UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
____________ TO ____________
COMMISSION FILE NUMBER 333-84934
WORLD HEALTH ALTERNATIVES, INC.
(Exact name of registrant as specified in its charter)
Florida 04-3613924
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
300 Penn Center Boulevard, Suite 201
Pittsburgh, Pennsylvania 15235
(Address of principal executive offices) (Zip Code)
412-829-7800
(Registrant's telephone number, including area code)
- November 30 (Former Fiscal Year)
(Former Name, Former Address and Former Fiscal Year, if Changes Since Last
Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]
As of May 16, 2003, there were 40,575,400 shares of the registrant's common
stock outstanding.
Transitional Small Business Disclosure Format: Yes____ No____
World Health Alternatives, Inc. and Subsidiary
INDEX
Part I. Financial Information Page
Item 1. Consolidated Financial Statements and Notes to Consolidated Financial
Statements
(a) Condensed Consolidated Balance Sheets as of
March 31, 2003 (unaudited) and December 31,
2002 (Audited) 3
(b) Condensed Consolidated Statements of Operations
for the Three Months Ended March 31, 2003
and 2002 (unaudited) 4
(c) Condensed Statement of Changes in Shareholders
Equity for the three months ended March 31,
2003 (unaudited) 5
(d) Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2003
and 2002 (unaudited) 6
(e) Notes to Condensed Consolidated Financial
Statements (unaudited) 7
Item 2. Plan of Operations and Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Controls and Procedures 20
Part II. Other Information
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature and Certification
2
PART I. FINANCIAL INFORMATION
WORLD HEALTH ALTERNATIVES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2003 2002*
------------ ------------
Assets (unaudited)
Current Assets
Cash $ 3,870 $ 64,864
Accounts receivable 150,575 157,957
------------ ------------
Total current assets 154,445 222,821
------------ ------------
Property, Plant and Equipment, net 62,329 43,360
------------ ------------
Non-current assets
Other current assets 28,953 515
Total Assets $ 245,727 $ 266,696
------------ ------------
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 37,367 $ 38,720
Accrued liabilities 48,122 40,222
Income taxes payable 27,000 27,000
Note Payable 225,000 -
------------ ------------
Total Current Liabilities 337,489 105,942
Stockholders' Equity
Preferred stock, $.0001 par value,
100,000,000 shares authorized, none
issued and outstanding - -
Common stock, $.0001 par value,
200,000,000 shares authorized
40,575,400 and 33,000,000 shares
issued and outstanding respectively 4,058 3,300
Additional paid-in capital 154,300 12,558
Retained earnings (deficit) (250,120) 144,896
------------ ------------
Total Stockholders' Equity (deficit) (91,762) 160,754
------------ ------------
Total Liabilities and Stockholders' Equity $ 245,727 $ 266,696
------------ ------------
*Derived from audited financial statements.
See accompanying notes to consolidated financial statements.
3
WORLD HEALTH ALTERNATIVES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Three Months
Ended March 31,
----------------------
2003 2002
------------- -------------
Sales $ 942,887 $ 627,585
Cost of Sale 625,609 393,803
------------- -------------
Gross profit 317,278 233,782
Selling, marketing and administrative expenses 679,408 258,209
------------- -------------
Operating loss (362,129) (24,427)
Other income (expense):
Interest expense (33,000) (18,826)
Interest income 114 11
------------- -------------
Total Other Income (expense) (32,886) (18,815)
------------- -------------
Loss before income taxes (395,016) (43,242)
Income tax provision - -
------------- -------------
Net loss $ (395,016) $ (43,242)
------------- -------------
Per share of common stock:
Basic $ (0.01) $ 0.00
------------- -------------
Dilutive $ (0.01) $ 0.00
------------- -------------
Weighted average shares outstanding 38,828,444 33,000,00
------------- -------------
See accompanying notes to consolidated financial statements.
