CONFIDENTIAL OFFERING MEMORANDUM
$363,000,000
GLOBAL
H.O.M
MAXIMUM SHARES OFFERED:
10,000
MINIMUM SHARES OFFERED:
7,260
PRICE PER SHARE:
$50,000
MINIMUM INVESTMENT:
$50,000. (1 SHARE)
CARE
SYSTEMS,
INC.
(THE
“COMPANY”),
A
NEVADA
CORPORATION, IS OFFERING A MINIMUM OF 7,260 AND A MAXIMUM OF 10,000 SHARES FOR $50,000 PER SHARE. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), THE SECURITIES LAWS OF THE STATE OF NEVADA, OR UNDER THE SECURITIES LAWS OF ANY OTHER STATE OR JURISDICTION IN RELIANCE UPON THE
EXEMPTIONS
FROM
REGISTRATION
PROVIDED
BY
THE
ACT
AND
REGULATION
D
RULE
506(b)
COMPARABLE EXEMPTIONS
PROMULGATED
THEREUNDER,
AND
THE
FROM REGISTRATION PROVIDED BY OTHER
APPLICABLE SECURITIES LAWS.
Sale Price Per Share Minimum Maximum
$50,000 $363,000,000 $500,000,000
Selling Commissions Proceeds to Company (2) (3) $0 $50,000 $0 $363,000,000 $0 $500,000,000
THIS OFFERING IS NOT UNDERWRITTEN. THE OFFERING PRICE HAS BEEN ARBITRARILY SET BY THE MANAGEMENT OF THE COMPANY. THERE CAN BE NO ASSURANCE THAT ANY OF THE SECURITIES WILL BE SOLD.
The Company reserves the right to waive the 1 (ONE) Share minimum subscription for any investor. The Offering is not underwritten. The Shares are offered on a “best efforts” basis by the Company through its officers and directors. The Company has set a minimum offering amount of 7,260 Shares with minimum gross proceeds of $363,000,000 for this Offering. All proceeds from the sale of Shares up to $1,000,000 will be deposited in an escrow account. Upon the sale of 20 of Shares, all proceeds will be delivered directly to the Company’s corporate account and be available for use by the Company at its discretion (Florida, Georgia, and Pennsylvania Residents see NASAA Legend). (1) Shares may also be sold by FINRA member brokers or dealers who enter into a Participating Dealer Agreement with the Company, who will receive commissions of up to 10% of the price of the Shares, sold. The Company reserves the right to pay expenses related to this Offering from the proceeds of the Offering. See “PLAN OF PLACEMENT and USE OF PROCEEDS”
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
2
OFFERING EFFECTIVE DATE IS MARCH 17,2015
(2) The Offering will terminate on the earliest of: (a) the date the Company, in its discretion,
elects to terminate, or (b) the date upon which all Shares have been sold, or (c) MAY 31, 2015, or such date as may be extended from time to time by the Company, but not later than 180 days thereafter (the “Offering Period”.)
IMPORTANT DISCLOSURES THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY, NOR HAS ANY SUCH REGULATORY BODY REVIEWED THIS OFFERING MEMORANDUM FOR ACCURACY OR COMPLETENESS.
BECAUSE THESE SECURITIES HAVE NOT BEEN SO
REGISTERED, THERE MAY BE RESTRICTIONS ON THEIR TRANSFERABILITY OR RESALE BY AN INVESTOR. EACH PROSPECTIVE INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT HE MUST BEAR THE ECONOMIC RISKS OF THE INVESTMENT FOR AN INDEFINITE PERIOD, SINCE THE SECURITIES MAY NOT BE SOLD UNLESS, AMONG OTHER THINGS, THEY ARE SUBSEQUENTLY REGISTERED UNDER THE APPLICABLE SECURITIES ACTS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THERE IS NO TRADING MARKET FOR THE COMPANY’S SHARES AND THERE CAN BE NO ASSURANCE THAT ANY MARKET WILL DEVELOP IN THE FUTURE OR THAT THE SHARES WILL BE ACCEPTED FOR INCLUSION ON NASDAQ OR ANY OTHER TRADING EXCHANGE AT ANY TIME IN THE FUTURE. THE COMPANY IS NOT OBLIGATED TO REGISTER FOR SALE UNDER EITHER FEDERAL OR STATE SECURITIES LAWS THE SHARES PURCHASED PURSUANT HERETO, AND THE ISSUANCE OF THE SHARES IS BEING UNDERTAKEN PURSUANT TO RULE 506(b) OF REGULATION D UNDER THE SECURITIES ACT. ACCORDINGLY, THE SALE, TRANSFER, OR OTHER DISPOSITION OF ANY OF THE SHARES, WHICH ARE PURCHASED PURSUANT HERETO, MAY BE RESTRICTED BY APPLICABLE FEDERAL OR STATE SECURITIES LAWS (DEPENDING ON THE RESIDENCY OF THE INVESTOR) AND BY THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT REFERRED TO HEREIN.
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
3
OFFERING EFFECTIVE DATE IS MARCH 17,2015
THE OFFERING PRICE OF THE SECURITIES TO WHICH THE CONFIDENTIAL TERM SHEET RELATES HAS BEEN ARBITRARILY ESTABLISHED BY THE COMPANY AND DOES NOT NECESSARILY BEAR ANY SPECIFIC RELATION TO THE ASSETS, BOOK VALUE OR POTENTIAL EARNINGS OF THE COMPANY OR ANY OTHER RECOGNIZED CRITERIA OF VALUE. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THE MEMORANDUM AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON. NOTHING IN THIS MEMORANDUM SHOULD BE CONSTRUED AS LEGAL OR TAX ADVICE. THE MANAGEMENT OF THE COMPANY HAS PROVIDED ALL OF THE INFORMATION STATED HEREIN. THE COMPANY MAKES NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE COMPLETENESS OF THIS INFORMATION OR, IN THE CASE OF PROJECTIONS, ESTIMATES, FUTURE PLANS, OR FORWARD LOOKING ASSUMPTIONS OR STATEMENTS, AS TO THEIR ATTAINABILITY OR THE ACCURACY AND COMPLETENESS OF THE ASSUMPTIONS FROM WHICH THEY ARE DERIVED, AND IT IS EXPECTED THAT EACH PROSPECTIVE INVESTOR WILL PURSUE HIS, HER, OR ITS OWN INDEPENDENT INVESTIGATION.
IT MUST BE RECOGNIZED THAT ESTIMATES OF THE COMPANY’S
PERFORMANCE ARE NECESSARILY SUBJECT TO A HIGH DEGREE OF UNCERTAINTY AND MAY VARY MATERIALLY FROM ACTUAL RESULTS. NO GENERAL SOLICITATION OR ADVERTISING IN WHATEVER FORM WILL OR MAY BE EMPLOYED IN THE OFFERING OF THE SECURITIES, EXCEPT FOR THIS MEMORANDUM (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS HERETO), THE EXHIBITS HERETO AND DOCUMENTS SUMMARIZED HEREIN, OR AS PROVIDED FOR UNDER REGULATION D OF THE SECURITIES ACT OF 1933. OTHER THAN THE COMPANY’S MANAGEMENT, NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION WITH RESPECT TO THE COMPANY OR THE SHARES THAT IS NOT CONTAINED IN THIS MEMORANDUM. PROSPECTIVE INVESTORS SHOULD NOT RELY ON ANY INFORMATION NOT CONTAINED IN THIS MEMORANDUM. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANYONE IN ANY JURISDICTION IN WHICH SUCH
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
4
OFFERING EFFECTIVE DATE IS MARCH 17,2015
OFFER OR SOLICITATION WOULD BE UNLAWFUL OR IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER IF THE PROSPECTIVE INVESTOR IS NOT QUALIFIED UNDER APPLICABLE SECURITIES LAWS. THIS OFFERING IS MADE SUBJECT TO WITHDRAWAL, CANCELLATION, OR MODIFICATION BY THE COMPANY WITHOUT NOTICE AND SOLELY AT THE COMPANY’S DISCRETION. THE COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE NUMBER OF SHARES SUBSCRIBED FOR BY SUCH PROSPECTIVE INVESTOR. THIS MEMORANDUM HAS BEEN PREPARED SOLELY FOR THE INFORMATION OF THE PERSON TO WHOM IT HAS BEEN DELIVERED BY OR ON BEHALF OF THE COMPANY. DISTRIBUTION
OF
THIS
MEMORANDUM
TO
ANY
PERSON OTHER THAN THE
PROSPECTIVE INVESTOR TO WHOM THIS MEMORANDUM IS DELIVERED BY THE COMPANY AND THOSE PERSONS RETAINED TO ADVISE THEM WITH RESPECT THERETO IS UNAUTHORIZED. ANY REPRODUCTION OF THIS MEMORANDUM, IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF THE CONTENTS WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY IS STRICTLY PROHIBITED.
EACH PROSPECTIVE INVESTOR, BY
ACCEPTING DELIVERY OF THIS MEMORANDUM, AGREES TO RETURN IT AND ALL OTHER DOCUMENTS RECEIVED BY THEM TO THE COMPANY IF THE PROSPECTIVE INVESTOR’S SUBSCRIPTION IS NOT ACCEPTED OR IF THE OFFERING IS TERMINATED. BY ACCEPTANCE OF THIS MEMORANDUM, PROSPECTIVE INVESTORS RECOGNIZE AND ACCEPT THE NEED TO CONDUCT THEIR OWN THOROUGH INVESTIGATION AND DUE DILIGENCE BEFORE CONSIDERING A PURCHASE OF THE SHARES. THE CONTENTS OF THIS MEMORANDUM SHOULD NOT BE CONSIDERED TO BE INVESTMENT, TAX, OR LEGAL ADVICE AND EACH PROSPECTIVE INVESTOR SHOULD CONSULT WITH THEIR OWN COUNSEL AND ADVISORS AS TO ALL MATTERS CONCERNING AN INVESTMENT IN THIS OFFERING.
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
5
OFFERING EFFECTIVE DATE IS MARCH 17,2015
TABLE OF CONTENTS I.
Summary of the Offering ................................................................................................................ 16 a) The Company .................................................................................................................................... 17 b) Operations ......................................................................................................................................... 17 c) Business Plan ..................................................................................................................................... 17 d) The Offering ...................................................................................................................................... 18 e) Risk Factors ....................................................................................................................................... 18 f) Use of Proceeds ................................................................................................................................. 18 g) Minimum Offering Proceeds - Escrow of Subscription Proceeds ..................................................... 18 h) Shareholders Shares........................................................................................................................... 19 i) Registrar ............................................................................................................................................ 19 j) Subscription Period ........................................................................................................................... 19
II.
