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PART I
Item 1.
Business
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
General Overview
We are a development stage company that has not realized any revenues to date. Our business is the development and marketing a fixed digital gateway presence for Telehealth services through a diverse marketing strategy that highlights E-visits for doctor patient interaction through the internet that connects users with the desire to be treated.
We were incorporated in the State of Nevada on January 21, 2011. On March 4, 2015, we effected a forward stock split of our common shares at a ratio of 45 for 1 and to authorize 200,000,000 shares of common stock, $0.001 par value per share. There were 3,145,000 common shares before the split and there were 141,525,000 common shares after the split.
On March 4, 2015, we also filed an Amendment to the Company’s Articles of Incorporation (the “Certificate of Amendment”) with the Nevada Secretary of State. The Certificate of Amendment amended Article 3 of our Articles of Incorporation to: authorize the issuance of up to five million (5,000,000) shares of Preferred Stock, par value $0.001 per share, of which the voting and other powers, preferences and relative, participating, optional and other rights and qualifications, limitations and restrictions of the shares of such series shall be determined by the Board of Directors. As a result of the Certificate of Amendment, we now have 205,000,000 authorized shares, par value $0.001 per share, consisting of two classes designated as “Common Stock” and “Preferred Stock.” The total number of shares of Common Stock that we have authority to issue is 200,000,000 shares and the total number of shares of Preferred Stock that we have authority to issue is 5,000,000 shares.
Our corporate and mailing address 23564 Calabasas Road, Suite 205, Calabasas, CA, 91302 and our telephone number is (818) 855-8199.
General
Telemedicine and Virtual Medicine are interchangeable terms often described under the heading of “Telehealth” referring to the use of electronic communication and information technologies to provide or support clinical care at a distance. Telehealth, being the broadest of these terms is often used to refer to a diverse group of health-related activities. We are developing a fixed digital gateway presence for Telehealth services through a diverse marketing strategy that highlights E-visits for doctor patient interaction.
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Business
On August 3, 2015, we signed an agreement with New Benefits, Inc. to become one of its independent sales representatives. We intend to offer membership to healthcare benefits packages as a reseller for New Benefits, Inc. under its own private label. The service offered connects individuals with participating physicians and other licensed healthcare practitioners (the “Providers”) in real time, via live streaming video, telephone and/or secure e-mail for diagnosis and treatment of patients over the Internet, as well as providing other types of administrative services and information. All of the participating Providers have independently contracted to be in a network operated by New Benefits, Inc. We do not provide any physicians’ or other Providers’ services itself. Our services enable access to Providers who have agreed to provide patient care to customers using our system. Our service consists of a telemedicine feature. We arrange for the provision of care; we do not provide medical care nor does New Benefits.
New Benefits is a leader in non-insured health, personal security and leisure benefit plans. It has been in business for over 25 years and has in excess of 25 million members in its various plans. New Benefits members, depending on the plan they purchase, have access to a doctor 24/7 through their telephone, computer, Smartphone or tablet to obtain a quick diagnosis and/or treatment options from a U.S. licensed physician. New Benefits contracts with U.S. board-certified doctors. Neither New Benefits nor our company is responsible for the care and treatment rendered to the members by the participating doctors. The care and treatment is between the member/patient and the doctor and the doctor is solely responsible for such care and treatment.
The services will be marketed over the Internet and anchored by a team of qualified sales people via the telephone should we advance the business model to that point. We will secure merchant accounts and take credit cards over the phone and on the Internet for the memberships we sell. Fulfillment is provided by our contracted Direct Medical Provider Organization (“DMPO”), New Benefits, Inc. It is intended for Phase 1 to provide us with the knowledge, information and firmly position our company to generate revenue under the DMPO model, which at this time is the most profitable channel for these services, primarily offered through employee benefits programs.
As a new age healthcare company, we will create value for patients, physicians, and payment systems through Telemedicine services. As a result of the increasing digital transformation in healthcare, we will be able to address some of the challenges facing healthcare today, recognizing a diversity of services provided in healthcare that present complications. The healthcare industry represents approximately 17% of the U.S. economy. This is important given the extent of government involvement with healthcare for the elderly and the poor through Medicare and Medicaid. Cost, access, and convenience present difficulties for patients who need care, the doctors who provide it and how those services are paid. Some of these problems can be alleviated through the use of telemedicine. Convenience is a driving force behind the growing popularity of Telehealth services, however the ability to deliver care at a lower cost is ultimately what will determine success. Lower overhead is the primary factor that allows for a lower cost. This is attractive both to patients and physicians. We will collect fees from every physician-patient interaction. We have chosen to enter this market at the perfect time as digital technology is able to rapidly increase its application in the healthcare industry. In addition to the obvious increase in ease of use, we will be able to provide comfort and desire for interaction with physicians in a more convenient cost effective way.
