Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Report on Form
10-Q contains forward-looking statements which involve assumptions and describe our future plans, strategies, and expectations,
and are generally identifiable by use of words such as “may,” “will,“ “should,” “expect,”
“anticipate,” “estimate,” “believe,” “intend,” or “project,” or the
negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith
and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.
Such forward-looking
statements include statements regarding, among other things, (a) the potential markets for our products, our potential profitability,
and cash flows, (b) our growth strategies, (c) anticipated trends in the in-vitro diagnostics industry, (d) our future financing
plans, and (e) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties,
and other factors that may cause our actual results, performance, or achievements to be materially different from the future results,
performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. Actual
events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including,
without limitation, the matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be
no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly
required to be included in this filing, we will provide such further material information, if any, as may be necessary to make
the required statements, in light of the circumstances under which they are made, not misleading.
Although forward-looking
statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject
to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially
different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable
law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our filings with the
Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business,
financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the
underlying assumptions prove incorrect our actual results may vary materially from those expected or projected.
Except where the context
otherwise requires and for purposes of this Form 10-Q only, “we” “us“ “our“ “Company“
“our Company“ and “Global WholeHealth Partners” refer to Global WholeHealth Partners Corporation, a Nevada
corporation.
Overview
The Company was founded
to develop, manufacture and market in-vitro diagnostic (“IVD”) tests for over-the-counter (“OTC” or consumer),
or consumer-use and point-of-care (“POC” or professional) which includes hospitals, physicians’ offices and medical
clinics, including those within penal systems throughout the US and abroad. The Company currently manufactures and markets a range
of diagnostic test kits for consumer use through OTC sales, and for use by health care professionals, generally located at medical
clinics, physician offices and hospitals known POC, in the United States. These test kits are known as in-vitro diagnostic test
kits or “IVD” products.
The Company believes,
according to publicly available sources, that the IVD industry is a multi-billion dollar industry that is increasing each year.
This assessment includes all laboratory hospital-based products, OTC devices, and rapid tests performed at the point-of-care.
The Company believes that the following factors can be attributed to the increase in overall need and use of IVD test kits: an
aging baby-boomer population; increasing healthcare costs; the ever-growing number of uninsured and under-insured in the U.S.
and abroad; and a general increase in consumer awareness, in part due to the wealth of information available on the Internet.
The concepts that distinguish
POC technology—operation simple enough for non-laboratory users; little or no maintenance requirement; and rapid, reliable
results—mean that it can be applied equally well in many non-clinical settings, such as the OTC market. As advances in medical
technology increasingly make it possible to diagnose diseases and physiological conditions from ever-smaller amounts of body fluids,
certain diseases and conditions that once required diagnosis by physicians and/or medical technicians inside hospital emergency
rooms, exam rooms/bedside studies, or private clinics, can now also be done by inexpensive, easy-to-use diagnostic devices that
consumers can use in the comfort and anonymity of their home. Today, the average pharmacy, whether a privately owned neighborhood
store, or chain owned, has become an outlet for selling IVD test kits for in-home use.
All of the products we sell are manufactured
in an FDA Approved Facility in the USA. An FDA Approved facility is a facility that meets Good Manufacturing Practices (“GMP”)
with the FDA.
CoVid-19 / SARS2 Activities
In response to the CoVid-19
/ SARS2 (“CoVid-19”) Pandemic, in early January 2020, the Company set out to test and perform the studies necessary
to develop a Rapid Diagnostic Test (“RDT”) and Real Time Polymerase Chain Reaction Test (“RT-PCR”). During
the quarter, the Company completed the testing necessary to develop both the RDT and RT-PCR tests. RDT test results are available
in 10 minutes with an overall accuracy rate of 98%. The RT-PCR test looks for the E-Gene and RdRq-Gene markers and has proven to
be 97% accurate. The test is able to be processed in any PCR machine and each test kit includes the required reagents.
On March 13, 2020 Charles
Strongo, CEO filed on the behalf of the Company, the Pre Emergency Use Application (“PEUA”) with the FDA for the RT-PCR
Test for CoVid-19. On March 15, 2020, the FDA sent an Official Acknowledgement letter accepting the Company’s application
for the RT-PCR Test for CoViD-19. The Company is in the process of responding to FDA inquires.