Requirements for Purchasers ......................................................................................................... 20
a) General Suitability Standards ............................................................................................................ 20 b) Accredited Investors .......................................................................................................................... 21 c) Other Requirements ........................................................................................................................... 23 III. Forward Looking Information ....................................................................................................... 23 IV.
Risk Factors ..................................................................................................................................... 24
a) Development Stage Business ............................................................................................................ 24 b) Inadequacy of Funds.......................................................................................................................... 25 c) Dependence on Management ............................................................................................................ 25 d) Risks Associated with Expansion ...................................................................................................... 25 e) Customer Base and Market Acceptance ............................................................................................ 26 f) Competition ....................................................................................................................................... 26 g) Trend in Consumer Preferences and Spending.................................................................................. 26
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
6
OFFERING EFFECTIVE DATE IS MARCH 17,2015
h) Risks of Borrowing............................................................................................................................ 27 i) Unanticipated Obstacles to Execution of the Business Plan ............................................................. 27 j) Management Discretion as to Use of Proceeds ................................................................................. 28 k) Control by Management .................................................................................................................... 28 l) Return of Profits ................................................................................................................................ 29 m) No Assurances of Protection for Proprietary Rights; Reliance on Trade Secrets ............................. 29 n) Dilution.............................................................................................................................................. 30 o) Limited Transferability and Liquidity ............................................................................................... 30 p) Broker - Dealer Sales of Shares......................................................................................................... 31 q) Long Term Nature of Investment ...................................................................................................... 32 r) No Current Market for Shares ........................................................................................................... 32 s) Compliance with Securities Laws ..................................................................................................... 32 t) Offering Price .................................................................................................................................... 33 u) Lack of Firm Underwriter ................................................................................................................. 33 v) Projections: Forward Looking Information ...................................................................................... 33 V.
Use Of Proceeds .............................................................................................................................. 35
VI.
Management..................................................................................................................................... 36
VII. Management Compensation ........................................................................................................... 36 VIII. Board of Advisors ............................................................................................................................ 36 IX.
Dilution ............................................................................................................................................. 37
X.
Current Shareholders ..................................................................................................................... 37
XI.
Option Agreements.......................................................................................................................... 38
XII. Litigation .......................................................................................................................................... 38 XIII. Description of Shares ...................................................................................................................... 38 XIV. Transfer Agent and Registrar ........................................................................................................ 39 XV. Plan of Placement ............................................................................................................................ 39
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
7
OFFERING EFFECTIVE DATE IS MARCH 17,2015
a) Escrow of Subscription Funds ............................................................................................................ 39 b) How to Subscribe for Shares .............................................................................................................. 40 XVI. Additional Information ................................................................................................................... 41
EXHIBITS: EXHIBIT A: SUBSCRIPTION AGREEMENT EXHIBIT B: INVESTOR QUESTIONNAIRE EXHIBIT C: ERISA DISCLOSURE EXHIBIT D: ANTI MONEY LAUNDERING EXHIBIT E: BUSINESS PLAN
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GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
8
OFFERING EFFECTIVE DATE IS MARCH 17,2015
JURISDICTIONAL (NASAA) LEGENDS FOR RESIDENTS OF ALL STATES: THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN A PARTICULAR STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE HEREBY ADVISED TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THIS MEMORANDUM HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS (COMMONLY CALLED "BLUE SKY" LAWS) THESE SECURITIES MUST BE ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF SUCH SECURITIES UNDER SUCH LAWS, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THE STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OF SALE MAY BE MADE IN ANY PARTICULAR STATE.
1. FOR NEVADA RESIDENTS ONLY: THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT
OF
THIS
OFFERING
HAS
NOT
BEEN
QUALIFIED
WITH
COMMISSIONER OF CORPORATIONS OF THE STATE OF NEVADA AND THE ISSUANCE OF SUCH SECURITIES OR PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFORE PRIOR TO SUCH QUALIFICATIONS IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPTED FROM QUALIFICATION BY SECTION 25100, 25102, OR 25104 OF THE NEVADA CORPORATIONS CODE. THE
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
9
OFFERING EFFECTIVE DATE IS MARCH 17,2015
RIGHTS OF ALL PARTIES TO THIS OFFERING ARE EXPRESSLY CONDITION UPON SUCH QUALIFICATIONS BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 2. NOTICE TO DELAWARE RESIDENTS ONLY: IF YOU ARE A DELAWARE RESIDENT, YOU ARE HEREBY ADVISED THAT THESE SECURITIES ARE BEING OFFERED
IN
A
TRANSACTION
EXEMPT
FROM
THE
REGISTRATION
REQUIREMENTS OF THE DELAWARE SECURITIES ACT. THE SECURITIES CANNOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH THE ACT. 3. NOTICE TO FLORIDA RESIDENTS ONLY: THE SHARES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED WITH THE FLORIDA DIVISION OF SECURITIES AND INVESTOR PROTECTION UNDER THE FLORIDA SECURITIES ACT. THE SHARES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF SAID ACT. THE SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION, ALL OFFEREES WHO ARE FLORIDA RESIDENTS SHOULD BE AWARE THAT SECTION 517.061(11)(a)(5) OF THE ACT PROVIDES, IN RELEVANT PART, AS FOLLOWS: "WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN [FLORIDA], ANY SALE IN [FLORIDA] MADE PURSUANT TO [THIS SECTION] IS VOIDABLE BY THE PURCHASER IN SUCH SALE EITHER WITHIN 3 DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY THE PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER." THE AVAILABILITY OF THE PRIVILEGE TO VOID SALES PURSUANT TO SECTION 517.061(11) IS HEREBY COMMUNICATED TO EACH FLORIDA OFFEREE. EACH PERSON ENTITLED TO EXERCISE THE PRIVILEGE TO
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
10
OFFERING EFFECTIVE DATE IS MARCH 17,2015
AVOID SALES GRANTED BY SECTION 517.061 (11) (A)(5) AND WHO WISHES TO EXERCISE SUCH RIGHT, MUST, WITHIN 3 DAYS AFTER THE TENDER OF ANY AMOUNT TO THE COMPANY OR TO ANY AGENT OF THE COMPANY (INCLUDING THE SELLING AGENT OR ANY OTHER DEALER ACTING ON BEHALF OF THE PARTNERSHIP OR ANY SALESMAN OF SUCH DEALER) OR AN ESCROW AGENT CAUSE A WRITTEN NOTICE OR TELEGRAM TO BE SENT TO THE COMPANY AT THE ADDRESS PROVIDED IN THIS CONFIDENTIAL EXECUTIVE SUMMARY. SUCH LETTER OR TELEGRAM MUST BE SENT AND, IF POSTMARKED, POSTMARKED ON OR PRIOR TO THE END OF THE AFOREMENTIONED THIRD DAY. IF A PERSON IS SENDING A LETTER, IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME IT WAS MAILED. SHOULD A PERSON MAKE THIS REQUEST ORALLY, HE MUST ASK FOR WRITTEN CONFIRMATION THAT HIS REQUEST HAS BEEN RECEIVED. 4. NOTICE TO ILLINOIS RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECRETARY OF THE STATE OF ILLINOIS NOR HAS THE STATE OF ILLINOIS PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 5. NOTICE TO NEVADA RESIDENTS ONLY: IF ANY INVESTOR ACCEPTS ANY OFFER TO PURCHASE THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 49:3-60(b) OF THE NEVADA SECURITIES LAW. THE INVESTOR IS HEREBY ADVISED THAT THE ATTORNEY GENERAL OF THE STATE OF NEVADA HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING AND THE FILING OF THE OFFERING WITH THE BUREAU OF SECURITIES DOES NOT CONSTITUTE APPROVAL OF THE ISSUE, OR SALE THEREOF, BY THE BUREAU OF SECURITIES OR THE DEPARTMENT
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
11
OFFERING EFFECTIVE DATE IS MARCH 17,2015