The terms “fixed digital gateway presence” and “fixed digital gateway for Telehealth services and internet interface” are interchangeable used in context and do not relate directly to the product we intend to sell initially. One is more descriptive than the other, describing the fact there will be a website. The dual-channel approach refers to the enterprise-level Telemedicine platform we will have to offer healthcare providers to introduce virtual medicine programs in their offices. The platform facilitates on-demand and scheduled consults, record keeping and billing solutions, which can be managed by all levels of clinicians including primary care and specialty physicians, pharmacists, nurse practitioners and physician’s assistants. We will collect fees for every e-visit and virtual consult that takes place on the system in addition to collecting fees from clinicians for access to and use of the platform.
Selling the New Benefits suite of services is not a technical platform; it will be in addition to the technical platform that will be used to provide virtual medicine in medical practices. We do not intend to employ a third party, we will be a reseller for one of several providers of the enterprise level telemedicine platform and run it ourselves, the provider will manage the technology. This is in addition to reselling New Benefits programs.
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Strategy
By securing a contract with a leading Health benefits network to resell a full suite of virtual health benefits as a DMPO or “Direct Medical Provider Organization” using a direct pay model, the consumer pays a monthly recurring fee. Additionally, we will introduce an enterprise-level Telemedicine platform for healthcare providers to introduce virtual medicine programs in their offices. The platform facilitates on-demand and scheduled consults, record keeping and billing solutions, which can be managed by all levels of clinicians including primary care and specialty physicians, pharmacists, nurse practitioners and physician’s assistants. We will collect fees for every e-visit and virtual consult that takes place on the system in addition to collecting fees from clinicians for access to and use of the platform. This dual-channel approach is unique to us allowing our company to profit on demand in the current market, while positioning for growth as physicians accept and implement virtual services to build their practice and maintain patient relationships, this is a material element to our strategy. There is no assurance that we will be able to introduce this new service this year or if introduced that it will be successful.
Industry
As telemedicine has grown during the past 15 years, it has been used to deliver care to patients in rural communities, in their homes, in nursing homes and assisted living facilities and urban areas. Its scope has expanded to include direct care to patients, patient education, and continuing education for health care providers. The term “Telehealth” is now often used to describe the expanded function of using technology to facilitate the delivery of health care and health training at a distance. As the baby boomers begin to retire, the problem with limited numbers of physicians, nurses, and other health care providers is expected to exacerbate. Health care must be as efficient as possible. This situation provides an opportunity for the application of Telehealth.
According to United Health Services “Population growth from 2008-2030 is set at 20%, reaching 363 million residents, but at the same time, forecasts predict a shortage of healthcare professionals and a lack of specialists and health facilities in rural areas. Additionally, there is an expected increase in chronic diseases, including diabetes, congestive heart failure and obstructive pulmonary disease. Every year, 5 million patients are admitted to intensive care units accounting for at least 20% of hospitals’ operating budgets. Telehealth can reduce the impact of these challenges by connecting the right people with the right resources and expertise at the right time.”
Environment
The current market has forced wide spread adoption of alternatives as they become necessary to provide health care to a population that is rapidly increasing, combined with economic conditions this is creating a demand that reaches far beyond what the current system supports. Even under Patient Protection and Affordable Care Act, deductibles need to be met and office visits are consistently at a higher cost than an E-visit. With the poor and the elderly being the primary market, E-visits are more affordable. Under the DMPO model, we intend to capitalize on the current environment.
2016 should see a significant increase in Telehealth services and E-visits primarily due to changes in technology and increased pressure to reduce costs while improving care. PC deployment, fixed internet and comfort with technology by the older population who make up the bulk of doctor visits will contribute to this increase in demand for Telehealth services. We are also taking advantage of advancements in analytics that integrate with E-visit technology assimilating into the current environment over multiple channels.
Mobile
Wide spread adoption of mobile devices are also making E-visits more readily available and represent a more viable way to conduct an E-visit.