On April 6, 2020, Mr.
Strongo filed on the behalf of the Company a PEUA for the RDT for CoViD-19 test. On April 6th 2020, the FDA sent the Official Acknowledgement
Letter accepting the Company’s Application for the RDT. The Company is in the process of responding to FDA inquires.
On April 13, 2020, the
Department of NAVY ordered 1,000 RDT tests from the Company under the FDA March 16th guideline, which allows tests to be sold once
a tests accuracy is demonstrated to be 90%+ and a PEUA has been filed with the FDA while working with the FDA for approval. The
NAVY order was delivered on April 29, 2020 at the NAVY BASE at Point Loma.
The Company has sent
RDT samples to 3rd party Labs for evaluations with positive feedback.
The Company anticipates
near term sales of its RDT and PCR tests to various domestic and international private and public entities.
The Company is currently
developing the next generation of RDT and Microwell CoVid-19 tests to achieve increased accuracy, remove all cross reactivity on
the test itself and differentiate between the IgG and IgM antibodies which differentiation aids in an improved understanding of
the stage of disease progression.
Industry
The use of diagnostics
in quality measures often is supported by clinical practice guidelines. Of all the quality measures contained in The Healthcare
Effectiveness Data and Information Set (“HEDIS”) is a widely used set of performance measures in the managed care industry,
developed and maintained by the National Committee for Quality Assurance (“NCQA”) and The National Quality Measures
Clearinghouse (“NQMC”). We identified guidelines specifically recommending diagnostic use in the NGC for 61.5% of those
in HEDIS and 78.5% of those in the NQMC.
Of course, the
development of measures for HEDIS, NQMC and other quality assessment initiatives is a relatively new process and represents only
a sample of evidence-based use of diagnostics. Nevertheless, this analysis conveys the essential role of diagnostics in health
care quality. Further, the incorporation of diagnostics into quality measures serves as a benchmark for assessing underuse of diagnostics
and the health and economic impact of such underuse.
In its annual report on
the state of health care quality in the US, NCQA assessed the impact of under-compliance with HEDIS measures, including those pertaining
to diagnostics, on avoidable adverse health events, deaths and costs. Figure 7.7 below shows these impacts for measures pertaining
to diagnostics used in breast cancer detection, cholesterol management, colorectal cancer screening and diabetes management.
Figure 7.7 Relationship between Application
of Selected HEDIS Diagnostic Quality Measures and Avoidable Adverse Health Events, Deaths and Costs
HEDIS Quality Measure
|
Percent National Under-use in HEDIS Compliant Health Plans
|
Estimated Annual Avoidable
Adverse Health Events
|
Estimated
Annual Avoidable Deaths
|
Estimated
Annual Avoidable Costs
|
Breast cancer screening
|
19.3%
|
7,600 breast cancer
|
600–1,000
|
$ 48 million
|
(biopsy, needle
|
|
cases treated in Stage
|
|
|
aspiration or
|
|
IV due to late
|
|
|
mammography)
|
|
diagnosis
|
|
|
Cholesterol management
|
48.9
|
14,600 major coronary events
|
6,900–17,000
|
$ 87 million
|
Colorectal cancer
|
51.9
|
20,000 cases of
|
4,200–6,300
|
$191 million
|
screening
|
|
colorectal cancer
|
|
|
(FOBT or colonoscopy)
|
|
diagnosed/treated at a
|
|
|
|
|
later stage
|
|
|
Diabetes management
(HbA1c control)
|
20.2
|
14,000 heart attacks, strokes, or amputations
|
4,300–9,600
|
$573 million
|
549
State of health care quality: industry trends and analysis. Washington, DC: National
Committee for Quality Trance, 2004.
These and
other findings of the 2004 NCQA report on the state of health care quality demonstrate the potential for evidence-based use of
diagnostics to improve health care quality and to avoid unnecessary adverse health events, deaths and costs. These studies are
the most recent and as time has passed, we all understand that the cost of Health Care has gone up dramatically and therefore
the savings to the health care industry is even greater than the studies show (See Figure 7.7 above).
