2,913
========== ==========
See accompanying notes to financial statements.
-5-
BETTER SOLUTIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
Better Solutions Incorporated (the "Company") was incorporated in the state of
Pennsylvania on August 30, 2000 and is primarily involved in staffing medical
personnel to hospitals and other healthcare related facilities. The Company
places medical professionals, such as nurses, doctors, pharmacists and medical
technicians, on either an hourly or permanent consulting basis and charges their
clients a fee for this service.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all investments purchased with an original maturity of
less than three months to be cash equivalents.
Revenue Recognition and Accounts Receivable
The Company recognizes revenue on service contracts as services are performed.
Property, Plant and Equipment
Property, plant and equipment is carried at cost. Depreciation is computed using
the straight-line method over the following estimated lives:
Software 3 years
Computer equipment 5 years
Furniture and fixtures 7 years
Advertising
The Company expenses advertising costs as incurred. The Company incurred
advertising expenses of approximately $26,184 and $41,482 during the years ended
December 31, 2002 and 2001, respectively. These amounts are included in selling,
marketing, warehouse and administrative expenses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at December 31:
2002 2001
--------------- ---------------
Computers and equipment $ 48,318 $ 13,342
Software 3,929 -
Furniture and fixtures 6,656 6,656
--------------- ---------------
58,903 19,998
Less: accumulated depreciation (15,543) (3,619)
--------------- ---------------
$ 43,360 $ 16,379
=============== ===============
-6-
BETTER SOLUTIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, continued
Depreciation expense for the years ended December 31, 2002 and 2001 was
approximately $11,924 and $3,619, respectively.
NOTE 4 - LEASE OBLIGATIONS
The Company leases premises, automobiles and operating equipment under operating
lease agreements with unrelated parties. Future minimum rental commitments under
these noncancellable operating leases are as follows:
For the Year Ending December 31,
-------------------------------------
2003 $ 161,672
2004 61,547
2005 7,584
2006 -
2007 -
-
Total minimum rental commitment $ 230,803
=========
Rental expense of approximately $91,060 and $61,877 was incurred in connection
with these leases in 2002 and 2001, respectively.
NOTE 5 - ACCOUNTS RECEIVABLE
Accounts receivable comprise the following at December 31, 2002, and December
31, 2001:
2002 2001
--------- ---------
Receivables assigned to factor $ 289,304 $ 200,286
Advances to (from) factor (276,816) (179,368)
-------- ---------
Amounts due from factor 12,488 20,918
Unfactored accounts receivable 145,469 145,818
--------- ---------
$ 157,957 $ 166,736
========= =========
Pursuant to a factoring agreement, AmeriSource Funding, Inc. acts as the
Company's factor for the majority of its receivables, which are sold with
recourse on a pre-approved basis. Fees for accounts receivables purchased by
AmeriSource Funding, Inc. includes a flat rate of 3.5% for the first 35 days an
account is outstanding. An additional fee of 0.12% per day begins on the 36th
day the account is outstanding. At December 31, 2002 and 2001, the factoring
charge amounted to $69,814 and $58,959, respectively. The Company's obligations
to AmeriSource Funding, Inc. are collateralized by substantially all of the
Company's assets and are guaranteed by the shareholders.
-7-
BETTER SOLUTIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES
On January 1, 2002 the Company, with the consent of its shareholders, elected
under the Internal Revenue Code to be an S Corporation. In lieu of corporation
income taxes, the stockholders of an S Corporation are taxed on their
proportionate share of the Company's taxable income. Therefore, no provision or
liability for federal or state income taxes has been included in the
accompanying financial statements.
For the year ended December 31, 2001 the Company incurred income taxes of
$36,650. This amount included approximately $27,000 of built in gains tax which
will be paid with the Company's 2002 income tax return.
NOTE 7 - SALES CONCENTRATION
In 2002, one customer accounted for 10.8% of sales. In 2001, two customers
accounted for 22.7% of sales.
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments are accounts receivable and accounts
payable. The approximate fair value of the accounts payable is based on its
short-term nature.
NOTE 9 - SUBSEQUENT EVENTS
On December 27, 2002 the Company entered into an agreement with World Health
Alternatives, Inc. ("WHAI") and its shareholders to acquire all of the issued
and outstanding shares of capital stock of the Company in exchange for
approximately 90% of WHAI's capital stock. For accounting purposes, the public
shell merger will be treated as a recapitalization of the Company.