4
WORLD HEALTH ALTERNATIVES, INC. AND SUBSIDIARY
Condensed Statement of Changes in Shareholders
Equity for the three months ended March 31, 2003 (unaudited)
Retained
Common Stock Additional Earnings
Shares Amount Paid-in Capital (Deficit) Total
Balance, December 31, 2002 33,000,000 $ 3,300 12,558 $ 144,896 $ 160,754
Common stock issued in
share exchange 4,725,400 473 (473) - -
Common stock issued for services 2,850,000 285 142,215 - 142,500
Net loss - March 31, 2003 - - - (395,016) (395,016)
---------- ------- -------- ----------- -----------
Balance, March 31, 2003 40,575,400 4,058 154,300 (250,120) $ (91,762)
---------- ------- -------- ----------- -----------
See accompanying notes to consolidated financial statements.
5
WORLD HEALTH ALTERNATIVES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the Three Months
Ended March 31,
--------------------
2003 2002
-------- ------
Cash Flows from Operating Activities:
Net loss $ (395,016) $ (43,242)
------------- ------------
Adjustments to Reconcile Net Income to net Cash
Used in operating activities:
Depreciation of property plant and equipment 4,009 5,135
Stock issued for services 142,500 -
(Increase) decrease in:
Accounts receivable 7,382 15,348
Other current assets (28,438) 761
Increase (decrease) in:
Accounts payable (1,353) 13,992
Accrued liabilities 7,900 (2,839)
Income taxes payable - 1,420
------------- ------------
Net Cash Used in Operating Activities (263,016) (9,425)
Cash Flows from Investing Activities:
Purchase of property, plant and equipment (22,978) (7,578)
------------- ------------
Cash Flows from Financing Activities:
Proceeds from note payable 225,000 -
Loan proceeds, related party - 35,200
------------- ------------
Net Cash Provided by Financing Activities 225,000 35,200
------------- ------------
Net Increase (Decrease) in Cash and cash equivalents (60,994) 18,197
Cash and cash equivalents, Beginning of Period 64,864 5,802
------------- ------------
Cash and cash equivalents, End of Period $ 3,870 $ 23,999
------------- ------------
Supplementary disclosure of cash activities:
Cash Paid for interest $ 33,000 $ 18,815
------------- ------------
Cash Paid for income taxes $ - $ -
------------- ------------
See accompanying notes to consolidated financial statements.
6
WORLD HEALTH ALTERNATIVES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of World Health
Alternatives, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results for the
interim periods presented have been included.
These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's Annual Financial Statements for the year ended December 31,
2002. Operating results for the three months ended March 31, 2003 are not
necessarily indicative of the results that maybe expected for the year ending
December 31, 2003.
It is recommended that the accompanying condensed financial statements be read
in conjunction with the financial statements and notes for the year ended
December 31, 2002, found in the Company's Form 10-KSB and Form 8-K.
NOTE 2 - 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 March 31,
- -------------------------------------------------
2003 $ 173,090
2004 52,340
2005 1,744
2006 -
2007 -
------------
Total minimum rental commitment $ 227,174
------------
NOTE 3 - SUBSEQUENT EVENT
In April 2003, a significant shareholder loaned the company $60,000 to fund
operations. The loan is non-interest bearing and has no formal terms of
repayment
7
WORLD HEALTH ALTERNATIVES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 (continued)
(UNAUDITED)
NOTE 4 - ACQUISITION OF BETTER SOLUTIONS, INC.
On February 20, 2003, the Company completed the acquisition of 100% of the
outstanding common stock of Better Solutions, Inc. in exchange for 33,000,000
newly issued shares of our common stock. For accounting purposes, the
acquisition will be treated as a recapitalization of the Company. The value of
the net assets of the Companies after the acquisition was completed is the same
as their historic book value
NOTE 5 - NOTE PAYABLE
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.
NOTE 6 -COMMON STOCK
During the quarter ending March 31, 2003, the Company issued 2,850,000 shares of
common stock to consultants and attorneys. The Company valued the shares at
$0.05 per share. The Company recorded stock based compensation of $142,500.
8
Item 2. Management's Discussion and Analysis or Plan of Operations
The following is a discussion and analysis of a) our former and future Plan
of Operations pertaining to our website; and b) financial condition and results
of operations which should be read in conjunction with our financial statements
and related notes appearing in this Form 10-QSB.
