UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For
the quarterly period ended September 30, 2014
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For
the transition period from __________ to _________
Commission
File Number: 000-55155
Vantage
Health
(Exact
name of registrant as specified in its charter)
Nevada |
|
93-0659770 |
(State
or other jurisdiction of incorporation or organization) |
|
(IRS
Employer
Identification No.) |
401
Warren St. Suite 200
Redwood
City, CA 94063
(Address
of principal executive offices)
(917)
745-7202
(Registrant’s
telephone number)
(Former
name, former address and former fiscal year, if changed 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.
[X] Yes [ ] No
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes [ ] No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.
[ ] Large accelerated filer |
[ ] Accelerated filer |
[ ] Non-accelerated filer |
[X] Smaller reporting
company |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ]
Yes [X] No
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 193,437,478
as of November 3, 2014.
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Our
consolidated financial statements included in this Form 10-Q are as follows:
These
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2014 are not
necessarily indicative of the results that can be expected for the full year.
VANTAGE
HEALTH
BALANCE
SHEETS
| |
September 30, 2014 | | |
June 30, 2014 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash and each equivalents | |
$ | 99,936 | | |
$ | 235,073 | |
Prepaid expenses and other current assets | |
| 76,824 | | |
| 143,259 | |
Total current assets | |
| 176,760 | | |
| 378,332 | |
| |
| | | |
| | |
Fixed Assets | |
| 11,964 | | |
| - | |
Securities-available for sale | |
| 6,000 | | |
| 20,000 | |
| |
| | | |
| | |
Total assets | |
| 194,724 | | |
| 398,332 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 95,193 | | |
$ | 114,486 | |
Convertible notes payable | |
| 71,875 | | |
| 71,875 | |
Due to related parties | |
| 316,287 | | |
| - | |
Derivative liabilities | |
| 492,421 | | |
| 659,934 | |
Total current liabilities | |
| 975,776 | | |
| 846,295 | |
| |
| | | |
| | |
Convertible debt | |
| 372,289 | | |
| 221,544 | |
| |
| | | |
| | |
Total liabilities | |
| 1,348,065 | | |
| 1,067,839 | |
| |
| | | |
| | |
Stockholders’ deficit | |
| | | |
| | |
Common stock; $0.001 par value; 250,000,000 shares authorized; 192,009,927 and 189,423,721 shares issued and outstanding as of September 30, 2014 and June 30, 2014, respectively | |
| 192,010 | | |
| 189,424 | |
Additional paid-in capital | |
| 7,803,339 | | |
| 7,747,925 | |
Accumulated deficit | |
| (9,148,690 | ) | |
| (8,606,856 | ) |
Total stockholders’ deficit | |
| (1,153,341 | ) | |
| (669,507 | ) |
| |
| | | |
| | |
Total liabilities and stockholders’ deficit | |
$ | 194,724 | | |
$ | 398,332 | |
See
accompanying notes to financial statements.
VANTAGE
HEALTH
CONSOLIDATED
STATEMENT OF OPERATIONS
(UNAUDITED)
| |
Three Months Ended | |
| |
September 30, 2014 | | |
September 30, 2013 | |
Operating expenses | |
| | | |
| | |
Professional fees | |
| 137,520 | | |
| 7,236 | |
General and administrative expenses | |
| 104,108 | | |
| 14,503 | |
Officer and director compensation | |
| 26,181 | | |
| - | |
Consulting | |
| 286,585 | | |
| 5,057 | |
Stock based compensation | |
| 127,956 | | |
| - | |
Royalty expenses | |
| 75,000 | | |
| - | |
Total operating expenses | |
| 757,350 | | |
| 26,796 | |
| |
| | | |
| | |
Loss from operations | |
| (757,350 | ) | |
| (26,796 | ) |
| |
| | | |
| | |
Other expense | |
| | | |
| | |
Interest income (expense) | |
| (7,953 | ) | |
| - | |
Gain (loss) on derivative | |
| 237,469 | | |
| - | |
Unrealized loss on investment | |
| (14,000 | ) | |
| - | |
Total other expense | |
| 215,516 | | |
| - | |
| |
| | | |
| | |
Loss before non-controlling interest | |
$ | (541,834 | ) | |
$ | (26,796 | ) |
Less: Loss attributable to non-controlling interest | |
$ | - | | |
$ | 8,545 | |
Net loss | |
$ | (541,834 | ) | |
$ | (18,251 | ) |
| |
| | | |
| | |
Net loss per common share basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| |
| | | |
| | |
Basic weighted average common shares outstanding | |
| 190,435,715 | | |
| 80,125,000 | |
See
accompanying notes to financial statements.