As an enhancement to the virtual services offered and in order to provide easier access to meet the demand for mobile access, we are focusing on a mobile application for user-experience and customer acquisition. The mobile application will lead the way for customer engagement and first point of contact. This is a material part of the overall strategy and direction for our company. Through this application, we will be able to offer 24/7 access to a full spectrum of Telehealth and medical services. We expect to be on-line with this mobile app by the end of 2016.
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Market size and Growth Potential
In 2014, there was an estimate of 100 million E-visits for virtual medicine calls globally. Representing over $5 billion in savings when compared to the cost of office visits this is a 400% increase since 2012. North America accounts for about 75% of this. There are more than 600 million doctor offices visits annually to general practitioners and half of these visits are for reasons that could be solved through an E-visit. E-visits are a sub set of the overall Telehealth market which is predicted to hit 25 billion within the next year. The E-visits are the primary focus for our marketing plan and the applications we intend to employ.
Health care reform, the newly insured and a growing interest in population health management have intensified the market’s interest in Telehealth technologies and services. In looking to extend capabilities and patient interactions beyond traditional care settings, health care providers are developing integrated strategies for adopting Telehealth technologies — as more payers and employers begin to pay for these services and as the value of these tools is increasingly quantified. A recent study from business information provider IHS predicts the US Telehealth market will grow from $240 million in revenue in 2013 to $1.9 billion in 2018 — an annual growth rate of more than 50%. The anticipated surge is due in part to the current physician shortage and an expanded patient base under the Patient Protection and Affordable Care Act. Added to the move toward Telehealth are efforts to put consumers at the center of their own health care — maximizing the power of technology innovations for virtual care, where patients can get the care they need where and when they need it.
The total market in developed countries is estimated to between $50 and $60 billion calculated as follows: 3 to 4 visits per year in a developed country per person, these countries have a population of about 1 billion people, which translates to 3.5 billion doctor visits annually - the cost per visit varies worldwide from $11 in Spain to $40 in Germany and $89 in the US. Assuming a $50 average per visit, the market value is $175 billion per year in office visits. Not all visits can be properly handled by E-visits, but assuming follow ups added to a 1/3 assumption landing between 30 and 40% implies $50 to $60 billion as the total accessible market for E-visits.
Growth in this industry has been consistently running at about 50% annually for the past few consecutive years.
Competition
Telehealth has created its own ecosystem and the primary parts of the ecosystem are based on technology, including, peripheral device suppliers and gateway suppliers - health hubs and mobile gateways; in addition to data transmission service providers - cellular and broadband. There are several companies offering the exact same services as our company. Almost all of these companies have substantially greater capital and marketing resources, and greater experience in commercializing products and services than we have.
As the industry defines itself, suppliers in different segments of the ecosystem are collaborating. However, as the market changes, competition between suppliers will increase.
The market primarily consists of three types of entities. They are:
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Data transmission suppliers, which provide information exchange technology for Telehealth systems; mobile and internet
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Gateway suppliers, which provide Telehealth hubs and user platforms.
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Peripheral device suppliers, which provide remote monitoring devices - such as blood pressure monitors and glucose meters, used in conjunction with Telehealth services.
Competition will increase as these entities expand the types of services they provide. Through improved choices, new competition brings with it the real possibility of higher quality and lowered costs. This increased competition also presents a challenge to providers, health systems and regulators used to traditional delivery systems. Many feel threatened. Resistance to the growth of telemedicine can be attributed, in part, to the fear of competition. Nevertheless, consumer choice and competition flourish when barriers to access and innovation are removed. This creates an opportunity for profitable relationships between gateways and peripheral suppliers.
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Government Regulations
The healthcare industry and the practice of medicine are extensively regulated at both the state and federal levels. The practice of medicine is subject to various federal, state and local certification and licensing laws, regulations and approvals, relating to, among other things, the adequacy of medical care, the practice of medicine (including the provision of remote care and cross-coverage practice), equipment, personnel, operating policies and procedures and the prerequisites for the prescription of medication. The application of some of these laws to Telehealth is unclear and subject to differing interpretation.