For purposes of this Management's Discussion and Analysis and Plan of
Operations, the words "we" or "our" refer to World Health Alternatives, Inc. and
its 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 "believe,"
"expect," "may," "should," "anticipates," 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,
including those risk factors contained in our Post Effective Registration
Statement.
Introduction
We were incorporated in the State of Florida in February 2002. On February 20,
2003, we acquired our wholly owned subsidiary, Better Solutions, Inc., in
exchange for 33,000,000 shares of our common stock. As a result of our
acquisition of Better Solutions, Inc.:
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 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;
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 Messrs. Roup and McDonald, and the retirement of
47,500,000 shares by Messrs. Sicleoff and Prugh, a change in the
voting control of our common stock occurred; and
o Better Solutions, Inc.'s medical staffing business became integrated
into our business.
Upon completion of the acquisition, we changed our fiscal year end to Better
Solutions' fiscal year end of December 31.
As a result of the acquisition of Better Solutions, we now operate a medical
staffing business under the name MedTech, which is a division of Better
Solutions. MedTech provides staffing services to hospitals and other healthcare
related facilities.
9
OUR FORMER AND FUTURE PLAN OF OPERATIONS PERTAINING TO OUR WEBSITE
From our inception until April 17, 2003, our Plan of Operations was to develop
our website based business of selling nutritional and related products. As
indicated below, we have modified our business and Plan of Operations to sell
website based advertising for companies involved in various markets, including
nutritional products such as vitamins, herbs, amino acids and minerals,
homeopathic products, sports clothing and equipment, organic and low
carbohydrate foods, and candles, incense, and aromatherapy products. We have
discontinued the sale of nutritional and related products.
Our Former Plan of Operations for Website Product Sales
We had planned to accomplish the following aspects of our Plan of Operations as
indicated below in (1) - (8).We have also indicated below in (1) - (8), what has
been and what has not been accomplished with our former Plan of Operations, the
amount of funds which we devoted to each step, and why we failed to accomplish a
specific step in our former plan:
(1) Enter into Agreements with Suppliers
Throughout our Plan of Operations, in order to select product suppliers, we had
planned to conduct Internet research and review various nutritional wholesaler
publications. Based on this research, we had planned to contact various
companies and make supplier selections based upon cost, delivery requirements,
and product selection. We had also planned to purchase wholesale catalogues and
discuss with company representatives pertinent factors such as product
availability, quality, selection, and delivery. There was no cost affiliated
with this aspect to our Plan of Operations.
We located four suppliers of products for our initial website. During
approximately March of 2002, we located Con Yeager Spice Company and Frontier
Herb Co-Op to furnish us with products on an as needed basis. We also located
Global HealthTrax, Inc. and EcoQuest International to furnish us with supplies
pursuant to written agreements. We entered into written agreements with EcoQuest
International on April 8, 2002 and our president entered into an agreement with
Global HealthTrax, Inc. on our behalf on October 10, 2001, which was assigned to.
us on April 25, 2002.
We did not enter into agreements with any other suppliers because (a) we did not
have any customer orders; and (b) many suppliers required that we agree to
purchase a minimum amount of their products which we were not able to
accommodate or produce.
10
(2) Update Design, Graphics and Functional Aspects of Website We had planned to
update the design, graphics and functional aspects of our website on an ongoing
and continual basis. To accomplish this planned step in our Plan of Operations,
we planned to hire website consultants at an estimated cost of $3,500. During
early 2002, we had spent $3,800 to develop our initial website and design, plus
an additional $1,150 for further development; however, we have not spent any
funds to update our website since that time. We originally planned to complete
this aspect of our Plan of Operations by late January 2003; however, in March
2003, we stated that we did not anticipate completing this aspect until July
2003. We had contacted website consulting companies and received quotations to
update and maintain certain functional components of our website; however, we
did not complete this part of the Plan of Operations because at the time we did
not have adequate cash flow to cover the expense associated with the updating
and maintenance of the website.