VANTAGE
HEALTH
STATEMENTS
OF CASH FLOWS
(UNAUDITED)
| |
Three Months Ending | |
| |
September 30, 2014 | | |
September 30, 2013 | |
Cash Flows from Operating Activities | |
| | | |
| | |
Net loss | |
$ | (541,834 | ) | |
$ | (26,796 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |
| | | |
| | |
Unrealized loss on investment | |
| 14,000 | | |
| - | |
Amortization of debt discount | |
| 745 | | |
| - | |
Gain on derivative liability | |
| (237,469 | ) | |
| - | |
Warrants issued for services | |
| 58,000 | | |
| | |
Warrants issued for debt | |
| 69,956 | | |
| | |
Depreciation | |
| 185 | | |
| 425 | |
Changes in assets and liabilities | |
| | | |
| | |
(Increase) decrease in prepaid expense | |
| 66,435 | | |
| - | |
Increase (decrease) in accounts payable | |
| (19,293 | ) | |
| (14,706 | ) |
Net cash from operating activities | |
| (589,275 | ) | |
| (41,077 | ) |
| |
| | | |
| | |
Cash Flows from investing | |
| | | |
| | |
Purchase of fixed assets | |
| (12,149 | ) | |
| - | |
Net cash used in investing activities | |
| (12,149 | ) | |
| - | |
| |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | |
Proceeds from related party debt | |
| 316,287 | | |
| 3,576 | |
Payments on related party debt | |
| - | | |
| (60,000 | ) |
Proceeds from convertible notes payable | |
| 150,000 | | |
| - | |
Net cash from financing activities | |
| 466,287 | | |
| (56,424 | ) |
| |
| | | |
| | |
Effect of exchange rate on cash | |
| - | | |
| 12,429 | |
| |
| | | |
| | |
Net increase (decrease) in Cash | |
| (135,137 | ) | |
| (85,072 | ) |
| |
| | | |
| | |
Beginning cash balance | |
| 235,073 | | |
| 89,089 | |
| |
| | | |
| | |
Ending cash balance | |
$ | 99,936 | | |
$ | 4,017 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information | |
| | | |
| | |
Cash paid for interest | |
$ | - | | |
$ | - | |
Cash paid for tax | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Non-Cash investing and financing transactions | |
| | | |
| | |
Shares issued to acquire intangible assets | |
$ | 2,586 | | |
$ | - | |
See
accompanying notes to financial statements.
VANTAGE
HEALTH
NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2014
NOTE
1 – BASIS OF PRESENTATION AND GOING CONCERN
The
accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read
in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial
Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of operations for the interim period presented have been
reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected
for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited
financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.
Going
concern
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The Company has incurred accumulated deficit of $9,148,690 and
requires capital for its contemplated operational and marketing activities to take place. The ability of Vantage Health to continue
as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing
and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt
financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful
in these efforts. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability
to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result
from the outcome of these aforementioned uncertainties.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fair
Value of Financial Instruments
The
carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair
values due to the short maturities of these items.
As
required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted
prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly
or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity
to develop its own assumptions.
The
three levels of the fair value hierarchy are described below:
Level
1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities;
Level
2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially
the full term of the asset or liability;
Level
3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(supported by little or no market activity).
A
financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.