OF LAW AND PUBLIC SAFETY OF THE STATE OF NEVADA. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. NEVADA ALLOWS THE SALE OF SECURITIES TO 25 OR FEWER PURCHASERS IN THE STATE WITHOUT REGISTRATION. HOWEVER, CERTAIN CONDITIONS APPLY, I.E., THERE CAN BE NO GENERAL ADVERTISING OR SOLICITATION AND COMMISSIONS ARE LIMITED TO LICENSED BROKER-DEALERS. THIS EXEMPTION IS GENERALLY USED WHERE THE PROSPECTIVE INVESTOR IS ALREADY KNOWN AND HAS A PRE-EXISTING RELATIONSHIP WITH THE COMPANY. (SEE NRS 90.530.11.) 6. NOTICE TO NEW JERSEY RESIDENTS ONLY: IF YOU ARE A NEW JERSEY RESIDENT AND YOU ACCEPT AN OFFER TO PURCHASE THESE SECURITIES PURSUANT TO THIS MEMORANDUM, YOU ARE HEREBY ADVISED THAT THIS MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 7. NOTICE TO NEW YORK RESIDENTS ONLY: THIS DOCUMENT HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW YORK PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE COMPANY HAS TAKEN NO STEPS TO CREATE AN AFTER MARKET FOR THE SHARES OFFERED HEREIN AND HAS MADE NO ARRANGEMENTS WITH BROKERS OF OTHERS TO TRADE OR MAKE A MARKET IN THE SHARES. AT SOME TIME IN THE FUTURE, THE COMPANY MAY ATTEMPT TO ARRANGE FOR INTERESTED BROKERS TO TRADE OR MAKE A MARKET IN THE SECURITIES AND TO QUOTE THE SAME IN A PUBLISHED QUOTATION MEDIUM, HOWEVER, NO SUCH ARRANGEMENTS HAVE BEEN MADE
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
12
OFFERING EFFECTIVE DATE IS MARCH 17,2015
AND THERE IS NO ASSURANCE THAT ANY BROKERS WILL EVER HAVE SUCH AN INTEREST IN THE SECURITIES OF THE COMPANY OR THAT THERE WILL EVER BE A MARKET THEREFORE. 8. NOTICE TO PENNSYLVANIA RESIDENTS ONLY: EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM REGISTRATION BY SECTION 203(d), DIRECTLY FROM THE ISSUER OR AFFILIATE OF THIS ISSUER, SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON WITHIN TWO (2) BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO BINDING CONTRACT OF PURCHASE, WITHIN TWO (2) BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. IF YOU HAVE ACCEPTED AN OFFER TO PURCHASE THESE SECURITIES MADE PURSUANT TO A PROSPECTUS WHICH CONTAINS A NOTICE EXPLAINING YOUR RIGHT TO WITHDRAW YOUR ACCEPTANCE PURSUANT TO SECTION 207(m) OF THE PENNSYLVANIA SECURITIES ACT OF 1972 (70 PS § 1-207(m), YOU MAY ELECT, WITHIN TWO (2) BUSINESS DAYS AFTER THE FIRST TIME YOU HAVE RECEIVED THIS NOTICE AND A PROSPECTUS TO WITHDRAW FROM YOUR PURCHASE AGREEMENT AND RECEIVE A FULL REFUND OF ALL MONEYS PAID BY YOU. YOUR WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL, YOU NEED ONLY SEND A LETTER OR TELEGRAM TO THE ISSUER (OR UNDERWRITER IF ONE IS LISTED ON THE FRONT PAGE OF THE PROSPECTUS) INDICATING YOUR INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD
BE
SENT
AND
POSTMARKED
PRIOR
TO
THE
END
OF
THE
AFOREMENTIONED SECOND BUSINESS DAY. IF YOU ARE SENDING A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSGTI THAT IT IS RECEIVED AND ALSO EVIDENCE THE TIME WHEN IT WAS
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
13
OFFERING EFFECTIVE DATE IS MARCH 17,2015
MAILED. SHOULD YOU MAKE THIS REQUEST ORALLY, YOU SHOULD ASK WRITTEN CONFIRMATION THAT YOUR REQUEST HAS BEEN RECEIVED. NO SALE OF THE SECURITIES WILL BE MADE TO RESIDENTS OF THE STATE OF PENNSYLVANIA WHO ARE NON-ACCREDITED INVESTORS IF THE AMOUNT OF SUCH INVESTMENT IN THE SECURITIES WOULD EXCEED TWENTY (20%) OF SUCH INVESTOR'S NET WORTH (EXCLUDING PRINCIPAL RESIDENCE, FURNISHINGS THEREIN AND PERSONAL AUTOMOBILES). EACH PENNSYLVANIA RESIDENT MUST AGREE NOT TO SELL THESE SECURITIES FOR A PERIOD OF TWELVE (12) MONTHS AFTER THE DATE OF PURCHASE, EXCEPT IN ACCORDANCE WITH WAIVERS ESTABLISHED BY RULE OR ORDER OF THE COMMISSION. THE SECURITIES HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE PENNSYLVANIA SECURITIES ACT OF 1972. NO SUBSEQUENT RESALE OR OTHER DISPOSITION OF THE SECURITIES MAY BE MADE WITHIN 12 MONTHS FOLLOWING THEIR INITIAL SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION, EXCEPT IN ACCORDANCE WITH WAIVERS ESTABLISHED BY RULE OR ORDER OF THE COMMISSION, AND THEREAFTER ONLY PURSUANT TO AN EFFECTIVE REGISTRATION OR EXEMPTION. 9. NOTICE TO TEXAS RESIDENTS ONLY: THE SECURITIES OFFERED HEREUNDER HAVE NOT BEEN REGISTERED UNDER APPLICABLE TEXAS SECURITIES LAWS AND, THEREFORE, ANY PURCHASER THEREOF MUST BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE SECURITIES
CANNOT
BE
RESOLD
UNLESS
THEY
ARE
SUBSEQUENTLY
REGISTERED UNDER SUCH SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. FURTHER, PURSUANT TO §109.13 UNDER THE TEXAS SECURITIES ACT, THE COMPANY IS REQUIRED TO APPRISE PROSPECTIVE INVESTORS OF THE FOLLOWING: A LEGEND SHALL BE PLACED, UPON ISSUANCE, ON CERTIFICATES REPRESENTING SECURITIES PURCHASED HEREUNDER, AND ANY PURCHASER HEREUNDER SHALL BE REQUIRED TO SIGN
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
14
OFFERING EFFECTIVE DATE IS MARCH 17,2015
A WRITTEN AGREEMENT THAT HE WILL NOT SELL THE SUBJECT SECURITIES WITHOUT
REGISTRATION
UNDER
APPLICABLE
SECURITIES
LAWS,
OR
EXEMPTIONS THEREFROM. 10. NOTICE TO WASHINGTON RESIDENTS ONLY: THE ADMINISTRATOR OF SECURITIES HAS NOT REVIEWED THE OFFERING OR PRIVATE PLACEMENT MEMORANDUM AND THE SECURITIES HAVE NOT BEEN REGISTERED IN RELIANCE UPON THE SECURITIES ACT OF WASHINGTON, CHAPTER 21.20 RCW, AND THEREFORE, CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER THE SECURITIES ACT OF WASHINGTON, CHAPTER 21.20 RCW, OR UNLESS AN EXEMPTION FROM REGISTRATION IS MADE AVAILABLE. DURING THE COURSE OF THE OFFERING AND PRIOR TO ANY SALE, EACH OFFEREE OF THE SHARES AND HIS OR HER PROFESSIONAL ADVISOR(S), IF ANY, ARE INVITED TO ASK QUESTIONS CONCERNING THE TERMS AND CONDITIONS OF THE OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH HEREIN.
SUCH
INFORMATION WILL BE PROVIDED TO THE EXTENT THE COMPANY POSSESS SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE. EACH PROSPECTIVE INVESTOR WILL BE GIVEN AN OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM, MANAGEMENT OF THE COMPANY CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE EXTENT THE COMPANY POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE
EFFORTS
OR
EXPENSE,
NECESSARY
TO
VERIFY
THE
ACCURACY OF THE INFORMATION CONTAINED IN THIS MEMORANDUM.
GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
15
OFFERING EFFECTIVE DATE IS MARCH 17,2015
IF YOU HAVE ANY QUESTIONS WHATSOEVER REGARDING THIS OFFERING, OR DESIRE ANY ADDITIONAL INFORMATION OR DOCUMENTS TO VERIFY OR SUPPLEMENT THE INFORMATION CONTAINED IN THIS MEMORANDUM, PLEASE WRITE OR CALL GLOBAL H.O.M CARE SYSTEMS, INC. AT THE ADDRESS AND NUMBER LISTED ON THE FRONT OF THIS PRIVATE OFFERING MEMORANDUM.
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GLOBAL H.O.M CARE SYSTEMS, INC. OFFERING MEMORANDUM • REGULATION D RULE 506
16
OFFERING EFFECTIVE DATE IS MARCH 17,2015
I.
SUMMARY OF THE OFFERING The following material is intended to summarize information contained elsewhere in this Limited Offering Memorandum (the “Memorandum”).
This summary is
qualified in its entirety by express reference to this Memorandum and the materials referred to and contained herein.
Each prospective subscriber should carefully
review the entire Memorandum and all materials referred to herein and conduct his or her own due diligence before subscribing for Shareholders Shares. a) The Company GLOBAL H.O.M CARE SYSTEMS, INC.
(“GLOBAL H.O.M CARE
SYSTEMS, INC. ”, or the “Company”), began operations in March 14, 2012, with the purpose of medical services, and technology. The Company’s legal structure was formed as a Corporation (INC.) under the laws of the State of NEVADA on March 14, 2012. Its principal offices are presently located at 1605 Cumberland Station Blvd., Madison, TN 37115. The Company’s telephone number is (888) 274-4205. The Managing Shareholder of the Company is Mr. Robert J Merritt, President
b) Business Plan Portions of the GLOBAL H.O.M CARE SYSTEMS, INC. Business Plan, included as a separate document, were prepared by the Company using assumptions, including several forward looking statements. Each prospective investor should carefully review the Business Plan in association with this Memorandum before purchasing Shares.
Management makes no
representations as to the accuracy or achievability of the underlying assumptions and projected results contained herein.
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c) The Offering The Company is offering a minimum of 7,260 and a maximum of 10,000 Shares at a price of $50,000 per Share, $.001 par value per Share. Upon completion of the Offering between 7,260 and 10,000 Shares will be outstanding. Each purchaser must execute a Subscription Agreement making certain representations and warranties to the Company, including such purchaser’s qualifications as an Accredited Investor as defined by the Securities and Exchange Commission in Rule 501(a) of Regulation D promulgated, or one of 35 Non-Accredited Investors that may be allowed to purchase Shares in this offering.
See “REQUIREMENTS FOR
PURCHASERS” section. d) Risk Factors See “RISK FACTORS” section in this Memorandum for certain factors that could adversely affect an investment in the Shares. Those factors include, but are not limited to unanticipated obstacles to execution of the Business Plan, general economic factors. e) Use of Proceeds Proceeds from the sale of Shares will be used for the development of Gadson Garden Estates, a five (5) part project in Barstow, CA that will be funded and implemented in three (3) primary sequential stages See “USE OF PROCEEDS” section. f) Minimum Offering Proceeds - Escrow of Subscription Proceeds The Company has set a minimum offering proceeds figure of $363,000,000 (the “minimum offering proceeds”) for this Offering. The Company has established an Investment Holding Account with TD BANK, 1130 Whitehorse Hamilton Square Rd. Hamilton, NJ 08690, into which the
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minimum offering proceeds will be placed. At least 20 Shares must be sold for $1,000,000 before such proceeds will be released from the escrow account and utilized by the Company. After the minimum number of Shares is sold, all subsequent proceeds from the sale of Shares will be delivered directly to the Company.
See “PLAN OF PLACEMENT - ESCROW
ACCOUNT ARRANGEMENT” section. g) Shareholders Shares Upon the sale of the maximum number of Shares from this Offering, the number of issued and outstanding Shares of the Company’s stock will be held as follows: PRESENT SHAREHOLDERS
67%
NEW SHAREHOLDERS
33%
h) Registrar The Company will serve as its own registrar and transfer agent with respect to its Shareholders Shares. i) Subscription Period The Offering will terminate on the earliest of: (a) the date the Company, in its discretion, elects to terminate, or (b) the date upon which all Shares have been sold, or (c) MAY 31, 2015, or such date as may be extended from time to time by the Company, but not later than 180 days thereafter (the “Offering Period”.)
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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II.