On January 8, 2003, the Company entered into a promissory note agreement with
PNC Bank providing for a $250,000 revolving line of credit. Under the terms of
the agreement, the Company is required to pay a 6.25% per annum interest rate on
any unpaid principal balance. The note is secured by the personal property of
the shareholders.
-8-
Pro Forma financial information
On December 27, 2002, World Health Alternatives, Inc. ("WHAI" or the
"Registrant"), executed an agreement with Better Solutions, Inc. ("BSI") and its
shareholders, to acquire all of the issued and outstanding shares of common
stock of BSI in exchange for 33,000,000 shares of WHAI's common stock. As a
result of the common stock exchange, the two shareholders of BSI will acquire
approximately 87% of the outstanding voting control stock of WHAI upon closing.
The following Pro Forma Combined Balance Sheet of the Registrant have been
prepared by management of the Registrant based upon the balance sheets of BSI
for the year ended December 31, 2002. The pro forma combined balance sheet as of
December 31, 2002 gives effect to the proposed share exchange as if it had
occurred as of December 31, 2002.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The pro forma combined
financial statements do not purport to represent what the combined companies'
financial position or results of operations would actually have been had the
proposed share exchange occurred on such date or as of the beginning of the
period indicated, or to project the combined companies' financial position or
results of operations for any future period.
WHAI
Historical Acquisition
BSI Adjustments Pro Forma
$ $ $
(3) (4)
ASSETS
Current assets:
Cash and cash equivalents 64,864 97 (1) 64,961
Accounts receivable 157,957 157,957
Other current assets 515 1,030 (1) 1,545
Property, plant and equipment, net 43,360 43,360
--------- ----------- -----------
Total assets 266,696 1,127 (2) 267,823
========= =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 38,720 6,696 (1) 45,416
Accrued liabilities 40,222 40,222
Income taxes payable 27,000 27,000
Shareholders' equity:
Common stock, no par value
per share; 1,000,000 shares
authorized, 20,000 shares
issued and outstanding 15,858 (12,159)(1),(2) 3,699
Additional paid in capital 6,590 (1) 6,590
Retained earnings 144,896 - 144,896
--------- ----------- -----------
Total liabilities and
shareholder's equity 266,696 1,127 (2) 267,823
========= =========== ===========
Note (1) The adjustment to record the assets and liabilities acquired by BSI,
the accounting acquirer
Note (2) The Company issued 33,000,000 shares to the shareholders of BSI in
exchange for 100% of their common stock
Note (3) These numbers were obtained from the December 31, 2002 audited
financial statements of Better Solutions, Inc. ("BSI")
Note (4) These numbers were obtained from the November 30, 2002 10-QSB filed
by World Health Alternatives, Inc. ("WHAI")
- --------------------------------------------------------------------------------
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On February 20, 2003, we changed our independent accountants from Stark Winter
Schenkein & Co., LLP to Daszkal Bolton, LLP. In connection with the change in
our independent accountants, we filed a Form 8-K on February 26, 2003, reporting
that: (a) we decided to dismiss Stark Winter Schenkein & Co., LLP as our
independent accountants; (b) the financial statements reported on by Stark
Winter Schenkein & Co., LLP were not subject to an adverse or qualified opinion,
or a disclaimer of opinion and were not modified as to uncertainty, audit scope
or accounting principles during the fiscal year, and the interim period through
February 26, 2003, except that the financial statements for the year ended
February 28, 2002 contained going concern qualifications; (c) the decision to
change accountants was approved by our Board of Directors; (d) there were no
disagreements related to accounting principles or practices, financial statement
disclosure, or auditing scope or procedure during the past fiscal year and the
interim period through February 20, 2003; (e) On February 20, 2003, we engaged
Daszkal Bolton LLP as our independent accountants; and (f) we did not consult
with Daszkal Bolton LLP, our new independent accountants, regarding any matter
prior to their engagement with us.
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Florida Law provides for indemnification of officers and directors as follows:
A corporation may indemnify any person who may be a party to any third party
(nonderivative) action if the person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
in certain capacities, and acted in good faith and in a manner reasonably
believed to be in, or not opposed to, the best interests of the corporation.