VANTAGE
HEALTH
NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2014
Financial
assets and liabilities measured at fair value on a recurring basis are summarized below for September 30, 2014:
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets | |
| | | |
| | | |
| | | |
| | |
Securities -available for sale | |
$ | 6,000 | | |
$ | — | | |
$ | — | | |
$ | 6,000 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative Financial Instruments | |
$ | — | | |
$ | — | | |
$ | 492,421 | | |
$ | 492,421 | |
Financial
assets and liabilities measured at fair value on a recurring basis are summarized below for June 30, 2014:
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets | |
| | | |
| | | |
| | | |
| | |
Securities -available for sale | |
$ | 20,000 | | |
$ | — | | |
$ | — | | |
$ | 20,000 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Derivative Financial Instruments | |
$ | — | | |
$ | — | | |
$ | 659,934 | | |
$ | 659,934 | |
Investment
Securities
The
Company has elected to account for its investments in securities at fair value under the fair value option provisions of FASB
ASC 825, Financial Instruments (“FASB ASC 825”). The primary reason for electing the fair value option when it first
became available in 2008, was to reduce the burden of monitoring the differences between the cost and the fair value of the Company’s
investments, previously classified as available for sale securities, including the assessment as to whether the declines are temporary
in nature and to further remove an element of management judgment. In addition, the election was made for certain investments
that were previously required to be accounted for under the equity method because their fair value measurements were readily obtainable.
Such
financial assets accounted for at fair value include in general, securities that would otherwise qualify for available for sale
treatment.
The
changes in fair value (realized and unrealized gains and losses) of these instruments for which the Company has elected the fair
value option are recorded in principal transactions and other income in the consolidated statements of operations. All of the
investments for which the Company has elected the fair value option are included as a component of securities available for sale,
at fair value in the consolidated balance sheets. The Company recognized net gains (losses) of $(14,000) and $0 related to changes
in fair value of investments that are included as a component of other investments, at fair value during the three months ended
September 30, 2014 and 2013, respectively.
NOTE
3 – PREPAID EXPENSES
In
relation to a sub-licensing agreement with NASA, a shareholder has paid royalty fees applicable to 2014 on behalf of the Company.
The $100,000 payment was an additional investment in the Company and is not required to be repaid. During the quarter ending September
30, 2014 $75,000 of the royalties were recognized as an expense, the remaining prepaid royalty balance is $25,000.
In
addition, the Company has prepaid rent through December 2014, with a remaining prepaid balance of $47,733 as of September 30,
2014. The Company also prepaid interest of 7,500 on a short-term loan as of September 30, 2014 a balance remains capitalized as
prepaid expenses. $4,091
VANTAGE
HEALTH
NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2014
NOTE
4 – SECURITIES AVAILABLE FOR SALE
On
January 16, 2014, the Company acquired 2,000,000 restricted common shares of a publicly traded company. The investment was acquired
at market value of $0.03 per share, and is held for future trade. The value of the investment will be adjusted quarterly to reflect
the change in market value of the holding. The investment does not represent a controlling interest in the publicly traded company.
The company has elected the fair value option under ASC 825 allowing gains and losses to be recorded in earnings each period.
From receipt of the shares on January 16, 2014 through September 30, 2014 the securities were reduced in value from $60,000 to
$6,000 due to a change in the publicly traded company’s stock price. These securities are measured under level 1 of ASC
820.
The
Company reported an unrealized loss on investment of $14,000 during the quarter ending September 30, 2014
NOTE
5 – RELATED PARTY TRANSACTIONS
During
the three months ended September 30, 2014, the Company received net cash advances from its majority shareholder in the amount
of $316,287. All amounts advanced to the Company are unsecured, non-interest bearing and due upon demand.
NOTE
6 - CONVERTIBLE NOTE PAYABLE
On
April 17, 2014, the Company issued a convertible promissory note in the amount of $71,875. The note is due on April 16, 2015 and
bears interest at 15% per annum, which was prepaid by the Company and is being amortized over the life of the loan. The loan is
secured by shares of the Company’s common stock. The loan becomes convertible 180 days after date of the note. The loan
and any accrued interest can then be converted into shares of the Company’s common
stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the 25 trading
day period ending on the latest complete trading day prior to the conversion date. During the quarter ended September 30, 2014,
the Company has not converted any portion of this note into shares of common stock. The Company elected to prepay the entire term’s
interest this payment was capitalized as a prepaid assets and has been amortized over the term of the note, the interest expense
related to this loan was $1,541 for the year ending June 30, 2014 and $1,868 for the quarter ending September 30, 2014. As of
September 30, 2014 the remaining prepaid interest balance was $4,091.