REQUIREMENTS FOR PURCHASERS Prospective purchasers of the Shares offered by this Memorandum should give careful consideration to certain risk factors described under “RISK AND OTHER IMPORTANT FACTORS” section and especially to the speculative nature of this investment and the limitations described under that caption with respect to the lack of a readily available market for the Shares and the resulting long term nature of any investment in the Company. This Offering is available only to suitable Accredited Investors, or one of 35 Non-Accredited Investors that may be allowed to purchase Shares, having adequate means to assume such risks and of otherwise providing for their current needs and contingencies should consider purchasing Shares. a)
General Suitability Standards The Shares will not be sold to any person unless such prospective purchaser or his or her duly authorized representative shall have represented in writing to the Company in a Subscription Agreement that: i.
The prospective purchaser has adequate means of providing for his or her current needs and personal contingencies and has no need for liquidity in the investment of the Shares;
ii.
The prospective purchaser’s overall commitment to investments which are not readily marketable is not disproportionate to his, her, or its net worth and the investment in the Shares will not cause such overall commitment to become excessive; and
iii.
The prospective purchaser is an “Accredited Investor” (as defined below) suitable for purchase in the Shares.
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iv.
Each person acquiring Shares will be required to represent that he, she, or it is purchasing the Shares for his, her, or its own account for investment purposes and not with a view to resale or distribution. See “SUBSCRIPTION FOR SHARES” section.
b)
Accredited Investors The Company will conduct the Offering in such a manner that Shares may be sold only to “Accredited Investors” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933 (the “Securities Act”), or to a maximum of 35 Non-Accredited Investors that may be allowed to purchase Shares in this offering. In summary, a prospective investor will qualify as an “Accredited Investor” if he, she, or it meets any one of the following criteria: i.
Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase, exceeds $1,000,000;
ii.
Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and who has a reasonable expectation of reaching the same income level in the current year;
iii.
Any bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities and Exchange Act of 1934 (the “Exchange Act”); any insurance company as defined in Section 2(13) of the Exchange Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section
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2(a)(48) of that Act; any Small Business Investment Company (SBIC) licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are Accredited Investors; iv.
Any private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940;
v.
Any organization described in Section 501(c)(3)(d) of the Internal Revenue Code, corporation, business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
vi.
Any director or executive officer, or general partner of the issuer of the securities being sold, or any director, executive officer, or general partner of a general partner of that issuer;
vii.
Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 506(b)(2)(ii) of Regulation D adopted under the Act; and
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viii.
Any entity in which all the equity owners are Accredited Investors.
c) Other Requirements No subscription for the Shares will be accepted from any investor unless he is acquiring the Shares for his own account (or accounts as to which he has sole investment discretion), for investment and without any view to sale, distribution or disposition thereof. Each prospective purchaser of Shares may be required to furnish such information as the Company may require determining whether any person or entity purchasing Shares is an Accredited Investor, or select NonAccredited Investor who may purchase Shares.
III.
FORWARD LOOKING INFORMATION Some of the statements contained in this Memorandum, including information incorporated by reference, discuss future expectations, or state other forward looking information.
Those statements are subject to known and unknown risks,
uncertainties and other factors, several of which are beyond the Company’s control, which could cause the actual results to differ materially from those contemplated by the statements. The forward looking information is based on various factors and was derived using numerous assumptions.
In light of the risks, assumptions, and
uncertainties involved, there can be no assurance that the forward looking information contained in this Memorandum will in fact transpire or prove to be accurate. Important factors that may cause the actual results to differ from those expressed within may include, but are not limited to: a) The success or failure of the Company’s efforts to successfully market its products and services as scheduled; b) The Company’s ability to attract, build, and maintain a customer base;
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c) The Company’s ability to attract and retain quality employees; d) The effect of changing economic conditions; e) The ability of the Company to obtain adequate debt financing if only a fraction of this Offering is sold; These along with other risks, which are described under “RISK FACTORS” may be described in future communications to shareholders.
The Company makes no
representation and undertakes no obligation to update the forward looking information to reflect actual results or changes in assumptions or other factors that could affect those statements.
IV.
RISK FACTORS Investing in the Company’s Shares is very risky. You should be able to bear a complete loss of your investment. You should carefully consider the following factors, including those listed in the accompanying business plan. a) Development Stage Business GLOBAL H.O.M CARE SYSTEMS, INC. commenced operations in March 2012 and is organized as a Corporation under the laws of the State of NEVADA.
Accordingly, the Company has only a limited history upon
which an evaluation of its prospects and future performance can be made. The Company’s proposed operations are subject to all business risks associated with new enterprises. The likelihood of the Company’s success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the expansion of a business, operation in a competitive industry, and the continued development of advertising, promotions and a corresponding customer base. There is a possibility that the Company could sustain losses
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in the future. There can be no assurances that GLOBAL H.O.M CARE SYSTEMS, INC. will even operate profitably. b) Inadequacy of Funds Gross offering proceeds of a minimum of $363,000,000 and a maximum of $500,000,000 may be realized. Management believes that such proceeds will capitalize and sustain GLOBAL H.O.M CARE SYSTEMS, INC. sufficiently to allow for the implementation of the Company’s Business Plans. If only a fraction of this Offering is sold, or if certain assumptions contained in Management’s business plans prove to be incorrect, the Company may have inadequate funds to fully develop its business and may need debt financing or other capital investment to fully implement the Company’s business plans. c) Dependence on Management In the early stages of development the Company’s business will be significantly dependent on the Company’s management team.
The
Company’s success will be particularly dependent upon: Robert J. Merritt President & Chairman and Robert B. Merritt Sr. Vice President. The loss of Robert J. Merritt and/or any one of these individuals could
have
a
material
adverse
effect
on
the
Company.
See
“MANAGEMENT” section. d) Risks Associated with Expansion The Company plans on expanding its business through the introduction of a sophisticated marketing campaign.
Any expansion of operations the
Company may undertake will entail risks. Such actions may involve specific operational activities, which may negatively impact the profitability of the Company. Consequently, shareholders must assume the risk that (i) such expansion may ultimately involve expenditures of funds beyond the
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resources available to the Company at that time, and (ii) management of such expanded operations may divert Management’s attention and resources away from its existing operations, all of which factors may have a material adverse effect on the Company’s present and prospective business activities. e) Customer Base and Market Acceptance Seniors who are 55 years and older, and veterans in need of quality housing will be our customer profile. However, the recreation center and club house will be open to the general community.
f) Competition
Seniors and retirees have many options for assisted living facilities throughout Southern Nevada, any one of which have amenities and services that will meet the needs for most seniors. Hence, competition for the standard life-style at such facilities will be great. The principal exception will be the design, size and layout of the units at the Company’s facilities; and above all, the introduction and use of the Universal Healthcare Annuity Trust Fund, a proprietary program that has no match in the country and one that will become a model for institutionalized individuals throughout the country.
While there does exist some current competition, Management believes that GLOBAL H.O.M CARE SYSTEMS, INC. ’s products are demographically well positioned, top quality and unique in nature.
The expertise of
Management combined with the innovative nature of its marketing approach, set the Company apart from its competitors Trend in Consumer Preferences and Spending
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The Company’s operating results may fluctuate significantly from period to period as a result of a variety of factors, including purchasing patterns of customers, competitive pricing, debt service and principal reduction payments, and general economic conditions. There is no assurance that the Company will be successful in marketing any of its products, or that the revenues from the sale of such products will be significant. Consequently, the Company’s revenues may vary by quarter, and the Company’s operating results may experience fluctuations. g) Risks of Borrowing If the Company incurs indebtedness, a portion of its cash flow will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants, which may impair the Company’s operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to the rights of shareholders of the Company. A judgment creditor would have the right to foreclose on any of the Company’s assets resulting in a material adverse effect on the Company’s business, operating results or financial condition. h) Unanticipated Obstacles to Execution of the Business Plan The Company’s business plans may change significantly.
Many of the
Company’s potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes that the Company’s chosen activities and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of the Company’s principals and advisors. Management reserves
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the right to make significant modifications to the Company’s stated strategies depending on future events. i) Management Discretion as to Use of Proceeds The net proceeds from this Offering will be used for the purposes described under “Use of Proceeds.” The Company reserves the right to use the funds obtained from this Offering for other similar purposes not presently contemplated which it deems to be in the best interests of the Company and its shareholders in order to address changed circumstances or opportunities. As a result of the foregoing, the success of the Company will be substantially dependent upon the discretion and judgment of Management with respect to application and allocation of the net proceeds of this Offering. Investors for the Shares offered hereby will be entrusting their funds to the Company’s Management, upon whose judgment and discretion the investors must depend. j) Control by Management As of March 17, 2015 the Company’s Managing Shareholders owned approximately 100% of the Company’s outstanding Shares.
Upon
completion of this Offering, the Company’s Managing Shareholders will own approximately 67 % of then issued and outstanding Shares, and will be able to continue to control GLOBAL H.O.M CARE SYSTEMS, INC. Investor shareholders will own a minority percentage of the Company and will have minority voting rights. Investor shareholders will not have the ability to control either a vote of the Company’s Managing Shareholders or any appointed officers. See “MANAGING SHAREHOLDERS” section.
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k) Return of Profits The Company intends to retain any initial future earnings to fund operations and expand the Company’s business. A member will be entitled to receive revenue profits proportionate to the amount of Shares held by that member. The Company’s Managing Shareholders will determine a profit distribution plan for participating Investors, which shall include a minimum guaranteed 5% ( Five Per Cent) per annum return, based upon the Company’s results of operations, financial condition, capital requirements, and other circumstances. See “DESCRIPTION OF SECURITIES” section. l) No Assurances of Protection for Proprietary Rights; Reliance on Trade Secrets In certain cases, the Company may rely on trade secrets to protect intellectual property, proprietary technology and processes, which the Company has acquired, developed or may develop in the future.
There can be no
assurances that secrecy obligations will be honored or that others will not independently develop similar or superior products or technology.
The
protection of intellectual property and/or proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated. The prosecution of proprietary claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. The Company, in common with other firms, may also be subject to claims by other parties with regard to the use of intellectual property, technology information and data, which may be deemed proprietary to others.
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m) Dilution Purchasers of Shares will experience immediate and substantial dilution of $0.75 in net tangible book value per Share, or approximately 75% of the assumed offering price of $1.00 per Share (assuming maximum offering proceeds are achieved). Additional Shares issued by the Company in the future will also dilute a purchaser's investment in the Shares. n) Limited Transferability and Liquidity To satisfy the requirements of certain exemptions from registration under the Securities Act, and to conform with applicable state securities laws, each investor must acquire his Shares for investment purposes only and not with a view towards distribution. Consequently, certain conditions of the Securities Act may need to be satisfied prior to any sale, transfer, or other disposition of the Shares.