(3) Advertise our Website
We had planned to seek low cost advertising of $50 to $150 per month through
local publications such as local newspapers. We stated that we would begin this
advertising in March 2003. We failed to accomplish anything regarding this
planned step, and we did not place any advertisements. The reason that we failed
to place such advertisements was our lack of financial resources to do so.
(4) Incentives to Our Existing Customers
We had planned to provide incentives to customers, such as free bottles of
vitamins or discounts on products based on ordering a monthly supply of a
product on an annual basis. We had planned to complete this aspect of our Plan
of Operations by June 2002, but this was further delayed because we had not
generated any revenues. We then anticipated that we would begin offering such
incentives in March 2003, if we had revenues at that time. We failed to
accomplish any aspect of this planned step because we never generated sufficient
revenues or established a sufficient customer base to develop such secondary
marketing efforts, upon which our accomplishment of this step was contingent.
11
(5) Establish Database of Specific Product Ingredients, Benefits, and Harmful
Effects
We had planned 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. We had
planned to begin this planned aspect in February 2003 and continue throughout
our Plan of Operations. The cost affiliated with this former planned aspect of
our Plan of Operations is related to the $3,500 cost for hiring website
consultants to implement and organize such information into our website. Our
former president conducted Internet research on specific product
ingredients, benefits, and harmful effects; however, no steps were completed to
make that information available through the website nor were any funds spent for
this specific purpose. The reason our management did not accomplish everything
regarding this planned step is that we did not have the funds to do so.
(6) Establish Database of General Articles of Interest
We had planned to establish a database of general articles of interest
pertaining to vitamins, minerals, herbs, spices, homeopathy, and aromatherapy.
We had planned to commence this aspect of our Plan of Operations in June 2002;
however, this step had been further delayed until March 2003. Our former
President had conducted Internet research from which he collected articles to be
included; however, his research was more time consuming than originally
anticipated and he failed to establish a sufficient number of articles that
would provide a basis for a database of articles. The cost affiliated with this
planned aspect was part of the expected $3,500 to hire website consultants. We
have spent no funds to establish this database, and did not have sufficient
funds to do so.
(7) Viral Marketing
We had planned to conduct viral marketing, which would have involved an equal
exchange of like advertising services between us and other websites. We
originally planned to commence this aspect of our Plan of Operations in July
2002, but this planned aspect was further delayed to April 2003, due to our
inability to accomplish other aspects of our Plan of Operations. We did not
anticipate any cost with this planned aspect. Former management failed to
accomplish any aspect of this planned step in our Plan of Operations.
12
(8) Introduce our Homoeopathic Product Line
We had planned to attempt to establish agreements with suppliers of homeopathic
products and to offer these homeopathic 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 had been delayed until an anticipated date of
May 2003 or until such time that we completed the updating of our website. We
did not anticipate any direct costs affiliated with this aspect of our Plan of
Operations; however, since it was contingent upon updating our website, which
would have cost $3,500 for website consultants, we would have had indirect costs
affiliated with this step. Nonetheless, we failed to accomplish any aspect of
this planned step in our Plan of Operations.
Why We are Discontinuing Product Sales on Our Website
Our current President, Richard McDonald, had conducted an initial evaluation of
the website product sales operation during December of 2002 when he was
negotiating with our then President, Mr. Siceloff, regarding our possible
acquisition of Better Solutions, Inc. At that time, our new President had not
completed an exhaustive evaluation of our website operations, and he anticipated
that we would continue to sell the same products which had been offered on our
website; however, after he conducted a thorough evaluation of the website
operations in March 2003, we decided to discontinue the website product sales
business.
Our Website Advertising Business
We plan to take none of our originally planned steps which had been directed
towards the sale of the approximately 1,500 nutritional and related products.
After reviewing the market conditions, cash flow and possible liability
associated with the sale of these products, we have decided to transform the
website into a hosting site for advertising within various markets, including
nutritional products such as vitamins, herbs, amino acids and minerals,
homeopathic products, sports clothing and equipment, organic and low
carbohydrate foods, and candles, incense, and aromatherapy products. We will
offer advertisement space for companies that offer these products for sale. We
will continue to maintain the domain name, www.worldhealthalternatives.com. We
have determined that, although the market for these products is strong and
emerging, it carries too much potential liability for the direct sale of the
products themselves. A more conservative and less litigious route would be to
aid other companies in the direct distribution of these products by way of
advertising their sites on our website and helping drive traffic to their web
sites.