On
April 18, 2014, the Company issued a convertible promissory note in which the Company will be taking tranche payments on pre-defined
dates, the total of these payments cannot exceed $650,000. There is an original discount component of 10% per tranche and an additional
expense fee of $5,000. Therefore, the funds available to the Company will be $650,000 and the liability (net of interest) will
be $750,000 when all disbursements have been received by the Company. Each tranche is accounted for separately with each principal
and OID balance becoming due 18 months after receipt. Each tranche bears interest at 8% per annum. The loan is secured by shares
of the Company’s common stock. Each portion of the loan becomes convertible 180 days after date of the note. The loan and
any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the
market price, which is the lowest quoted price for the common stock during the 20 trading day period ending on the latest complete
trading day prior to the conversion date. During the period ended
June 30, 2014, the Company has received three tranche disbursements of $100,000 on April 21, 2014; $50,000 on May 6, 2014; and
$50,000 on June 11, 2014.
During
the period ended September 30, 2014 the Company receive two additional tranche disbursements of $50,000 on July 15, 2014 and $100,000
on September 30, 2014.
VANTAGE
HEALTH
NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2014
The
following details the disbursements as of September 30, 2014:
Tranche
Date | |
Principal
with OID | | |
Accrued
Interest | | |
Converted
to Stock |
April 21, 2014 | |
$ | 110,776 | | |
$ | 3,933 | | |
None |
May 6, 2014 | |
| 55,384 | | |
| 1,784 | | |
None |
June 11, 2014 | |
| 55,384 | | |
| 1,347 | | |
None |
July 16, 2014 | |
| 55,384 | | |
| 923 | | |
None |
September 30, 2014 | |
| 110,768 | | |
| - | | |
None |
Unamortized Original Issue Discount | |
| (15,407 | ) | |
| - | | |
|
| |
$ | 372,289 | | |
$ | 7,988 | | |
|
The
Company analyzed the conversion options embedded in the Convertible Promissory Notes for derivative accounting consideration under
ASC 815, Derivatives and Hedging, and determined that there is not a derivative as the above references convertible notes are
not convertible as of September 30, 2014 as they have not reached 180 days from the date of issuance.
NOTE
7 – COMMON STOCK
On
August 25, 2014, the Company issued 2,586,206 common shares for the conversion of the Parent Company common shares of stock when
a Parent Company shareholder exercised their stock warrant and converted their holdings into Vantage Health common stock in a
cashless transaction. The fair value of the common shares is $291,983. The fair value of the common shares is considered to be
the excess value from the carry over cost basis of $0 and is recorded as a pass through to additional paid in capital.
NOTE
8 – STOCK WARRANTS
On
July 15, 2014 the Company granted stock warrants for 291,494 shares of common stock in association with a long-term loan at no
cost to the lender. These warrants have an expiration date of July 15, 2019, and were valued using the Black Scholes Valuation
Model, the stock price at the grant date was $0.24/share, the exercise price is $0.0143/share, the value of the issuance is $69,956.
The
warrants have anti-dilution provisions, including a provision for adjustments to the exercise price and to the number of warrant
shares purchasable if we issue or sell common shares at a price less than the then current exercise price. We determined that
the warrants were not afforded equity classification because the warrants are not considered to be indexed to our own stock due
to the anti-dilution provision. Accordingly, the warrants are treated as a derivative liability and are carried at fair value.
We estimate the fair value of these derivative warrants at each balance sheet date and the changes in fair value are recognized
in earnings in the statement of operations under the caption “change in fair value of derivative warrant liability”
until such time as the derivative warrants are exercised or expire.
We
estimate the fair value of our derivative warrants on the date of issuance and each subsequent balance sheet date using the Black-Scholes
option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate,
and expected life of the warrants. Currently, we believe that the potential impact to the fair value of our derivative warrants
attributable to the anti-dilution provision is insignificant and we will consider using a lattice model for purposes of valuation
if and when the fair value of the anti-dilution provision becomes significant. Our expected volatility assumption is based on
our historical weekly closing price of our stock over a period equivalent to the expected remaining life of the derivative warrants.
The
derivative liability as of June 30, 2014 was $659,934 and the Company recorded a loss in the change in fair value due to derivative
warrant liability of $(418,930) during the 12 months ended June 30, 2014.
The
derivative liability as of September 30, 2014 was $492,421 and the Company recorded a gain in the change in fair value due to
derivative warrant liability of $237,469.