With respect to any criminal action or proceeding, to be indemnified, the person
has to have had no reasonable cause to believe the conduct was unlawful. F.S.
607.0850(1).
A corporation may indemnify any person who may be a party to a derivative action
if the person is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation in certain
capacities, and acted in good faith and in a manner reasonably believed to be
in, or not opposed to, the best interests of the corporation. However, no
indemnification may be made for any claim, issue or matter for which the person
was found to be liable unless a court determines that, despite adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity. F.S. 607.08509(2).
Any indemnification made under these subsections, unless under a court
determination, may be made only after a determination has met these standards of
conduct. This determination is to be made by a majority vote of a quorum
consisting of the disinterested directors of the board of directors, by
independent legal counsel, or by a majority vote of the disinterested
shareholders. The board of directors also may designate a special committee of
disinterested directors to make this determination. F.S. 607.0850(4).
With regard to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of the Corporation in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by us is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such case.
52
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without consideration to
future contingencies, incurred or expected to be incurred by us connection with
the issuance and distribution of the securities being offered by this
prospectus. Items marked with an asterisk (*) represent estimated expenses. We
have agreed to pay all the costs and expenses of this offering. Selling
shareholders have not and will not pay any offering expenses.
ITEM EXPENSE
---- -----------
SEC Registration Fee $ 24.06
Legal Fees and Expenses $ 27,700.00
Accounting Fees and Expenses $ 2,300.00
Miscellaneous* $ 500.00
================================================
Total* $ 30,524.06
* Estimated Figure
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Effective October 7, 2002, we enacted a two (2) share for one (1) share forward
stock split of our common stock. All share amounts listed below include shares
of our common stock issued pursuant to our two (2) share for one (1) share
forward stock split.
On February 14, 2002, we issued 40,000,000 (post October 7, 2002, two (2) share
for one (1) share forward stock split) shares of our common stock to our former
President/Chief Executive Officer/Chairman of the Board, Edward G. Siceloff, for
services rendered in connection with our corporate formation. We valued these
shares at $.05 per share or $2,000,000.
On February 14, 2002, we issued 8,000,000 (post October 7, 2002, two (2) share
for one (1) share forward stock split) shares of our common stock to our former
Director, Joseph L. Prugh, for services rendered in connection with our
corporate formation. We valued these shares at $.05 per share or $400,000.
On February 14, 2002, we issued 200,000 (post October 7, 2002, two (2) share for
one (1) share forward stock split) shares of our common stock to Hamilton,
Lehrer & Dargan, P.A. for legal services rendered to us. We valued these shares
at $.05 per share or $10,000.
On March 5, 2002, we issued 1,500,000 (post October 7, 2002, two (2) share for
one (1) share forward stock split) shares of our common stock to Barry Gewin for
rendering the following services to us from March 5, 2002 until March 5, 2003:
assistance with suppliers; marketing of our products; preparation of information
regarding our business; hiring of key management and sales personnel; and
general assistance in the development of our website content. We valued these
shares at $.05 per share of $75,000.
On March 5, 2002, we issued 1,500,000 (post October 7, 2002, two (2) share for
one (1) share forward stock split) shares of our common stock to Tommi Ferguson
for the following services rendered to us from March 5, 2002 until March 5,
2003: locating web site development personnel; development of an incentive
program for the our customers; advertising of our products; and expansion of our
product lines. We valued these shares at $.05 per share or $75,000.
On February 14, 2002, we issued 2000 (post October 7, 2002, two (2) share for
one (1) share forward stock split) shares of our common stock to Beadros Asare
for Edgarizing services. We valued these shares at a price of $.05 per share or
$100.
53
On February 14, 2002, we issued 2000 (post October 7, 2002, two (2) share for
one (1) share forward stock split) shares of our common stock to Cathy Hagen for
Edgarizing services. We valued these shares at a price of $.05 per share or
$100.
On February 14, 2002, we issued 2000 (post October 7, 2002, two (2) share for
one (1) share forward stock split) shares of our common stock to Kevin Steil for
Website Development Services. We valued these shares at a price of $.05 per
share or $100.
On February 19, 2002, we sold 5000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to James G. Xilas for
a price of $.05 per share or $250.