Some of these conditions may include a minimum holding
period, availability of certain reports, including financial statements from GLOBAL H.O.M CARE SYSTEMS, INC. , limitations on the percentage of Shares sold and the manner in which they are sold. GLOBAL H.O.M CARE SYSTEMS, INC. can prohibit any sale, transfer or disposition unless it receives an opinion of counsel provided at the holder’s expense, in a form satisfactory to GLOBAL H.O.M CARE SYSTEMS, INC. , stating that the proposed sale, transfer or other disposition will not result in a violation of applicable federal or state securities laws and regulations. No public market exists for the Shares and no market is expected to develop. Consequently, owners of the Shares may have to hold their investment indefinitely and may not be able to liquidate their investments in GLOBAL H.O.M CARE SYSTEMS, INC. or pledge them as collateral for a loan in the event of an emergency.
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o) Broker - Dealer Sales of Shares The Company’s Shares are not presently included for trading on any exchange, and there can be no assurances that the Company will ultimately be registered on any exchange due to the fact that it is a Corporation and not a corporation. The NASDAQ Stock Market, Inc. has recently enacted certain changes to the entry and maintenance criteria for listing eligibility on the NASDAQ Small Cap Market. The entry standards require at least $4 million in net tangible assets or $750,000 net income in two of the last three years. The proposed entry standards would also require a public float of at least $1 million shares, $5 million value of public float, a minimum bid price of $2.00 per share, at least three market makers, and at least 300 shareholders. The maintenance standards (as opposed to entry standards) require at least $2 million in net tangible assets or $500,000 in net income in two of the last three years, a public float of at least 500,000 shares, a $1 million market value of public float, a minimum bid price of $1.00 per share, at least two market makers, and at least 300 shareholders. No assurance can be given that the Shareholders Share of the Company will ever qualify for inclusion on the NASDAQ System or any other trading market until such time as the Managing Shareholders deem it necessary and the Corporation is converted to a corporation. As a result, the Company’s Shares are covered by a Securities and Exchange Commission rule that opposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors. For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell the
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Company’s securities and will also affect the ability of shareholders to sell their Shares in the secondary market. p) Long Term Nature of Investment An investment in the Shares may be long term and illiquid. As discussed above, the offer and sale of the Shares will not be registered under the Securities Act or any foreign or state securities laws by reason of exemptions from such registration, which depends in part on the investment intent of the investors. Prospective investors will be required to represent in writing that they are purchasing the Shares for their own account for long-term investment and not with a view towards resale or distribution. Accordingly, purchasers of Shares must be willing and able to bear the economic risk of their investment for an indefinite period of time. It is likely that investors will not be able to liquidate their investment in the event of an emergency. q) No Current Market for Shares There is no current market for the Shares offered in this private Offering and no market is expected to develop in the near future. r) Compliance with Securities Laws The Shares are being offered for sale in reliance upon certain exemptions from the registration requirements of the Securities Act, applicable NEVADA Securities Laws, and other applicable state securities laws. If the sale of Shares were to fail to qualify for these exemptions, purchasers may seek rescission of their purchases of Shares. If a number of purchasers were to obtain rescission, GLOBAL H.O.M CARE SYSTEMS, INC. would face significant financial demands, which could adversely affect GLOBAL H.O.M CARE SYSTEMS, INC. as a whole, as well as any non-rescinding purchasers.
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s) Offering Price The price of the Shares offered has been arbitrarily established by GLOBAL H.O.M CARE SYSTEMS, INC. , considering such matters as the state of the Company’s business development and the general condition of the industry in which it operates. The Offering price bears little relationship to the assets, net worth, or any other objective criteria of value applicable to GLOBAL H.O.M CARE SYSTEMS, INC. . t) Lack of Firm Underwriter The Shares are offered on a “best efforts” basis by the Managing Shareholders of GLOBAL H.O.M CARE SYSTEMS, INC.
without
compensation and on a “best efforts” basis through certain FINRA registered broker-dealers, which enter into Participating Broker-Dealer Agreements with the Company. Accordingly, there is no assurance that the Company, or any FINRA broker-dealer, will sell the maximum Shares offered or any lesser amount. u) Projections: Forward Looking Information Management has prepared projections regarding GLOBAL H.O.M CARE SYSTEMS, INC. ’ anticipated financial performance.
The Company’s
projections are hypothetical and based upon a presumed financial performance of the Company, the addition of a sophisticated and well funded marketing plan, and other factors influencing the business of GLOBAL H.O.M CARE SYSTEMS, INC. .
The projections are based on
Management’s best estimate of the probable results of operations of the Company, based on present circumstances, and have not been reviewed by GLOBAL H.O.M CARE SYSTEMS, INC. ’ independent accountants. These projections are based on several assumptions, set forth therein, which Management believes are reasonable. Some assumptions, upon which the
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projections are based, however, invariably will not materialize due the inevitable occurrence of unanticipated events and circumstances beyond Management’s control. Therefore, actual results of operations will vary from the projections, and such variances may be material. Assumptions regarding future changes in sales and revenues are necessarily speculative in nature. In addition, projections do not and cannot take into account such factors as general economic conditions, unforeseen regulatory changes, the entry into GLOBAL H.O.M CARE SYSTEMS, INC. ’ market of additional competitors, the terms and conditions of future capitalization, and other risks inherent to the Company’s business. While Management believes that the projections accurately reflect possible future results of GLOBAL H.O.M CARE SYSTEMS, INC. ’ operations, those results cannot be guaranteed. v) General Economic Conditions The financial success of the Company may be sensitive to adverse changes in general economic conditions in the United States, such as recession, inflation, unemployment, and interest rates. Such changing conditions could reduce demand in the marketplace for the Company’s products.
Management
believes that the impending growth of the market, mainstream market acceptance and the targeted product line of GLOBAL H.O.M CARE SYSTEMS, INC.
will insulate the Company from excessive reduced
demand. Nevertheless, GLOBAL H.O.M CARE SYSTEMS, INC. has no control over these changes.
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V.
USE OF PROCEEDS 1 The Company seeks to raise minimum gross proceeds of $363,000,000 and maximum gross proceeds of $500,000,000 from the sale of Shares in this Offering. The Company intends to apply these proceeds substantially as set forth herein, subject only to reallocation by Management in the best interests of the Company.
APPLICATION OF PROCEEDS Offering Expenses (1)
$0
0%
$0
0%
Commissions (2)
$0
0%
$0
0%
$0
0%
$0
0%
$500,000,000
100%
$363,000,000
100%
$500,000,000
100%
$363,000,000
100%
Total Offering Expenses & Fees Net Offering Proceeds Total Application of Proceeds
1
A) Includes estimated memorandum preparation, filing, printing, legal, accounting and other fees and expenses related to the
Offering. B) This Offering is being sold by the Managing Members of the Company.
No compensatory sales fees or related
commissions will be paid to such Managing Members. Registered broker or dealers who are members of the FINRA and who enter into a Participating Dealer Agreement with the Company may sell units. Such brokers or dealers may receive commissions up to ten percent (10%) of the price of the Units sold.
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VI.
MANAGEMENT At the present time, two individuals are actively involved in the management of the Corporation. The Member Managers are: Robert J. Merritt President & Chairman and Robert B. Merritt Sr. Vice President.
VII.
MANAGEMENT COMPENSATION There is no accrued compensation that is due any member of Management. Each Manager will be entitled to reimbursement of expenses incurred while conducting Company business. Each Manager may also be a member in the Company and as such will share in the profits of the Company when and if revenues are disbursed. Management reserves the right to reasonably increase their salaries assuming the business is performing profitably and Company revenues are growing on schedule. Any augmentation of these salaries will be subject to the profitability of the Business and the effect on the Business cash flows.
VIII.
BOARD OF ADVISORS The Company has established a Board of Advisors, which includes highly qualified business and industry professionals.
The Board of Advisors will advise the
Management team in making appropriate decisions and taking effective action. However, the Board of Advisors will not be responsible for Management decisions and has no legal or fiduciary responsibility to the Company.
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OFFERING EFFECTIVE DATE IS MARCH 17,2015
DILUTION The purchasers of the Shares offered in this offering will experience an immediate and substantial dilution of their investments. There are 10,000 authorized Shares of the Company of which 0 Shares are currently issued and outstanding. The net tangible book value per Share of the Company’s ownership was approximately $0.001 at March 17, 2015. Net tangible book value per Share of ownership is equal to the Company’s total tangible assets less its total liabilities, divided by the total number of outstanding Shares of ownership. Upon completion of this Offering, the net tangible book value for the Shares, which are now outstanding, will be increased with corresponding dilution for the Shares sold to investors. The following reflects the dilution to be incurred by the investors. “Dilution” is determined by subtracting the net tangible book value per Shareholders Share after the Offering from the Offering price. If the expected maximum number of Shares offered hereby is sold, of which there can be no assurance, there will be 10,000 Shares of ownership outstanding with net tangible book value of approximately $0.25 per Share. This represents an immediate increase in net tangible book value from $0.001 to $0.25 per Share to existing shareholders and an immediate dilution of from $1.00 to $0.25 per Share to purchasers of Shares in this Offering.
IX.
CURRENT SHAREHOLDERS The following table contains certain information as of March 17,2015 as to the number of Shares beneficially owned by (i) each person known by the Company to own beneficially more than 5% of the Company’s Shares, (ii) each person who is a Managing Member of the Company, (iii) all persons as a group who are Managing Shareholders and/or Officers of the Company, and as to the percentage of the outstanding Shares held by them on such dates and as adjusted to give effect to this Offering.
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OFFERING EFFECTIVE DATE IS MARCH 17,2015
NAME
POSITION
Robert J. Merritt
X.
PRE-OFFERING
CEO
POST-OFFERING
100 %
66%
OPTION AGREEMENTS The Company has not entered into option agreements with the following individuals and companies allowing them to purchase Shares in the Company at a future date:
XI.
LITIGATION The Company is not presently a party to any material litigation, nor to the knowledge of Management is any litigation threatened against the Company, which may materially affect the business of the Company or its assets.
XII.