Over
the life of the derivative liability the Company has recorded a net loss in the change in fair value due to derivative warrant
liability of $(181,461)
VANTAGE
HEALTH
NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2014
Fair
value assumptions – derivative warrants: | |
September
30, 2014 | |
Risk free interest rate | |
| 1.78 | % |
Expected term (years) | |
| 5 | |
Expected volatility | |
| 362 | % |
Expected dividends | |
| 0 | % |
On
July 1, 2014 the Company granted stock warrants for 200,000 shares of common stock for services. These warrants have an expiration
date of July 1, 2019, and were valued using the Black Scholes Valuation Model, the stock price at the grant date was $0.29/share,
the exercise price is $0.12495/share, the value of the issuance is $58,000.
NOTE
9 – COMMITMENTS
On
January 1, 2014, the Company entered into a Sub-License Agreement affiliated with the National Aeronautics and Space Administration
(“NASA”) pursuant to which the Company was granted a royalty-bearing, non-transferable license to certain inventions
and patent rights owned by NASA relating to chemical sensing nanotechnology, for use within the United States and its territories.
The License is effective as of December 31, 2013 and subject to an initial five year term, during which the License will be exclusive
to the Company. Following the initial five-year term, the License shall automatically convert to a non-exclusive license. The
License may be terminated by NASA following a 30 day cure period, among other reasons, upon a breach of the License Agreement
or upon its determination that the Company has failed to adequately develop or commercialize the licensed patents. Specific milestones
and commercialization requirements are set forth in the License Agreement. NASA provides no warranties under the License Agreement
and assumes no responsibility for our use, sale or other disposition of the licensed technology. We agree to indemnify NASA against
all liabilities arising from such use, sale or other disposition. We must pay certain royalties in connection with the License
as set forth in the License Agreement. Royalties owed for 2014 have been paid in advance by a related party and will not be charged
to Vantage Health, with the next Vantage Health payment due in 2015.
During
the year ended June 30, 2014 The Company expensed $1,184,251 under this agreement of which $854,251 was paid directly to the Parent
Company who in turned paid NASA for fees under this agreement.
In
relation to a sub-licensing agreement with NASA, a shareholder has paid royalty fees applicable to 2014 on behalf of the Company.
The $100,000 payment was an additional investment in the Company and is not required to be repaid. During the quarter ending September
30, 2014 $75,000 of the royalties were recognized as an expense, the remaining prepaid royalty balance is $25,000.
NOTE
10 – SUBSEQUENT EVENTS
On
April 17, 2014, we issued a convertible promissory note in the amount of $71,875. The loan became convertible 180 days after date
of the note. The loan and any accrued interest could then be converted into shares of our common stock at a rate of 50% multiplied
by the market price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest
complete trading day prior to the conversion date. On October 16, 2014 the note holder exercised their conversion rights and converted
a portion of the note into 713,266 shares of common stock.
On
April 18, 2014, we issued a convertible promissory note in which we have taken tranche payments on pre-defined dates. Each portion
of the loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into
shares of our common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock
during the 20 trading day period ending on the latest complete trading day prior to the conversion date. On April 21, 2014 we
took our first tranche payment of totaling $110,776. On October 22, 2014 the note holder exercised their conversion rights and
converted a portion of the tranche note into 714,285 shares of common stock.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking
statements.” These forward-looking statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are
subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our
ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have
a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes
in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted
accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements.
Overview
We
were incorporated in the State of Nevada on April 21, 2010. We were initially in the business of becoming a pharmaceutical manufacturer
with the specific intention of bidding on South African government health care contracts and tenders. We abandoned that business
plan when, on November 7, 2013, Nanobeak, Inc., a California corporation (“Nanobeak”) acquired a majority interest
in our company through the stock purchase of a controlling interest in our company from Bayview Terrace Limited.
Since
the change of control, we have implanted a new business plan. On January 1, 2014, Nanobeak entered into a License Agreement (the
“License Agreement”) with the National Aeronautics and Space Administration (“NASA”) pursuant to which
Nanobeak was granted a royalty-bearing, non-transferable license (the “License”) to certain inventions and patent
rights owned by NASA relating to chemical sensing nanotechnology, for use within the United States and its territories.