On February 21, 2002, we sold 1000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Vivian L. Malits
for a price of $.05 per share or $50.
On February 21, 2002, we sold 20,000 (post October 7, 2002, two (2) share for
one (1) share forward stock split) shares of our common stock to Rita S. Price
for a price of $.05 per share or $1000.
On February 21, 2002, we sold 1000 (post October 7, 2002, two (2) share for one
(1) share forward stock split)shares of our common stock to Hubert P. Siceloff
for a price of $.05 per share or $50.
On February 21, 2002, we sold 1000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Hubert P. Siceloff
Jr. for a price of $.05 per share or $50.
On February 25, 2002, we sold 6000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Linc Frye, for a
price of $.05 per share or $300.
On February 25, 2002, we sold 2400 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Dell Ferguson for a
price of $.05 per share or $120.
On February 26, 2002, we sold 2000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Clark B. Kinnison
for a price of $.05 per share or $100.
On February 27, 2002, we sold 2000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Alice Jones for a
price of $.05 per share or $100.
On March 4, 2002, we sold 8000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Rosemary Ferguson for a
price of $.05 per share or $400.
On March 4, 2002, we sold 20,000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Gary C. Law for a
price of $.05 per share or $1000.
On March 4, 2002, we sold 4,000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to William E. Gewin for a
price of $.05 per share or $200.
On March 5, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Phyllis Zaffaroni for a
price of $.05 per share or $100.
54
On March 5, 2002, we sold 4000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Raymond Hall for a
price of $.05 per share or $200.
On March 5, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Jay F. Johnson for a
price of $.05 per share or $100.
On March 5, 2002, we issued 4000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Richard Clayton at
a price of $.05 per share or $200.
On March 5, 2002, we sold 20,000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Nathan Zafran for a
price of $.05 per share or $1000.
On March 6, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Brian M. Gewin for a
price of $.05 per share or $100.
On March 7, 2002, we sold 8000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Debra M. White at a
price of $.05 per share or $400.
On March 7, 2002, we sold 4000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Sandy L. Dell at a
price of $.05 per share or $200.
On March 7, 2002, we sold 40,000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Christopher R. Dell
at a price of $.05 per share or $2000.
On March 11, 2002, we sold 8000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to David Wood for a price
of $.05 per share or $400.
On March 11, 2002, we sold 4000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Clinton F. Walker at a
price of $.05 per share or $200.
On March 11, 2002, we sold 4000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Juanita G. Davidson at
a price of $.05 per share or $200.
On March 11, 2002, we sold 4000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Jason M. Baker at a
price of $.05 per share or $200.
On March 11, 2002, we sold 6000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to our former director,
Joseph L. Prugh a price of $.05 per share or $300.
On March 11, 2002, we sold 40,000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Thomas J. Martinis
at a price of $.05 per share or $200.
On March 11, 2002, we sold 10,000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Sharon J. Martincic
at a price of $.05 per share or $500.
55
On March 13, 2002, we sold 4000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Don Brown for a price
of $.05 per share or $200.
On March 15, 2002, we sold 4000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Norma Jean Walston at a
price of $.05 per share of $200.
On March 15, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Geoffrey M. Miller for
a price of $.05 per share or $100.
On March 19, 2002, we sold 10,000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Shannon Squyres at
a price of $.05 per share or $500.
On March 19, 2002, we sold 10,000 (post October 7, 2002, two (2) share for one
(1) share forward stock split) shares of our common stock to Kurt Divich for a
price of $.05 per share or $500.
On March 20, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Hassan El Gabri for a
price of $.05 per share or $100.
On March 20, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Cara Jo Malinowski for
a price of $.05 per share or $100.
On March 20, 2002, we sold 6000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to David E. Lincoln for a
price of $.05 per share or $300.
On March 20, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to One Stop Financial
Group, Inc., a Florida corporation owned by Kenneth Easton, for a price of $.05
per share or $100.
On March 20, 2002, we sold 2000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Jan R. Steele for a
price of $.05 per share or $100.
On March 24, 2002, we sold 3000 (post October 7, 2002, two (2) share for one (1)
share forward stock split) shares of our common stock to Edward G. Siceloff, our
former President, for a price of $.05 per share or $150.