DESCRIPTION OF SHARES The Company is offering a minimum of 7,260 and a maximum of 10,000 Shares at a price of $50,000 per Share, $.001 par value per Share. Upon completion of the Offering between 7,260 and 10,000 Shares will be outstanding. The Shares of ownership are equal in all respects, and upon completion of the Offering, the Shares will comprise the only representation of ownership that the Company will have issued and outstanding to date, upon close of the Offering. Each member is entitled to one vote for each Share held on each matter submitted to a vote of the shareholders.
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Shares are not redeemable and do not have conversion rights. The Shares currently outstanding are, and the Shares to be issued upon completion of this Offering will be, fully paid and non-assessable. In the event of the dissolution, liquidation or winding up of the Company, the assets then legally available for distribution to the shareholders will be distributed ratably among such shareholders in proportion to their Shares. Shareholders are only entitled to profit distributions proportionate to their Shares of ownership when and if declared by the Managing Shareholders out of funds legally available therefore.
The Company to date has not given any such profit
distributions. Future profit distribution policies are subject to the discretion of the Managing Shareholders and will depend upon a number of factors, including among other things, the capital requirements and the financial condition of the Company.
XIII.
TRANSFER AGENT AND REGISTRAR The Company will act as its own transfer agent and registrar for its Shares of ownership.
XIV.
PLAN OF PLACEMENT The Shares are offered directly by the Managing Shareholders of the Company on the terms and conditions set forth in this Memorandum. FINRA brokers and dealers may also offer Shares. The Company is offering the Shares on a “best efforts” basis. The Company will use its best efforts to sell the Shares to investors. There can be no assurance that all or any of the Shares offered, will be sold. a) Escrow of Subscription Funds Commencing on the date of this Memorandum all funds received by the Company in full payment of subscriptions for Shares will be deposited in an
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escrow account. The Company has set a minimum offering proceeds figure of $363,000,000 for this Offering. The Company has established an Investment Holding Account with TD BANK, 1130 Whitehorse Hamilton Square Rd. Hamilton, NJ 08690, into which the minimum offering proceeds will be placed. At least 20 Shares must be sold for $1,000,000 before such proceeds will be released from the escrow account and utilized by the Company.
After the
minimum number of Shares are sold, all subsequent proceeds from the sale of Shares will be delivered directly to the Company and be available for its use. Subscriptions for Shares are subject to rejection by the Company at any time. b) How to Subscribe for Shares A purchaser of Shares must complete, date, execute, and deliver to the Company the following documents, as applicable. All of which are included as part of the Investor Subscription Package: Exhibit A
INSTRUCTIONS TO SUBSCRIBERS and SUBSCRIPTION AGREEMENT: Review, sign and execute Subscription Agreement.
Exhibit B
INVESTOR QUESTIONNAIRE: Review, sign and execute the Investor Questionnaire.
Exhibit C
ERISA PLAN
Exhibit D
ANTI MONEY LAUNDERING ( Patriot Act)
Exhibit E
BUSINESS PLAN
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Copies of all the above referenced documents are included with this Private Placement Memorandum. For discussion of the actions of the Company upon receipt of a properly completed request to invest by a Subscriber, please see “TERMS OF THE OFFERING.” H.O.M
Such Investor should include his check made payable to GLOBAL
CARE SYSTEMS, INC., along with the subscription agreement, note, and
investor questionnaire. Delivery of the documents referred to above, together with a check to the Company should be addressed to the Company as follows:
GLOBAL H.O.M CARE SYSTEMS, INC.
1605 Cumberland Station Blvd., Madison, TN 37115. XV.
ADDITIONAL INFORMATION Each prospective investor may ask questions and receive answers concerning the terms and conditions of this offering and obtain any additional information which the Company possesses, or can acquire without unreasonable effort or expense, to verify the accuracy of the information provided in this Memorandum. Please contact: ATTN: Mr. Justyn Wielenta, Investor Relations 508 Whitehorse Mercerville, Hamilton, NJ 08610 609 570 9369 Phone / 609 570 9672 Fax / Email:
[email protected]
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EXHIBIT A
SUBSCRIPTION AGREEMENT
GLOBAL H.O.M CARE SYSTEMS, INC.
Gentlemen: You have informed the undersigned (the “Purchaser”) that GLOBAL H.O.M CARE SYSTEMS, INC. , a Nevada corporation, (the “Company”) wishes to raise a minimum of Three Hundred Sixty Three Million Dollars ($363,000,000) and a maximum of Five Hundred Million Dollars ($500,000,000) from various persons by selling up to 10,000 Shares of ownership, $0.001 par value (the “Shares”), at a price of Fifty Thousand Dollars ($50,000) per Share. I have received, read, and understand the Limited Offering Memorandum dated March 17,2015 (the “Memorandum”). I further understand that my rights and responsibilities as a Purchaser will be governed by the terms and conditions of this Subscription Agreement, the Memorandum and the Operating Agreement of GLOBAL H.O.M CARE SYSTEMS, INC. .
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I understand that you will rely on the following information to confirm that I am an “Accredited Investor”, as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), or one of 35 Non-Accredited Investors that will be allowed to purchase Shares in this Offering (subject to Company approval), and that I am qualified to be a Purchaser. This Subscription Agreement is one of a number of such subscriptions for Shares. By signing this Subscription Agreement, I offer to purchase and subscribe from the Company the number of Shares set forth below on the terms specified herein. The Company reserves the right, in its complete discretion, to reject any subscription offer or to reduce the number of Shares allotted to me. If this offer is accepted, the Company will execute a copy of this Subscription Agreement and return it to me. I understand that commencing on the date of this Memorandum all funds received by the Company in full payment of subscriptions for Shares will be deposited in an Investment Holding Account. The Company has set a minimum offering proceeds figure of $363,000,000 for this Offering. The Company has established an Investment Holding Account with : TD BANK, 1130 Whitehorse Hamilton Square Rd. Hamilton, NJ 08690,
, into which the minimum offering proceeds will be placed. At least 20 Shares must be sold for $1,000,000 before such proceeds will be released from the holding account and utilized by the Company. After the minimum number of Shares are sold, all proceeds from the sale of Shares will be delivered directly to the Company and be available for its use. 1. Accredited Investor. I am an Accredited Investor because I qualify within one of the following categories: Please Check The Appropriate Category _____ $1,000,000 Net Worth. A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000, excluding the value of my real estate residence. _____ $200,000/$300,000 Income. A natural person who had an individual income in excess of $200,000 (including contributions to qualified employee benefit plans) or joint income with such person’s spouse in excess of $300,000 per
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year in each of the two most recent years and who reasonably expects to attain the same individual or joint levels of income (including such contributions) in the current year. _____ Director or Officer of Issuer. Any director or executive officer of the Company _____ All Equity Owners In Entity Are Accredited. An entity, (i.e. corporation, partnership, trust, IRA, etc.) in which all of the equity owners are Accredited Investors as defined herein. _____ Corporation. A corporation not formed for the specific purpose of acquiring the Shares offered, with total assets in excess of $5,000,000. _____ Other Accredited Investor. Any natural person or entity which qualifies as an Accredited Investor pursuant to Rule 501(a) of Regulation D promulgated under the Act; specify basis for qualification: ________________________________________________________________________ _________________________________________________________________________
______One of 35 Non-Accredited Investors that may be allowed to invest in the offering
2. Representations and Warranties. I represent and warrant to the Company that: (A) I (i) have adequate means of providing for my current needs and possible contingencies and I have no need for liquidity of my investment in the Shares, (ii) can bear the economic risk of losing the entire amount of my investment in Shares, and (iii) have such knowledge and experience that I am capable of evaluating the relative risks and merits of this investment; (iv) the purchase of Shares is consistent, in both nature and amount, with my overall investment program and financial condition. (B) The address set forth below is my true and correct residence, and I have no intention of becoming a resident of any other state or jurisdiction.
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(C) I have not utilized the services of a “Purchaser Representative” (as defined in Regulation D promulgated under the Securities Act) because I am a sophisticated, experienced investor, capable of determining and understanding the risks and merits of this investment. (D) I have received and read, and am familiar with the Offering Documents, including the Memorandum, Subscription Agreement, and Operating Agreement of the Company. All documents, records and books pertaining to the Company and the Shares requested by me, including all pertinent records of the Company, financial and otherwise, have been made available or delivered to me. (E) I have had the opportunity to ask questions of and receive answers from the Company’s officers and representatives concerning the Company’s affairs generally and the terms and conditions of my proposed investment in the Shares. (F) I understand the risks implicit in the business of the Company. Among other things, I understand that there can be no assurance that the Company will be successful in obtaining the funds necessary for its success. If only a fraction of the maximum amount of the Offering is raised, the Company may not be able to expand as rapidly as anticipated, and proceeds from this Offering may not be sufficient for the Company’s long term needs. (G) Other than as set forth in the Memorandum, no person or entity has made any representation or warranty whatsoever with respect to any matter or thing concerning the Company and this Offering, and I am purchasing the Shares based solely upon my own investigation and evaluation. (H) I understand that no Shares have been registered under the Securities Act, nor have they been registered pursuant to the provisions of the securities or other laws of applicable jurisdictions.
(I) The Shares for which I subscribe are being acquired solely for my own account, for investment and are not being purchased with a view to or for their resale or distribution. In order to induce the Company to sell Shares to me, the Company will have no obligation to recognize the ownership, beneficial or otherwise, of the Shares by anyone but me. (J) I am aware of the following: (i)The Shares are a speculative investment which involves a high degree of risk; and
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(ii) My investment in the Shares is not readily transferable; it may not be possible for me to liquidate my investment.
(iii) The financial statements of the Company have merely been compiled, and have not been reviewed or audited.