The
License is effective as of December 31, 2013 and subject to an initial five year term, during which the License will be exclusive
to Nanobeak. Following the initial five-year term, the License shall automatically convert to a non-exclusive license. Under the
License, Nanobeak is required to develop and commercialize the licensed patents. NASA provided no warranties under the License
Agreement and assumed no responsibility for our use, sale or other disposition of the licensed technology. Nanobeak has agreed
to indemnify NASA against all liabilities arising from such use, sale or other disposition.
Pursuant
to Section 3.1.1 of the License Agreement, Nanobeak is permitted to sublicense its rights under the License Agreement to subcontractors.
Effective as of February 20, 2014, Nanobeak has sublicensed such rights to us as set forth in a Sublicense Agreement.
The
Sublicense Agreement grants patent rights to us on the same terms as such rights have been granted to Nanobeak under the License
Agreement; provided, however, that the field of use for the patent rights granted to Vantage Health is limited to disease detection.
We
must pay to Nanobeak certain royalties in connection with the Sublicense Agreement, which royalties are equivalent to those owed
by Nanobeak to NASA pursuant to the License Agreement. We must further comply with other obligations of Nanobeak under the License
Agreement as though we were a party thereto, including achievement of practical application of the patent rights and certain reporting
obligations.
The
Sublicense Agreement will terminate upon the earlier of (i) termination of the License Agreement or (ii) termination by either
party to the Sublicense Agreement as set forth therein.
As
a result of the License Agreement and Sublicense Agreement, we are now a mobile health technology company that is developing personalized
and point-of-care screening using applications based upon chemical sensing residing within a small device attached to a smartphone.
With our foundations in advanced nanotechnology, our first product, the Vantage Health Sensor, is the convergence of nano-electronics,
bio-informatics, and wireless technology to create the next generation mobile health application. Still under development, the
first mobile application is expected to be for lung cancer screening with additional mobile healthcare applications in the planning
stages.
The
sensor will collect a breath signature based upon chemical sensing technology residing in a small Bluetooth-enabled breathalyzer
device that attaches to any smartphone. The sensor devices will ultimately be sold through a distributor to healthcare professionals,
who will then download screening applications and pay a monthly subscription fee. Subsequently the company plans to sell direct
to consumers in conjunction with a major pharmacy platform.
We
have entered into a Strategic Partnership with Scripps Translational Sciences Institute (STSI) to assist in the development, advancement,
and commercialization of the mobile technology. Scripps will also provide the testing, evaluation, and detection of certain combinations
of Volatile Organic Compounds (VOCs) known as the breath signature and will assist in managing our clinical trials in partnership
with several other research hospitals in the United States. These clinical trials will support the 510K that will be submitted
to the FDA. It is expected that the contemplated clinical trials will take approximately four months with another four months
expected for the 510K process within the FDA.
We
have also entered into a Strategic Partnership with Theranostics Laboratory, a translational research company, with offices in
the USA and New Zealand. Theranostics laboratory was founded at the Cleveland Clinic in 2010 and works on subcontracted research,
in collaboration with the Auckland Bioengineering Institute (ABI), in New Zealand, and with NASA (via NASA Grant NCC 9-58).
The
Auckland Bioengineering Institute is recognised as a world-leader in the field of personalised modelling and is part of the international
Virtual Physiologic Human (VPH) project. The Institute has successfully commercialised numerous mHealth technologies, including
wireless telemetry systems, wearable sensors and a needle-free injectable system into the US market.
The
partnership between the Theranostics laboratory and the Auckland Bioengineering Institute (ABI) is a strategic alliance for us
through which the lab will act as principal investigators for us in the areas of mobile strep detection, mobile virus detection
and other related areas including breath sample conditioning methodologies. The partnership gives us access to world-class expertise
and skill in the field of personalized modelling. It also provides us with cost-efficiencies working across multiple time zones,
as well as insight into the Australasian MedTech market.
Results
of operations for the three months ended September 30, 2014 and 2013
We
have earned no revenues from our inception to September 30, 2014. We do not expect to earn any revenues until we complete our
technology and bring it to market.