Health care
increasingly is subject to demands for improved health and quality of life and constraints on the spending required to deliver
these improvements. In vitro diagnostics, henceforth in this report referred to as diagnostics, aid in responding to such
demands by enabling accurate detection of health risks and disease at earlier stages and improving treatment and disease management,
while diminishing subsequent health problems and their associated costs. Diagnostics serve a key role in the health value chain
by influencing the quality of patient care, health outcomes, and downstream resource requirements.
From consumer-friendly at-home
pregnancy and glucose monitoring tests to more complex automated laboratory-based systems, these tests are often first-line health
decision tools. While diagnostics comprise less than 5% of hospital costs and about 1.6% of all Medicare costs, their findings
influence as much as 60-70% of health care decision-making. The value of diagnostics accrues to not only clinicians and patients,
but to health care managers, third-party payers, and quality assurance organizations that use diagnostic performance to measure
and improve health care quality.
The following data have
been culled from various publicly available sources that the Company believes to be accurate but cannot guarantee it. The Company
has attempted to provide conservative statistics and believe that it is generally known that the market for IVD products is significant
and is continuing to grow.
The pregnancy test
is one of the primary home tests used in the world. The Company believes that approximately, 85,000 retail drug stores in the U.S.
are selling over $900 million of pregnancy tests alone and continues to increase annually. Presently, it knows of five major manufacturers
of this product.
The ovulation test
market is generally estimated at $51 million annually and is growing annually. Presently, the Company is aware of four major brand
companies that offer this test.
The glucose (diabetes)
whole blood test is used to test for abnormal glucose blood levels. A significant number of individuals are affected in the United
States with non-insulin dependent diabetes (Type II), many of whom are without knowledge of the disease. This disease, left untreated,
can cause cardiovascular disorders and cataracts. With the explosive growth of childhood obesity and general poorer health on Americans,
this test can saves thousands of lives.
As mentioned in the table
7.7: Diabetes management: There are 14,000 heart attacks, strokes, or amputations; 4,300–9,600 Deaths, but with Rapid
Diagnostic Testing an annual avoidable cost of $573 million per year, and lives saved.
The Company’s most
recent OTC product is its colorectal test (colon disorders). The Company estimates the demand for this test to increase with awareness
of availability. It knows of only one other company that is currently offering this product. The colorectal Cancer screening tests
helps detect the possibility of cancer early and can saves thousands of lives and millions of dollars. Colorectal cancer screening
(FOBT) Fecal Occult Blood Test: 20,000 cases of colorectal cancer diagnosed/treated at a later stage and 4,200–6,300 deaths,
but with Rapid Diagnostic Testing an annual avoidable cost of $191 million per year and lives saved.
The Company’s cholesterol
OTC test and its cholesterol colorimetric POC test are available to test for abnormal levels of cholesterol in whole blood. There
is evidence that a high blood cholesterol level increases the risk of developing arteriosclerosis, and with it the risk of coronary
heart disease or stroke. This heart disease is the leading cause of death in the United States, as reported by the American Heart
Association. Estimated Annual Avoidable Adverse Health Events are estimated to be approximately 14,600 with estimated annual avoidable
deaths of approximately 6,900–17,000 from high Cholesterol. Rapid Diagnostic Tests taken by this populations would save an
estimated $87 million per year and lives saved.
The market for drugs-of-abuse
tests for the over-the-counter market is generally estimated to be one of the fastest growing markets of all IVD test products.
At present, the Company believes that many law enforcement and governmental agencies are using laboratory testing facilities and
must wait for results, often taking one week to ten days. The Company’s tests are completed onsite within ten minutes.
A significant number of
people are infected by the H-Pylori bacteria, which are associated with ulcers. The Company’s H-Pylori test for the POC is
one of its newest products.
All of the Company’s
diagnostic tests, over 90 products are available for international distribution. The Company believes that its tests are excellent
for distribution and use in underdeveloped countries because, unlike lab and other rapid diagnostic tests, its test kits do not
need refrigeration and can withstand extended periods of excessive heat.
Competition
Several companies
around the world carry similar products, typically comprised of approximately 10-30 different products. However, we carry the
largest line of products that we know of including over 100 products. As of March 31, 2020, Global Wholehealth
Partners Corp. has made no sales.