Privacy and Security of Health Information and Personal Information; Standard Transactions: We may be engaged by a healthcare practice or facility that is considered a Covered Entity under the terms of HIPPA. In providing and performing administration and support services for such Covered Entities (i.e. physician practices and laboratories), such as medical coding and medical billing, medical chart review, healthcare facility call and message management, healthcare emergency dispatch and physician practice administration, we may come in contact with a Covered Entity’s confidential patient medical information. Under such an engagement, the Covered Entity may make available and/or transfer to us certain Protected Health Information, as that term is defined and certain Electronic Protected Health Information ("EPHI") as that term is defined, in connection with goods or services that may be provided by us to the Covered Entity, that is confidential and subject to protection under HIPAA, HIPAA regulations and the HITECH Act. As such, we would be considered a Business Associate of the Covered Entity and further be subject to state and federal laws and implementing regulations relating to the privacy and security of the medical information of the patients our client physician practices and facilities treat. As a “Business Associate”, we are subject to state and federal laws and implementing regulations relating to the privacy and security of the medical information of the patients its client physicians treat. The principal federal legislation is part of HIPAA, pursuant to which, the Secretary of the Department of Health and Human Services, or “HHS”, has issued final regulations designed to improve the efficiency and effectiveness of the healthcare system by facilitating the electronic exchange of information in certain financial and administrative transactions, while protecting the privacy and security of the patient information exchanged. These regulations also confer certain rights on patients regarding their access to and control of their medical records in the hands of healthcare providers.
Federal and State Fraud and Abuse Laws: The federal healthcare Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce referrals or in return for purchasing, leasing, ordering, or arranging for the purchase, lease, or order of any healthcare item or service reimbursable under a governmental payor program. The definition of “remuneration” has been broadly interpreted to include anything of value, including gifts, discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payments, ownership interests, opportunity to earn income, and providing anything at less than its fair market value. The Anti-Kickback Statute is broad, and it prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. Recognizing that the Anti-Kickback Statute is broad and may technically prohibit many innocuous or beneficial arrangements within the healthcare industry, HHS has issued a series of regulatory “safe harbors.” These safe harbor regulations set forth certain provisions that, if met, will provide healthcare providers and other parties with an affirmative defense against prosecution under the federal Anti-Kickback Statute. Although full compliance with these provisions ensures against prosecution under the federal Anti-Kickback Statute, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-Kickback Statute will be pursued.
Research and Development Expenditures
We have not incurred any research or development expenditures.
Subsidiaries
We do not have any subsidiaries.
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Patents and Trademarks
We do not own any patents or trademarks.
Employees
As of December 31, 2015, we have no employees and have chosen to outsource some of required services. Our President, Secretary/Chief Financial Officer provides services to us on an as-needed basis, which is usually thirty percent of his time.
Item 1A.
Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 1B.
Unresolved Staff Comments
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2.
Properties
Our 1540 South Coast Highway, Suite 206, Laguna Beach, CA office was given up on March 15, 2016 and currently our interim office space is being provided to us free of charge by our company attorney while we search for new space.
Item 3.
Legal Proceedings
We are not currently a party to any legal proceedings.
Item 4.
Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is not traded on any exchange and we cannot assure that there will be a market in the future for our common stock.
We intend to apply for the quoting of our common stock on the OTCBB. However, there is no assurance that our common stock will be quoted on the OTCBB or, if quoted, that a public market will develop.
As of March 30, 2016, there were 33 holders of record of our common stock. As of such date, 141,525,000 shares of our common stock was issued and outstanding and no preferred stock was issued and outstanding.
Dividend Policy
We have never declared or paid any cash dividends on our Common Stock. We currently anticipate that we will retain all future earnings for the expansion and operation of our business and do not anticipate paying cash dividends in the foreseeable future.
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Securities Authorized For Issuance under Equity Compensation Plans
We do not have any compensation plans under which equity securities are authorized for issuance.
Shares Issuable Upon Conversion of Convertible Debentures
We do not have any issued or outstanding convertible debentures or any other securities that are convertible into our Common Stock.
Item 6.
Selected Financial Data
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This document includes statements that may constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution readers regarding certain forward-looking statements in this document, press releases, securities filings, and all other documents and communications. All statements, other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position, made in this Form 10-K (" Report ") are forward looking. The words " believes ," " anticipates ," " estimates ," " expects ," and words of similar import, constitute " forward-looking statements ." While we believe in the veracity of all statements made herein, forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic and competitive uncertainties and contingencies and known and unknown risks. As a result of such risks, our actual results could differ materially from those expressed in any forward-looking statements made by, or on behalf of, our company. We will not necessarily update information if any forward-looking statement later turns out to be inaccurate. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including risks and uncertainties set forth in our S-1 Registration Statement, as well as in other documents we file with the Securities and Exchange Commission ("SEC ").