Our
operating expenses increased to $757,350 for the three months ended September 30, 2014, as compared with operating expenses of
$26,796 for the three months ended September 30, 2013. Our operating expenses for the three months ended September 30, 2014 mainly
consisted of consulting expenses of $286,585, professional fees of $137,520, stock based compensation of $127,956, royalty expense
of $75,000, office expenses of $60,576, and travel of $42,941. Our operating expenses for the three months ended September 30,
2013 mainly consisted of office expenses of $7,923, professional fees of $7,236, travel of $6,003, and consulting expenses of
$5,057.
We
anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to administrative
and operating costs associated with developing and commercializing our technology and our continued reporting obligations with
the Securities and Exchange Commission.
Our
other expenses increased to $215,516 for the three months ended September 30, 2014, as compared with other expenses of $0 for
the three months ended September 30, 2013. Our increase in other expenses was mainly attributable to a gain in the change in fair
value due to derivative warrant liability of $237,469.
We
incurred a net loss of $541,834 for the three months ended September 30, 2014, compared with a net loss of $18,251 for the three
months ended September 30, 2013. Our net loss for the three months ended September 30, 2013 consisted of $26,796 from continuing
operations, offset by $8,545 attributable to non-controlling interest.
We
have not attained profitable operations and are dependent upon obtaining financing to continue with our business plan. For these
reasons, there is substantial doubt that we will be able to continue as a going concern.
Liquidity
and Capital Resources
As
of September 30, 2014, we had total current assets of $176,760, consisting of cash, prepaid expenses and other current assets.
We had current liabilities of $975,776 as of September 30, 2014. Accordingly, we had negative working capital of $799,016 as of
September 30, 2014.
Operating
activities used $589,275 in cash for continuing operations for the three months ended September 30, 2014, as compared with $41,077
for the three months ended September 30, 2013. Our negative operating cash flow for the three months ended September 30, 2014
was mainly attributable to our net loss for the period and a gain in the change in fair value due to derivative warrant liability.
Financing
activities for the three months ended September 30, 2014 provided $466,287 in cash for continuing operations, as compared with
cash flows used by financing activities of $56,424 for the three months ended September 30, 2013. Our negative cash flow for the
three months ended September 30, 2013 was mainly the result of payments made on related party notes, and the positive cash flow
for the three months ended September 30, 2014 was the result of proceeds from related party debt and from convertible notes payable.
On
March 7, 2014, we issued a convertible promissory note in the amount of $100,000. Soon thereafter, we fully paid off this loan
in cash and did not convert any portion of this note into shares of common stock. The interest associated with this loan was $2,411,
with an additional early payment fee of $24,846.
On
April 17, 2014, we issued a convertible promissory note in the amount of $71,875. The note is due on April 16, 2015 and bears
interest at 15% per annum, which we elected to prepay. The loan is secured by shares of our common stock. The loan becomes convertible
180 days after date of the note. The loan and any accrued interest can then be converted into shares of our common stock at a
rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the 25 trading day period
ending on the latest complete trading day prior to the conversion date. During the three months ended September 30, 2014, we have
not converted any portion of this note into shares of common stock.
On
April 18, 2014, we issued a convertible promissory note in which we will be taking tranche payments on pre-defined dates, the
total of these payments cannot exceed $650,000. There is an original discount component of 10% per tranche and an additional expense
fee of $5,000. Therefore, the funds available to us will be $650,000 and the liability (net of interest) will be $750,000 when
we have received all disbursements. Each tranche is accounted for separately with each principal and OID balance becoming due
18 months after receipt. Each tranche bears interest at 8% per annum. The loan is secured by shares of our common stock. Each
portion of the loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of our common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common
stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date. Through September
30, 2014, we received five tranche disbursements: $100,000 on April 21, 2014; $50,000 on May 6, 2014; $50,000 on June 11, 2014;
$50,000 on July 14, 2014; and $100,000 on September 30, 2014.
On
April 30, 2014, we issued a convertible promissory note with available funds of $250,000, however, we only received one tranche
payment of $60,000 from this note, carrying a loan balance of $66,000 with principal and OID. We have fully paid off this loan
in cash and did not convert any portion of this note into shares of common stock. The interest associated with this loan was $667.
As
of September 30, 2014, we had $99,936 in cash. Until we are able to sustain our ongoing operations through sales revenue, we intend
to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures,
working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the
advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on
acceptable terms, or at all.
Off
Balance Sheet Arrangements
As
of September 30, 2014, there were no off balance sheet arrangements.