13
Our Future Plan of Operations to Develop a Website Based Advertising Business
Current management plans to attempt to locate companies that will purchase
advertising on our website for a monthly fee in the following product
categories: nutritional products, such as vitamins, herbs, amino acids and
minerals; homeopathic products; sports clothing and equipment; organic and low
carbohydrate foods; and candles, incense, and aromatherapy products. Because our
clients will be charged a flat fee per month based on the length of their
agreement and the size of their advertisement, our fees will be similar to print
or newspaper advertising. We anticipate charging between $80 to $120 per month
to be featured on our website. We believe that our advertising based business
will eliminate or vastly reduce the potential liability associated with selling
these products directly, but still allow us to do business in these popular
markets. Current management plans to organize the new website in such a way to
categorize different aspects within the various product lines to make it easy
for a consumer to be directed to a supplier or retailer that specializes in the
products they are searching for and also to help potential consumers gather and
research information on these products.
Richard McDonald, our President, will spend approximately 5 hours per week to
supervise the website transformation and oversee the website based advertising
business, and later will appoint or hire a manager to undertake the
responsibilities of overseeing our website advertising business. We plan to use
4 of our sales representatives that sell our healthcare staffing services to
offer our website based advertising. Each sales representative will spend
approximately 4 hours per week to offering these advertising services and to
call upon our healthcare related database of clients to obtain possible
sales leads.
We will conduct our Plan of Operations from May 2003 to May 2004, as follows:
May 2003 to May 2004
Design of Website
Our healthcare staffing business has an in-house graphic designer who is
currently designing our initial renovated website. Our President and graphic
designer will continuously evaluate the design of our website and our graphic
designer will update the design based on that evaluation. Most of the content
for our website will be derived from the actual advertisements submitted to us
by our clients. Essentially, we will be providing the folder for our advertising
clients to put their content material in, and our programmers and web hosting
company will be incorporating the advertisement into the folder.
May 2003 to May 2004
Website Hosting and Maintenance
We contacted several web hosting and maintenance companies to host and maintain
our website for our advertising based business. By June, 2003, we plan to use
Internic.com for our web hosting and maintenance on a month to month basis, at a
cost of $19.95 per month. We do not have a written agreement with Internic.com,
nor are we required to do so.
14
June 2003
Transformation of our Website into an Advertising Business
We plan to transform our website at www.worldhealthalternatives.com by June of
2003. We plan to use the services of Charactersink.com at a cost of $40 per hour
to accomplish this transformation; however, to date we do not have an agreement
with Charactersink.com. We plan to enter into an agreement with
Charactersink.com before June 2003. We estimate that the total approximate cost
of these services will be $2,000.
June 2003
Website Sales Brochure
Our sales presentation will consist of a tri-fold brochure which will be
available on our website in electronic and print formats. The brochure will
describe our services and illustrate the advertising costs as well as the
contract terms. Richard McDonald, our President, is currently providing and
creating the content for the brochure. Our graphic designer is currently working
on the design of the brochure. We plan to complete the brochure by June 2003.
Because our employees will accomplish the design and content of the brochure, we
do not anticipate any material costs associated with this step in our Plan of
Operations.
June 2003 to May 2004
Advertisement Sales
We plan to begin offering our advertising services by June 2003. We plan to use
four of our sales representatives that sell our healthcare staffing services to
offer our website based advertising, each of which will spend approximately four
hours per week to offer these advertising services and to call upon our
healthcare related database of clients involved to obtain possible sales leads.
Sales representatives will be compensated strictly on a 4% commission of the
gross sales amount. We also plan to contact similar suppliers and distributors
of the former operating website to offer our advertising services.