On December 31, 2002, we issued 500,000 shares of our common stock to Hamilton,
Lehrer and Dargan P.A. in exchange for legal services rendered to us. We valued
these shares at $.05 per share or $25,000.
On December 31, 2002, we issued 500,000 shares of our common stock to David
Mehalick in exchange for services rendered to us. We valued these shares at $.05
per share or $25,000.
In connection with our acquisition of Better Solutions, Inc., Edward G.
Siceloff, our prior president and director, retired 39,500,000 of the 40,003,000
shares of our common stock held by him. After retiring these shares, Edward G.
Siceloff owned 503,000 shares of our common stock.
In connection with our acquisition of Better Solutions, Inc., Joseph L. Prugh,
our prior director, retired 8,000,000 of the 8,006,000 shares held by him. After
retiring these shares, Joseph L. Prugh owned 6,000 shares of our common stock.
Of the shares cancelled in connection with our acquisition of Better Solutions,
Inc., 16,500,000 shares were issued to Richard E. McDonald, our President,
Principal Financial Officer/ Principal Accounting Officer and Chairman of the
Board of Directors. We valued these shares at $.05 per share or $825,000.
Of the shares cancelled in connection with our acquisition of Better Solutions,
Inc., 16,500,000 shares were issued to Marc D. Roup, our Chief Executive Officer
and a Director. We valued these shares at $.05 per share or $825,000.
56
On February 24, 2003, we issued 1,750,000 shares to Chad E. Dillow in exchange
for investor relations services by Mr. Dillow to us. We valued these shares at
$.05 per share or $87,500.
On February 27, 2003, we issued 858,000 shares to David Wood in exchange for
services rendered to us. We valued these shares at $.05 per share or $42,900.
None of the above issuances involved underwriters, underwriting discounts, or
commissions. We relied upon Sections 4(2) of the Securities Act of 1933, as
amended, and Rule 506 of Regulation D in offering these shares.
We believed these exemptions were available because:
o We are not a blank check company;
o Total sales did not exceed $1,000,000;
o We filed a Form D, Notice of Sales, with the Securities and Exchange
Commission;
o Sales were not made by general solicitation or advertising;
o All certificates had restrictive legends;
o Sales were made to persons with a pre-existing relationship to the company,
its officers and directors; and
o Sales were made to investors who were either accredited investors or who
represented that they were sophisticated enough to evaluate the risks of
the investment.
57
ITEM 27. EXHIBITS
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3.1 Articles of Incorporation(1)
3.1(i) Amendment to Articles of Incorporation(4)
3.2 Bylaws(1)
3.3 Agreement between us and Better Solutions(5)
3.4 Plan of Share Exchange/Articles of Share Exchange(10)
4. Specimen Stock Certificate(1)
5.1 Opinion of Hamilton, Lehrer & Dargan, P.A.
10.1 Agreement with Barry Gewin(2)
10.2 Agreement with Tommi Ferguson(2)
10.3 Agreement with Global Health Trax, Inc(1)
10.4 Global Health Trax Correspondence dated April 25, 2002(2)
10.5 Agreement with EcoQuest International(3)
10.6 Agreement with Amerisource Funding, Inc.(10)
10.7 Agreement with C. Dillow & Company, Inc.(10)
10.8 Agreement with McGrow® Consulting(10)
10.9 Agreement with PNC Bank, N.A.(10)
10.10 Agreement with Media 1 Financial Group LLC and David Wood(10)
10.11 Agreement between Better Solutions, Inc. and Barry Gewin(10)
10.12 Agreement between Better Solutions, Inc. and Tommi Ferguson(10)
10.13 Real property Lease agreement between Penn Center Management
Corporation and Better Solutions, Inc.(10)
10.14 Real Property Lease agreement between HQ Global Workplaces and
us doing business as MedTech for Glades Road Center in Boca Raton,
Florida.(10)
10.15 Real Property Lease agreement between HQ Global Workplaces and
us doing business as MedTech for Cleveland Ohio, Bank One Center
Offices(10)
10.16 Automobile Lease Agreement between Better Solutions, Inc. and GMAC(6)
10.17 Automobile Lease Agreement between Better Solutions, Inc. and BMW
Financial Services(10)
10.18 Amended Agreement with David Wood and Media 1 Group, LLC
23.1 Consent of Stark Winter Schenkein & Co., LLP
23.2 Consent of DazskalBolton, LLP
99.1 Form 8-K (filed September 3, 2002)(5)
99.2 Form 8-K (filed September 30, 2002)(6)
99.3 Form 8-K (filed January 6, 2003)(7)
99.4 Form 8-K (filed February 26, 2003)(8) [disclosing our acquisition of
Better Solutions, Inc.]