(iv)There are substantial restrictions on the transferability of the Shares registered under the Securities Act; and (v) No federal or state agency has made any finding or determination as to the fairness of the Shares for public investment nor any recommendation or endorsement of the Shares;
(K) Except as set forth in the Memorandum, none of the following information has ever been represented, guaranteed, or warranted to me expressly or by implication, by any broker, the Company, or agents or employees of the foregoing, or by any other person: (i) The appropriate or exact length of time that I will be required to hold the Shares; (ii) The percentage of profit and/or amount or type of consideration, profit, or loss to be realized, if any, as a result of an investment in the Shares; or (iii) That the past performance or experience of the Company, or associates, agents, affiliates, or employees of the Company or any other person, will in any way indicate or predict economic results in connection with the purchase of Shares; (iv)The amount of dividends or distributions that the Company will make;
(L) I have not distributed the Memorandum to anyone, no other person has used the Memorandum, and I have made no copies of the Memorandum; and (M) I hereby agree to indemnify and hold harmless the Company, its managers, directors, and representatives from and against any and all liability, damage, cost or expense, including reasonable attorneys fees, incurred on account of or arising out of:
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(i) Any inaccuracy in the declarations, representations, and warranties set forth above; (ii) The disposition of any of the Shares by me which is contrary to the foregoing declarations, representations, and warranties; and (iii) Any action, suit or proceeding based upon (1) the claim that said declarations, representations, or warranties were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company; or (2) the disposition of any of the Shares. (N) By entering into this Subscription Agreement, I acknowledge that the Company is relying on the truth and accuracy of my representations. The foregoing representation and warranties are true and accurate as of the date hereof, shall be true and accurate as of the date of the delivery of the funds to the Company and shall survive such delivery. If, in any respect, such representations and warranties are not true and accurate prior to delivery of the funds, I will give written notice of the fact to the Company, specifying which representations and warranties are not true and accurate and the reasons therefore. 3.
Transferability. I understand that I may sell or otherwise transfer my Shares only if registered
under the Securities Act or I provide the Company with an opinion of counsel acceptable to the Company to the effect that such sale or other transfer may be made in absence of registration under the Securities Act. I have no right to cause the Company to register the Shares. Any certificates or other documents representing my Shares will contain a restrictive legend reflecting this restriction, and stop transfer instructions will apply to my Shares. 4. Indemnification. I understand the meaning and legal consequences of the representations and warranties contained in Paragraph 2 hereof, and I will indemnify and hold harmless the Company, its officers, directors, and representatives involved in the offer or sale of the Shares to me, as well as each of the managers and representatives, employees and agents and other controlling persons of each of them, from and against any and all loss, damage or liability due to or arising out of a breach of any representation or warranty of mine contained in this Subscription Agreement. 5. Revocation. I will not cancel, terminate or revoke this Subscription Agreement or any agreement made by me hereunder and this Subscription Agreement shall survive my death or disability.
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6.
Termination of Agreement.
If this subscription is rejected by the Company, then this
Subscription Agreement shall be null and void and of no further force and effect, no party shall have any rights against any other party hereunder, and the Company shall promptly return to me the funds delivered with this Subscription Agreement. 7. Miscellaneous. (a) This Subscription Agreement shall be governed by and construed in accordance with the substantive law of the State of Nevada. (b) This Subscription Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only in writing and executed by all parties. (c) By Purchasing the Shares in GLOBAL H.O.M CARE SYSTEMS, INC. , INC. I hereby agree to the terms and provisions of the Operating Agreement of the INC. – as included in this Memorandum as Exhibit B. I have hereby read and understand the Operating Agreement and understand how an INC. functions as a corporate entity. 8. Ownership Information. Please print here the total number of Shares to be purchased, and the exact name(s) in which the Shares will be registered. Total Shares:_________________ Name(s):_____________________________________________________________ _____ Single Person _____ Husband and Wife, as community property _____ Joint Tenants (with right of survivorship) _____ Tenants in Common _____ A Married Person as separate property _____ Corporation or other organization _____ A Partnership _____ Trust _____ IRA
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_____ Tax-Qualified Retirement Plan (i) Trustee(s)/ Custodian_________________________________________ (ii) Trust Date_________________________________________________ (iii) Name of Trust_____________________________________________ (iv) For the Benefit of___________________________________________
_____ Other:________________________________________________________ (please explain)
Social Security or Tax I.D.#:____________________________________________ Residence Address: _____________________________________________________________________ Street Address _____________________________________________________________________ City
State
Zip
Mailing Address: (Complete only if different from residence) _____________________________________________________________________ Street Address (If P. O. Box, include address for surface delivery if different than residence) _____________________________________________________________________ City
State
Zip
Phone Numbers Home: (_______)_____________________
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Business: (_______)___________________ Facsimile: (_______)___________________ ______________ Purchaser’s Initials 9. Date and Signatures. Dated ______________________________, 2015
Signatures
Purchaser Name (Print)
____________________________
____________________________
___________________________
____________________________
(Each co-owner or joint owner must sign - Names must be signed exactly as listed under “Purchaser Name”)
ACCEPTED: GLOBAL H.O.M CARE SYSTEMS, INC. By:________________________________
Dated:______________________, 2015
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EXHIBIT B
INVESTOR SUITABILITY QUESTIONNAIRE To: Prospective purchasers of Promissory Notes (the “Notes”) offered by GLOBAL H.O.M CARE SYSTEMS, INC (the “Company”). The Purpose of this Questionnaire is to solicit certain information regarding your financial status to determine whether you are an “Accredited Investor,” as defined under applicable federal and state securities laws, and otherwise meet the suitability criteria established by the Company for purchasing Notes. This questionnaire is not an offer to sell securities. Your answers will be kept as confidential as possible. You agree, however, that this Questionnaire may be shown to such persons as the Company deems appropriate to determine your eligibility as an Accredited Investor or to ascertain your general suitability for investing in the Notes. Please answer all questions completely and execute the signature page A. Personal 1. Name:___________________________________________________ 2. Address of Principal Residence:_________________________________ ___________________________________________ County:__________ 3. Residence Telephone: (______)_____________________ 4. Where are you registered to vote?________________________________
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5. Your driver’s license is issued by the following state:_________________ 6. Other Residences or Contacts: Please identify any other state where you own a residence, are registered to vote, pay income taxes, hold a driver’s license or have any other contacts, and describe your connection with such state: ___________________________________________________________ ___________________________________________________________ 7. Please send all correspondence to: (A)_____ Residence Address (as set forth in item A-2) (B)_____ Business Address (as set forth in item B-1) 8. Date of Birth:_________________________________________________ 9. Citizenship:___________________________________________________ 10. Social Security or Tax I.D. #:_____________________________________ B. Occupations and Income 1. Occupation:____________________________________________ (a) Business Address:_________________________________ __________________________________________________ (b) Business Telephone Number: (______)_________________ 2. Gross income during each of the last two years exceeded: (1)_____$25,000
(2)_____$50,000
(3)_____$100,000
(4)_____$200,000
3. Joint gross income with spouse during each of the last two years exceeded $300,000 (1)_____Yes
(2)_____No
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4. Estimated gross income during current year exceeds: (1)_____$25,000
(2)_____$50,000
(3)_____$100,000
(4)_____$200,000
5. Estimated joint gross income with spouse during current year exceeds $300,000 (1)_____Yes
(2)_____No
C. Net Worth 1. Current net worth or joint net worth with spouse (note that “net worth” includes all of the assets owned by you and your spouse in excess of total liabilities, including the fair market value, less any mortgage, of your principal residence.) (1)_____$50,000-$100,000 (2)_____$100,000-$250,000 (3)_____$250,000-$500,000 (4)_____$500,000-$750,000 (5)_____$750,000-$1,000,000 (6)_____over $1,000,000 2. Current value of liquid assets (cash, freely marketable securities, cash surrender value of life insurance policies, and other items easily convertible into cash) is sufficient to provide for current needs and possible personal contingencies: (1)_____Yes
(2)_____No
D. Affiliation with the Company Are you a director or executive officer of the Company? (1)_____Yes
(2)_____No
E. Investment Percentage of Net Worth If you expect to invest at least $100,000 in Notes, does your total purchase price exceed 10% of your net worth at the time of sale, or joint net worth with your spouse. (1)_____Yes
(2)_____No
F. Consistent Investment Strategy Is this investment consistent with your overall investment strategy? (1)_____Yes
(2)_____No
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G. Prospective Investor’s Representations The information contained in this Questionnaire is true and complete, and the undersigned understands that the Company and its counsel will rely on such information for the purpose of complying with all applicable securities laws as discussed above. The undersigned agrees to notify the Company promptly of any change in the foregoing information which may occur prior to any purchase by the undersigned of securities from the Company. Prospective Investor: __________________________________ Signature
Date:________________, 2015
__________________________________ Signature (of joint purchase if purchase is to be made as joint tenants or as tenants in common)
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EXHIBIT C
ERISA............................................................ Each fiduciary of a pension, profit-sharing or other employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), (a Plan ) should consider the fiduciary standards of ERISA in the context of the Plans particular circumstances before authorizing an investment in the Securities. Accordingly, among other factors, the fiduciary should consider whether the investment would satisfy the prudence and diversification requirements of ERISA and would be consistent with the documents and instruments governing the Plan. In addition, we and certain of our subsidiaries and affiliates, including ______________________(Investor Company Name,) may be considered a party in interest within the meaning of ERISA, or a disqualified person within the meaning of the Internal Revenue Code of 1986, as amended (the Code), with respect to many Plans, as well as many individual retirement accounts and Keogh plans (also Plans). Prohibited transactions within the meaning of ERISA or the Code would likely arise, for example, if the Securities are acquired by or with the assets of a Plan with respect to which_________________________ (Investor Company Name) or any of its affiliates is a service provider or other party in interest, unless the Securities are acquired pursuant to an exemption from the prohibited transaction rules. A violation of these prohibited transaction rules could result in an excise tax or other liabilities under ERISA and/or Section 4975 of the Code for such persons, unless exemptive relief is available under an applicable statutory or administrative exemption. The U.S. Department of Labor has issued five prohibited transaction class exemptions (PTCEs) that may provide exemptive relief for direct or indirect prohibited transactions resulting from the purchase or holding of the Securities. Those class exemptions are PTCE
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96-23 (for certain transactions determined by in-house asset managers), PTCE 95-60 (for certain transactions involving insurance company general accounts), PTCE 91-38 (for certain transactions involving bank collective investment funds), PTCE 90-1 (for certain transactions involving insurance company separate accounts) and PTCE 84-14 (for certain transactions determined by independent qualified asset managers). In addition, ERISA Section 408(b)(17) provides a limited exception for the purchase and sale of securities and related lending transactions, provided that neither the issuer of the securities nor any of its affiliates have or exercise any discretionary authority or control or render any investment advice with respect to assets of any Plan involved in the transaction and provided further that the Plan pays no more than adequate consideration in connection with the transaction (the so-called service provider exemption ). Because we may be considered a party in interest with respect to many Plans, the Securities may not be purchased, held or disposed of by any Plan, any entity whose underlying assets include plan assets by reason of any Plan s investment in the entity (a Plan Asset Entity ) or any person investing plan assets of any Plan, unless such purchase, holding or disposition is eligible for exemptive relief, including relief available under PTCEs 96-23, 95-60, 91-38, 90-1, 84-14 or the service provider exemption or such purchase, holding or disposition is otherwise not prohibited. Any purchaser, including any fiduciary purchasing on behalf of a Plan, transferee or holder of the Securities will be deemed to have represented, in its corporate and its fiduciary capacity, by its purchase and holding of the Securities that either (a) it is not a Plan or a Plan Asset Entity and is not purchasing such Securities on behalf of or with plan assets of any Plan, or with any assets of a governmental or church plan that is subject to any federal, state, local or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA of Section 4975 of the Code ( Similar Law ) or (b) its purchase, holding and disposition are eligible for exemptive relief or such purchase, holding and disposition are not prohibited by ERISA or Section 4975 of the Code or any Similar Law. Under ERISA, assets of a Plan may include assets of certain commingled vehicles and entities in which the Plan has invested (including, in certain cases, the general account of an insurance company). Accordingly, commingled vehicles and entities which include assets of a Plan must ensure that one of the foregoing exemptions is available. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in nonexempt prohibited transactions, it is particularly important that fiduciaries or other persons considering purchasing the Securities on behalf of or with plan assets of any Plan consult with their counsel regarding the availability of exemptive relief under any available exemptions, such as PTCEs 96-23, 95-60, 91-38, 90-1 or 84-14 or the service provider exemption. Purchasers of the Securities have exclusive responsibility for ensuring that their purchase, holding and disposition of the Securities do not violate the prohibited transaction rules of ERISA or the Code or any Similar Law. The sale of any Securities to any Plan or plan subject to Similar Law is in no respect a representation by us or any of our affiliates or representatives that such an investment meets all relevant legal requirements
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with respect to investments by plans generally or any particular plan, or that such an investment is appropriate for plans generally or any particular plan.