June 2003 to May 2004
Advertising our Services and Increase Website Traffic
We plan to use the promotional services of Ultimate Promotion.com to list our
website name on search engines. We also plan to use the advertising services of
Ultimate Promotion.com to get our website listed on other websites through the
use of hyperlinks and banner advertising. Ultimate Promotion.com's uses banner
advertising on websites that have an audience that could be our potential
clients. For instance, Ultimate Promotion.com may place an advertisement for our
website on a third party's website which will in turn drive traffic to our
website. We will then direct traffic to less advertised websites that sell their
products directly to consumers. Our current management plans to spend
approximately $200 per month to advertise and promote the new website or an
annual cost of $2,400. Our in-house graphic design artist is currently preparing
items to be presented to Ultimate Promotions.com, Inc. for our definitive price
quote and written agreement. We do not have a completed contract with Ultimate
Promotions.com, Inc. as of May 19, 2003; however we plan to complete a contract
with Ultimate Promotion.com before June of 2003.
15
March 2004
Add User Function to Post Reviews and Ratings
In March 2004, we plan to add a user function that will include the ability for
customers to post reviews and ratings of the website product suppliers they were
directed to, or from which they have purchased products.
May 2004
Hiring Manager to Oversee Website Operations
Richard McDonald, our President, plans to appoint or hire a manager to undertake
the responsibilities of overseeing our website operations at an estimated annual
salary of $35,000. Our manager will be responsible for:
o Overseeing the sales presentations of our sales representatives;
o Continually modifying the sales presentations to make necessary
improvements;
o Reviewing possible agreements and services of website consultants and
advertisers to promote our website advertising business; and
o Continually reviewing and evaluating our website content and design to
make any necessary improvements.
Richard McDonald, our President, will oversee the work of the manager and will
no longer spend approximately 5 hours per week to oversee the website
advertising component of our business.
Subscription Fees
If and only if we have generated revenues from at least 50 website retailers
that market nutritional products such as vitamins, herbs, amino acids and
minerals, homeopathic products, sports clothing and equipment, organic and low
carbohydrate foods, and candles, incense, and aromatherapy products, we may
explore the feasibility of instituting a subscription service to our website in
which we would charge a subscription fee of $3.95 to $9.95 per month to our
website retailer clients to obtain our advertising services.
Comparative Pricing Database
If and only if we have generated revenues from at least 50 website retailers
that market the above products, we will begin establishing a database that
compares the prices of various retailers regarding various products. This
database will be equipped to provide relevant product information regarding our
client's products and provide the ability for consumers to perform comparative
shopping searches. If we begin establishing such a database in May 2004, we do
not expect to complete the database, which will be updated on a continual basis,
until September 2004.
16
Future Cash Needs
The estimated costs associated with website advertising business during our Plan
of Operations from May 2003 to May 2004 are:
- ------------------------------------------------------------------------ ---------
Estimated
Description costs
- ------------------------------------------------------------------------ ---------
Website hosting and maintenance $ 960
- ------------------------------------------------------------------------ ---------
Transformation of website into website advertising business $2,000*
- ------------------------------------------------------------------------ ---------
Agreement with a website advertising company to increase website traffic $1,440
- ------------------------------------------------------------------------ ---------
Agreement with a website advertising company to advertising our services $2,400
- ------------------------------------------------------------------------ ---------
Manager to oversee website operations $2,916**
- ------------------------------------------------------------------------ ---------
Total estimated costs $9,176
- ------------------------------------------------------------------------ ---------
*$2,000 estimate is based on the medium figure between an estimate rate of
between $1,800 and $2,000.
**$2,916 salary figure is based on the manager's annual salary of $35,000, only
during May 2004, the last month of our Plan of Operations and the month in
which we anticipate hiring the manager.
We believe that our cash balance of $154,000 as of April 21, 2003, together with
our existing credit lines totaling $500,000, and expected future cash flows from
our operating activities in the medical staffing business based on past cash
flow, will be sufficient for us to meet our current and future financial
obligations related to our website advertising business, 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.
17
RESULTS OF OPERATIONS
Three Months Ended March 31, 2003 and 2002
Sales. Sales for the three months ended March 31, 2003 increased by 50% to
$942,887 from $627,585 for the three months ended March 31, 2002. This increase
was primarily due to additional hourly consulting service revenue generated by
our Pittsburgh, Pennsylvania Better Solutions office. In addition, our new
Cleveland, Ohio and Boca Raton, Florida Better Solution offices began generating
hourly consulting service revenue in November 2002 and January 2003,
respectively, but were unprofitable during the first quarter of 2003.