Plan of Operation for the Next Twelve Months
Certain key factors that have affected our financial and operating results in the past will affect our future financial and operating results. These include, but are not limited to additional funding or the utilization of other venture partners that will be required to fund further development and implementation of our internet services when and if such activity is commenced. In the past we have been dependent on funding from the private placement of our securities as well as loans from related and third parties as the sole sources of capital to fund operations.
The Scope of Work
We will require additional funding in order to proceed with additional development and implementation. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or from director loans. We do not have any arrangements in place for any future equity financing or loans.
In addition to development, implementation and marketing and advertising costs of approximately $75,000, we will incur salary expenses of $12,000 for Mr. St. George prior to his resignation in March 2016 and for Mr. Sawatsky of $24,000, for a total of $111,000 for the year. If the Company cannot afford to pay this salary the salary will be accrued. In addition, we anticipate spending an additional $105,000 on administrative fees, new employees, legal and accounting fees, including fees payable in connection with the filing of this annual report and complying with future SEC reporting obligations. Operational expenses are estimated to be $45,500, which includes completion and maintenance of our website. Total expenditures over the next 12 months are therefore expected to be approximately $261,500.
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Results of Operations
Our current business strategy is to complete the development of our fixed digital gateway for Telehealth services and internet interface and the implementation of such health services over the internet.
Years Ended December 31, 2015 and 2014.
We are currently in the development stage and had no revenues for the years ended December 31, 2015 and 2014. Operating expenses for the years ended December 31, 2015 and 2014 were $136,695 and $53,720, respectively, and were comprised of principally legal and accounting costs, depreciation, and management fees.
Net loss for the years ended December 31, 2015 and 2014, were $136,695 and $53,720, respectively. Our loss increase by approximately $82,975 was primarily due to the increase in legal and accounting costs attributable to the preparation of our Form S-1.
Net cash used in operating activities for the year ended December 31, 2015 was $130,726, primarily due to the net loss for the year of $136,695.
Net cash flow from financing activities for the year ended December 31, 2015 was $127,000 due to loans from unrelated parties.
As a result of the above activities, we experienced a net decrease in cash of $3,726 for the year ended December 31, 2015. Cash and cash equivalents at December 31, 2015 were $6,575.
Our primary sources of operating capital have been debt and equity financings. Due to our continuing losses from business operations, the independent auditor’s report dated March 30, 2016, includes a “going concern” opinion relating to the fact that our continuation is dependent upon obtaining additional working capital either through revenues or through outside financing.
Liquidity and Capital Resources
Since our inception, we have financed our cash requirements from cash generated from the sale of common stock and by loans from non-affiliated third parties in the aggregate amount of $188,400 through December 31, 2015. The loans are unsecured, non-interest bearing and are payable on demand.
Our principal sources of liquidity as of December 31, 2015 consisted of $6,575 in cash. Since inception through to and including December 31, 2015, we raised $31,400 through a private placement of our common stock.
Our website which is a material part of the commencement of our business is 80% completed. Should financing allow, we plan to complete the website and carry out the rest of our business plan commencing in mid- 2016. The financing for these goals could come from further equity financing or could come from the further sales of securities and/or loans. There are no assurances that we will be able to achieve further sales of our securities or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to implement or continue to maintain our Telehealth service and our venture will fail.
We believe that anticipated cash flows from operations will be insufficient to satisfy our ongoing capital requirements. We are seeking financing in the form of equity capital in order to provide the necessary working capital. Our ability to meet our obligations and continue to operate as a going concern is highly dependent on our ability to obtain additional financing. We cannot predict whether this additional financing will be in the form of equity or debt, or be in another form. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, we may be unable to implement our current plans which circumstances would have a material adverse effect on our business, prospects, financial conditions and results of operations.
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If we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations liquidity and financial condition.
Proposed Goals Over the Next Twelve Months
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Complete website for reselling DMPO products 0-120 days
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Complete corporate site 0-90 days
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Create collateral marketing materials / brochures 0-90 days
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Secure credit card processing 0-90 days
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Establish marketing channels 90-180 days
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Establish marketing partnerships 3- 12 months
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Beta test marketing partners will be on going 3-12 months
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Analyze Metrics and ROI to establish a long term marketing budget 6- 12 months
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Employ a call center for telemarketing 60-90 days
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In house customer service rep for membership assistance 60-90 days