99.5 Form 8-K (filed February 26, 2003)(9) [disclosing our change in
accountants]
(1) Denotes exhibits filed with our Registration Statement on Form SB-2 on March
28, 2002.
(2) Denotes exhibits filed with our Registration Statement on Form SB-2 on April
26, 2002.
(3) Denotes exhibits filed with our Registration Statement on Form SB-2 on May
24, 2002.
(4) Denotes exhibits filed with our Post Effective Amendment to our Registration
Statement on Form SB-2 on October 10, 2002.
(5) Denotes previously filed Form 8-K. On September 3, 2002, we filed a Form
8-K regarding Item 9 of Form 8-K, "Regulation FD Disclosure". Specifically, in
that Form 8-K, and in connection with the new legislation that requires our
Chief Executive Officer to certify periodic reports that contain financial
statements, we attached as Exhibit 99.1 to the Form 8-K Current Report, the
Certification of Edward G. Siceloff, our former, Chief Executive Officer,
Chief Financial Officer, and Principal Accounting Officer. This Certification
pertained to our Form 10-QSB for the period ending May 31, 2002.
58
(6) Denotes previously filed Form 8-K. On September 30, 2002, we filed a Form
8-K regarding Item 5 of Form 8-K, "Other Events and Regulation FD Disclosure"
and Item 7 of Form 8-K, "Financial Statements, Pro Forma Financial Information
and Exhibits". Specifically, in that Form 8-K, we disclosed under Item 5 that
our common stock had been approved by the National Association of Securities
Dealers for quotation on the Over the Counter Bulletin Board under the symbol
"WHAI" and that our Board of Directors had unanimously approved a forward stock
split. In addition, under Item 7, we filed as an exhibit, an amendment to our
Articles of Incorporation regarding the forward stock split.
(7) Denotes previously filed Form 8-K. On January 6, 2003, we filed a Form 8-K
regarding Item 1 of Form 8-K, "Changes in Control". Specifically, in that Form
8-K , we disclosed under Item 1 that we had entered into an agreement to acquire
Better Solutions, Inc. The agreement was filed as an exhibit to the Form 8-K.
(8) Denotes previously filed Form 8-K. On February 26, 2003, we filed a Form 8-K
regarding Item 1 of Form 8-K, "Changes in Control". Specifically, in that Form
8-K , we disclosed under Item 1 that we had acquired Better Solutions, Inc.
(9) Denotes previously filed Form 8-K. On February 26, 2003, we filed a Form 8-K
regarding Item 4 of Form 8-K, "Changes in Registrant's Certifying Accountant".
Specifically, in that Form 8-K , we disclosed under Item 4 that on February 20,
2003, we changed accountants from Stark Winter Schenkein & Co., LLP to Daszkal
Bolton LLP.
(10) Denotes exhibits filed with our Post Effective Amendment 4 to our
Registration Statement on Form SB-2 on February 27, 2003.
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to their Registration Statement on Form SB-2 to:
a. Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
b. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the SB-2
Registration Statement and all amendments thereto. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(f) if, in the aggregate, the changes in the
volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
c. Include any additional or changed material information on the plan of
distribution.
2. That, for determining liability under the Securities Act of 1933, to treat
each post-effective amendment as a new Registration Statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
3. To file a post-effective amendment to remove from registration any of the
securities that remains unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
5. In the event that a claim for indemnification against such liabilities, other
than the payment by the Registrant of expenses incurred and paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding, is asserted by such director, officer or controlling
person in connection with the securities being registered hereby, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
59
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Pittsburgh, Pennsylvania on March 3, 2003.
By: /s/ Marc D. Roup, Chief Executive Officer
(Signatures and Title)
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
/s/ Marc D. Roup
Director
March 3, 2003
/s/ Richard E. McDonald
Director
March 3, 2003
60