Marketing and Sales
The company plans on selling
through large and small distributors, giving the company the greatest opportunity to sell to a greater amount of people, doctors,
hospitals, clinics and governments.
Research and Development:
We are continuing to look
for needs in the world to create and work with our scientific team and science partners to make a rapid test for the newest diseases,
such as ZIKA, EBOLA, TB, and Malaria.
Results of Operations
Three and nine months ended March 31, 2020 compared with the
three and nine months ended March 31, 2019
Operating Expenses
A summary of our operating expense for the
three months ended March 31, 2020 compared with the three months ended March 31, 2019 follows:
|
|
|
Three
Months Ended
March
31,
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
Increase/
|
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
(Decrease)
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
$
|
9,000
|
|
|
$
|
6,738
|
|
|
$
|
2,262
|
|
Research and development
|
|
|
443,750
|
|
|
|
—
|
|
|
|
443,750
|
|
Selling, general and administrative
|
|
|
2,629
|
|
|
|
2,270
|
|
|
|
359
|
|
Total operating expenses
|
|
$
|
455,379
|
|
|
$
|
9,008
|
|
|
$
|
446,371
|
|
A summary of our operating expense for the
nine months ended March 31, 2020 compared with the nine months ended March 31, 2019 follows:
|
|
|
Nine
Months Ended
March
31,
|
|
|
|
Nine
Months Ended
March
31,
|
|
|
|
Increase/
|
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
(Decrease)
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
$
|
44,900
|
|
|
$
|
6,738
|
|
|
$
|
38,162
|
|
Research and development
|
|
|
443,750
|
|
|
|
—
|
|
|
|
443,750
|
|
Selling, general and administrative
|
|
|
36,625
|
|
|
|
2,810
|
|
|
|
33,755
|
|
Total operating expenses
|
|
$
|
525,275
|
|
|
$
|
9,608
|
|
|
$
|
515,667
|
|
Professional Fees
Professional fees relate
to expenditures incurred primarily for legal and accounting services. During the three and nine months ended March 31, 2020 compared
to the three and nine months ended March 31, 2019, professional fees increased $2,262 and $38,162, respectively. The increase was
due to increased professional and management fees incurred in furtherance of the Company’s business plan and the administration
of the public entity.
Research and Product Development
Research and Product
Development (“R&D”) costs represent costs incurred to develop our tests and are incurred pursuant to
agreements with other third-party providers and certain internal R&D cost allocations when applicable. R&D costs are
expensed when incurred. During the three and nine months ended March 31, 2020 compared to the three and nine months ended
March 31, 2019, R&D costs increased as a result of a $443,750 increase related to testing and development of the
Company’s Co Vid-19 rapid test.
Selling, General and Administrative
Selling, general and administrative
(“SG&A”) costs include all expenditures related to personnel, travel and entertainment, public company compliance
costs, insurance and other office related costs. During the three and nine months ended March 31, 2020 compared to the three and
nine months ended March 31, 2019, SG&A increased $359 and $33,755, respectively. The increase was due to increased cost incurred
in furtherance of the Company’s business plan and the administration of the public entity.
Other Income
Other income increased $443,750 as a result
of the forgiveness of debt incurred related to the Company’s CoVid-19 test costs, please see Note 4 and Note 5 to
the Company’s Consolidated Financial Statements for additional information.
Liquidity and Capital Resources
As of March 31, 2020, our
assets consisted of $668 in cash and $23,372 in inventory compared to current liabilities of $65,747. From inception to March 31,
2020, we have incurred an accumulated deficit of $544,607. This loss has been incurred through a combination of professional fees,
R&D and SG&A costs to support our plans to develop our business. During the nine months ended March 31, 2020 and 2019,
the Company had no revenue and incurred a loss from operations of $525,275 and $9,608, respectively. The Company has incurred losses
since inception and may not be able to generate sufficient net revenue from its business in the future to achieve or sustain profitability.
The Company currently has insufficient funds to operate over the next twelve months. To finance our operations, we are currently
pursuing additional funds through equity or debt financing or a combination thereof. The Company currently has no commitments to
obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to
the Company, if at all.