Going
Concern
We
have incurred losses since inception, and have not yet received material revenues from sales of products or services. These factors
create substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment
that might be necessary if we are unable to continue as a going concern.
Our
ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt
financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining
debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful
in these efforts.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
A
smaller reporting company is not required to provide the information required by this Item.
Item
4. Controls and Procedures
Disclosure
Controls and Procedures
As
required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer
evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act
of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal
financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures
were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules
and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company’s
management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required
disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following
material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff:
(i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for
accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting
principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures
will not be effective until the material weaknesses are remediated.
We
plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered
by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate
such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2015, subject to obtaining
additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk
management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation
efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes
required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting during the quarter ended September 30, 2014 that have materially
affected or are reasonably likely to materially affect, our internal control over financial reporting.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
We
are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers,
directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse
to us.
Item
1A: Risk Factors
A
smaller reporting company is not required to provide the information required by this Item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
Aside
from that provided below, there have been no issuances of securities without registration under the Securities Act of 1933 during
the reporting period which were not previously included in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
On
July 1, 2014, we granted stock warrants for 200,000 shares of common stock for services. These warrants have an expiration date
of July 1, 2019, and are exercisable at a price of $0.12495 per share.
The
above securities were issued in reliance upon the exemption from registration contained in Section 4(2) of the Securities Act
of 1933, as amended, and Regulation D promulgated thereunder.
Item
3. Defaults upon Senior Securities
None
Item
4. Mine Safety Disclosures
Not
applicable.
Item
5. Other Information
None
Item
6. Exhibits
Exhibit Number |
|
Description
of Exhibit |
|
|
|
10.1 |
|
License
Agreement* |
|
|
|
31.1 |
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
|
|
|
31.2 |
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
|
|
|
32.1 |
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
101** |
|
The
following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 formatted
in Extensible Business Reporting Language (XBRL). |
* Portions
of this exhibit have been omitted pursuant to a request for confidential treatment with the Securities and Exchange Commission.
**Provided
herewith
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.
Vantage Health |
|
|
|
|
Date:
November 14, 2014 |
|
|
|
|
By: |
/s/ Joseph C. Peters |
|
Name: |
Joseph C. Peters |
|
Title: |
Chief Executive
Officer |
|
Exhibit
31.1
CERTIFICATIONS
I, Joseph
C. Peters, certify that;
1. |
I
have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2014 of Vantage Health (the “registrant”); |
|
|
2. |
Based on my knowledge,
this 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 report; |
|
|
3. |
Based on my knowledge,
the financial statements, and other financial information included in this 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
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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b. |
Designed such
internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c. |
Evaluated the
effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
|
|
|
|
d. |
Disclosed in this
report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
5. |
The
registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions): |
|
a. |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
b. |
Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting. |
Date: November 14, 2014 |
|
|
By: |
/s/
Joseph C. Peters |
|
Name: |
Joseph C. Peters |
|
Title: |
Chief Executive
Officer |
|
Exhibit 31.2
CERTIFICATIONS
I, Joseph
C. Peters, certify that;
1. |
I
have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2014 of Vantage Health (the “registrant”); |
|
|
2. |
Based on my knowledge,
this 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 report; |
|
|
3. |
Based on my knowledge,
the financial statements, and other financial information included in this 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
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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b. |
Designed such
internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c. |
Evaluated the
effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
|
|
|
|
d. |
Disclosed in this
report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
5. |
The
registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions): |
|
a. |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
b. |
Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting. |
Date: November 14, 2014 |
|
|
|
|
By: |
/s/
Joseph C. Peters |
|
Name: |
Joseph C. Peters |
|
Title: |
Chief Financial
Officer |
|
Exhibit 32.1
CERTIFICATION OF CHIEF
EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT
TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the quarterly Report of
Vantage Health (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 filed with the Securities and
Exchange Commission (the “Report”), I, J. Jeremy Barbera, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. |
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
|
|
2. |
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented. |
By: |
/s/ Joseph C. Peters |
|
Name: |
Joseph C. Peters |
|
Title: |
Principal Executive Officer, Principal Financial Officer and Director |
|
|
Date: November 14, 2014 |
|
This certification has been furnished solely pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
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