Gross Profit. Gross profit is total revenues less cost of revenues. Gross profit
excludes general corporate expenses, finance expenses, and income tax. For the
three months ended March 31, 2003 and 2002, respectively, our gross profit was
$317,278 and $233,782, which represents a 36% increase. The increase in gross
profit is due to our increased revenues. The gross profit as a percentage of
sales decreased to 33.6% for the three months ended March 31, 2003, from 37.3%
for the three months ended March 31, 2002. The 3.7% decrease of the gross profit
as a percentage of revenues is attributed to additional negotiated contracts
during the current period ended March 31, 2003, which are at a lower margin,
causing a reduction in the total gross profit percentage for the current period.
Selling, Marketing, and Administrative Expenses. Selling, marketing and
administrative expenses increased to $679,409 from $258,208 for the three months
ended March 31, 2003 and 2002, respectively, representing a 163% increase in
such expenses. The majority of this increase was due to: (a) $174,215 of
operating costs associated with the opening of our new offices in Cleveland,
Ohio and Boca Raton, Florida; (b) $130,000 in expenses for services associated
with our merger with Better Solutions; and (c) approximately $65,000 of legal
and accounting costs associated with this merger and related Securities and
Exchange Commission filings. The remaining $52,000 increase in selling,
marketing and administrative expenses was due to additional overhead costs
associated with operating our existing business.
18
Interest Expense. Interest expense increased to $33,000 from $18,826 for the
three months ended March 31, 2003 and 2002, respectively. This 75% increase in
interest expense is due to: (a) additional use of our factoring arrangement to
fund our operations; and (b) borrowing on our line of credit during the current
period ending March 31, 2003.
Operating Loss. Operating losses increased to $362,129 from $24,427 for the
three months ended March 31, 2003 and 2002, respectively. This 1382% increase in
our operating loss is a direct result of our increased expenses as discussed
above.
Liquidity and Capital Resources
Cash decreased by $60,994, to $3,870 from $64,864 for the three months ended
March 31, 2003 and 2002. The decrease in cash during the first three months of
2003 is attributable to cash outflows from operations of $263,016 and $22,978 of
cash outflows associated with investing activities. These cash outflows were
partially offset by $225,000 of cash inflows from financing activities.
Cash used by operating activities totaled $263,016 in the three months ended
March 31, 2003. Cash outflows included the $252,500 loss, net of $142,500
non-cash stock issued for services in the current quarter and a $28,438 increase
in other non-current assets due to rental deposits required at the newly opened
Cleveland, Ohio and Boca Raton, Florida offices. These cash outflows were
partially offset by cash inflows, including a $7,382 decrease in accounts
receivables and a $7,900 increase in accrued liabilities due to the timing of
our payroll payments.
Cash used by investing activities totaled $22,978 in the three months ended
March 31, 2003 and related to the purchase of property, plant and equipment to
furnish our new branch offices in Cleveland, Ohio and Boca Raton, Florida.
Cash inflows from financing activities were due to net borrowings of $225,000 on
the line of credit.
During the three months ended March 31, 2002, our cash increased by $18,197 to
$23,999.
19
The increase in cash and short-term investments during the first three months of
2002 is attributable to cash outflows from operations of $9,425 and $7,578 of
cash outflows associated with investing activities. These cash outflows were
more than offset by $35,200 of cash inflows from financing activities.
Cash used by operating activities totaled $9,425 in the three months ended March
31, 2002. Cash outflows included the $43,242 loss in the prior quarter and a
$2,839 decrease in accrued liabilities. These cash outflows were partially
offset by cash inflows including a $15,340 decrease in accounts receivable, and
a $13,992 increase in accounts payable.
Cash used by investing activities totaled $7,578 in the three months ended March
31, 2002 and related to the purchase of property, plant and equipment for our
Pittsburgh, Pennsylvania operation.
Cash inflows from financing activities were due to $35,200 of loan proceeds from
a related party.
ITEM 3. CONTROLS AND PROCEDURES
As of March 31, 2003, an evaluation was performed under the supervision and with
the participation of the our management, including our Chief Executive Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures. Based on that evaluation, our management, including our Chief
Executive Officer, concluded that our disclosure controls and procedures were
effective as of March 31, 2003. There have been no significant changes in our
internal controls or in other factors that could significantly affect internal
controls subsequent to March 31, 2003.
20
PART II-- OTHER INFORMATION
ITEM 1. Legal Proceedings
We are subject to dispute and litigation in the ordinary course of our business.
None of these matters, in the opinion of our management, is material or likely
to result in a material effect on us based upon information available at this
time.
ITEM 2. Changes in Securities
Not Applicable
ITEM 3. Defaults upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable
ITEM 5. Other Information
Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
EXHIBIT INDEX Pages of Sequential
Exhibit No. and Description Numbering System
Exhibit 99.1 Certification Pursuant To 18 U.S.C. Section 1350, As Amended
Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
On January 6, 2003, the registrant filed a Form 8-K which included as an exhibit
the Agreement and Plan of Share Exchange between World Health Alternatives and
Better Solutions
On February 26, 2003, the registrant filed a Form 8-K under Item 1, "Change in
Control of Registrant", regarding the acquisition of Better Solutions, Inc.
On April 16, 2003, the registrant filed a Form 8-K/A indicating under Item 8,
"Change in Fiscal Year", regarding the change in our fiscal year from November 30
to December 31.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORLD HEALTH ALTERNATIVES, INC.
By /s/Richard E. McDonald
Richard E. McDonald
Chairman and Principal Financial Officer
By /s/Marc D. Roup
Marc D. Roup
Chief Executive Officer and Director
Date: May 16th, 2003
22
CERTIFICATION
I, Richard McDonald, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of World Health
Alternatives, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly
report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14)for World Health Alternatives,
Inc. and have:
(a) Designed such disclosure controls and procedures to ensure that material
information relating to World Health Alternatives, Inc. is made known to me
by others within the Company, particularly during the period in which the
periodic reports are being prepared;
(b) Evaluated the effectiveness of World Health Alternatives, Inc.'s disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this report ("Evaluation Date"); and
(c) Presented in the report my conclusions about the effectiveness of the
disclosure controls and procedures based on their evaluation as of the
Evaluation Date;
5. I have disclosed, based upon their most recent evaluation, to World Health
Alternatives, Inc.'s auditors and the audit committee of the Company's
Board of Directors:
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect World Health Alternatives, Inc.'s
ability to record, process, summarize and report financial data and have
identified for World Health Alternatives, Inc.'s auditors any material
weaknesses in internal control, and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in World Health Alternatives, Inc.'s
internal controls, and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By /s/Richard E. McDonald
Richard E. McDonald
President,
Principal Financial Officer,
Principal Accounting Officer,
Chairman of the Board of Directors
Date: May 16, 2003
23
CERTIFICATION
I, Marc Roup, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of World Health
Alternatives, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly
report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14)for World Health Alternatives,
Inc. and have:
(a) Designed such disclosure controls and procedures to ensure that material
information relating to World Health Alternatives, Inc. is made known to me
by others within the Company, particularly during the period in which the
periodic reports are being prepared;
(c) Evaluated the effectiveness of World Health Alternatives, Inc.'s disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this report ("Evaluation Date"); and
(c) Presented in the report my conclusions about the effectiveness of the
disclosure controls and procedures based on their evaluation as of the
Evaluation Date;
5. I have disclosed, based upon their most recent evaluation, to World Health
Alternatives, Inc.'s auditors and the audit committee of the Company's
Board of Directors:
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect World Health Alternatives, Inc.'s
ability to record, process, summarize and report financial data and have
identified for World Health Alternatives, Inc.'s auditors any material
weaknesses in internal control, and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in World Health Alternatives, Inc.'s
internal controls, and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By /s/Marc D. Roup
Marc D. Roup
Chief Executive Officer and Director
Date: May 16th, 2003
24