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EXHIBIT D
ANTI-MONEY LAUNDERING CERTIFICATION FORM FOR ENTITIES THAT INVEST ON ‘BEHALF OF THIRD PARTIES’ The undersigned, being the
of Insert Title
a Insert Name of Entity
organized under the laws of __ Insert Type of Entity
. Insert Jurisdiction of Organization
(the "Subscriber Entity"), does hereby certify on behalf of the Subscriber Entity that it is aware of the requirements of the USA PATRIOT Act of 2001, the regulations administered by the U.S. Department of Treasury's Office of Foreign Assets Control and the anti-money laundering laws and regulations as established in its jurisdiction of organization (collectively, the "anti-money laundering/OFAC laws"). The Subscriber Entity has anti-money laundering policies and procedures in place reasonably designed to verify the identity of the beneficial owners of the investment in the Partnership and their sources of funds. Such policies and procedures are properly enforced and are consistent with the anti-money laundering/OFAC laws such that the Partnership may rely on this Certification. The Subscriber Entity hereby represents to the Partnership that, to the best of its knowledge, the beneficial owners of the investment in the Partnership are not individuals, entities or countries that may subject the Partnership to criminal or civil violations of anti-money laundering/OFAC laws. The Subscriber Entity has read the Subscriber's Declarations in the Partnership's Subscription Documents. The Subscriber Entity has taken all reasonable steps to ensure that the owners of the investment in the Partnership are able to certify to such representations. The Subscriber Entity agrees promptly to notify the Partnership should the Subscriber Entity have any questions relating to any of the investors or become aware of any changes in the representation set forth in this Certification. Date: By: Name: Title:
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EXHIBIT E
BUSINESS PLAN
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Global HOM Care Systems, Inc Gadson Garden Estates, LLC Hospital Outpatient Module & Homecare Delivery Services
Business and Marketing Plan
Non-Disclosure and Confidentiality Agreement I agree that reading of this Business Plan is strictly limited to me as authorized by Robert J Merritt and GHCS. I agree that I shall not divulge or reproduce the content of this Business Plan without the written consent of the Company. I understand that any information provided in this Business Plan is in all respects confidential in nature, other than the information which is in the public domain through other means. I agree not to disclose any information without the express written permission of Robert J Merritt and GHCS. Upon request, I will return this document to Robert J Merritt and Global HOM Care Systems. The Business Plan includes “forward looking statements and projections”. All such statements and projections within the Business Plan, other than statements of statistical fact, regarding GHCS’ strategies, plans, objectives and expectations are all forward-looking statements. Although GHCS believes that the projections reflected in this plan are reasonable at this time, it can give no assurance that these projections will prove to have been correct. This Business Plan is not a financing offer. It does not constitute an offer to sell or a solicitation to purchase.
Strategic Business and Marketing Plan
2
Disclaimer PLEASE NOTE: This confidential Business Plan (the “Plan”) pertains exclusively to the evaluation of investment opportunities. The Plan contains selected information pertaining to the business and operations of Global HOM Care Systems (“GHCS”) and any related enterprises, subsidiaries, and partnerships. The sole purpose of this Plan is to provide an overview of the various activities expected to be undertaken by GHCS. The information in this Plan has been provided by Robert J Merritt of Gadson Garden Estates (“GGE”) and its subsidiaries and affiliates. The Plan includes forward-looking information. Such information is based on assumptions as to future events that are inherently uncertain and subjective. Neither GHCS nor GGE makes any representation or warranty as to the attainability of such assumptions. It must be recognized that both GHCS’ nor GGE’s future performance is necessarily subject to a high degree of uncertainty and actual results cannot be projected. Offerees are expected to conduct their own investigation with regard to GHCS, GGE and their respective prospects, and to independently review and evaluate the merits of the Offering. Nothing contained herein is, or should be relied on as, a promise or representation as to the future performance of GHCS or GGE. It is important to note that unforeseeable circumstances, including but not limited to, changes in economic forecasts, changes in demand stemming from a slow-down of the economy, and other financial industry occurrences, may cause the investor to lose all or part of his investment. GHCS and GGE make no representation or guarantees as to the percentage or amount of investment that is subject to recovery by the investor. The Purchaser understands that this is an “at risk” investment and that as an “at risk” investment there can be no guarantee associated with this investment opportunity. GHCS and GGE shall make available upon request to any Offeree, prior to investing, the opportunity to ask questions of and to receive answers from representatives of GHCS or GGE concerning GHCS or GGE and the terms and conditions of the Offering. Offerees should not assume that such summaries are complete. Such summaries are qualified in their entirety by reference to the complete text of such agreements. GHCS and GGE will provide any relevant information in its possession upon request from Offerees or their advisors, and will obtain any additional relevant information to the extent GHCS and GGE possesses such information or can obtain it without unreasonable effort or expense.
This Package is for distribution only to persons reasonably believed to be sufficiently expert to understand the risks involved. Furthermore, because this Plan involves a broad scope of commercial and public works activities, it is for distribution only to persons reasonably believed to have sufficient expertise to understand both the operational activities involved in the venture as well as the financial risks associated with said activities.
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Contents
44
Gadson Garden Regional Plaza
45
Projected Market Value Analysis
5
1.0 Executive Summary
48 APPENDIX A : Hospital Outpatient Module (Business Plan)
6
Overview of Entire Venture
53
Company Description
7
1.1 The Services
55
MARKETING PLAN
11
1.2 Financing
56
Marketing Strategy
12
1.3 Management Team
57
Competition and Competitive Analysis
25
1.4 Sales Forecasts
60 COMPETITORS
26
1.5 Expansion Plan
61
GROWTH STRATEGY
27
2.0 Company and Financing Summary
62
Management Team
27
2.1 Registered Name and Corporate Structure
64
OPERATING BUDGET
27
2.2 Required Funds
65
FINANCIAL PROJECTIONS
28
2.3 Investor Equity
66 GHCS
28
2.4 Management Equity
66
SALES FORECAST 5-YEAR PROFORMA
28
2.5 Exit Strategy
67
Marketing Objectives
28
2.6 Investor Divestiture
71 Target(s)
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3.0 Senior & Veterans Housing
72 Image
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4.0 Strategic and Market Analysis
72 Promotion
30
4.1 Economic Outlook
72
32
4.2 Business Strategies
73 Publicity
33
4.3 Customer Profile
73 Advertising
33
4.4 Competition
73 Pricing
34
5.0 Marketing Plan and Strategies
74 Distribution
35
5.1 Pricing
74 Logistics
36 6.0 Organizational Plan and Personnel Summary 36
6.1 Corporate Organization
37
7.0 Financial Plan
38
7.1 Underlying Assumptions
38
7.2 Sensitivity Analysis
39
7.3 Source of Funds (for STAGE 1)
39
7.4 General Assumptions
40
7.5 Cash Flow Analysis
42
7.6 Breakeven Analysis
42
7.7 Business P & L Statement
Manufacturing Standards
74 Support 75
Competitive Analysis
76 Telemedicine 77
HOM Design Specifics
77
Component Parts & Features of the HOM
80
Compensation of Directors
81
Market Status
1.0 Executive Summary The purpose of this business plan is to raise a total of $363,000,000 for the development of Gadson Garden Estates, a five (5) part project in Barstow, CA that will be funded and implemented in three (3) primary sequential stages. The five (5) project components are: 1. Development of a 463-unit assisted living and veterans housing complex; 2. Development of a retail and commercial shopping plaza across the street from said 463 unit development; 3. Development of 822 upscale single-family residential homes surrounding an 18-hole tournament class golf course; 4. The acquisition of existing home care agencies that will be integrated with part 5; 5. Rolling out of a patent-pending technology called the Hospital Outpatient Module (“HOM”) and its affiliated Homecare Delivery Services (“HDS”).
The above projects and ventures will be owned and operated under the umbrellas of Global HOM Care Systems, Inc. and Gadson Garden Estates, collectively called (“the Company”). The Global HOM Care Systems, Inc. is a Nevada corporation and the Gadson Garden Estates is a California-based Limited Liability Company. Both entities were founded by Robert J. Merritt, who is also the creator of the Hospital Outpatient Module. Although these five projects are interrelated, they will be capitalized and initiated in three sequential stages according to either local mandate or their respective capacity for completion and production of near-term revenues. Each project can stand on its own. Gadson Garden Estates, LLC and each of the real estate ventures shall be divisions of Global HOM Care Systems, Inc.
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Overview of Entire Venture
STAGE 1 76.4 ACRES $133,000,000
STAGE 2 181+ ACRES $153,000,000
STAGE 3 36+ ACRES $77,000,000
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»» »» »» »» »» »» »» »» »»
43 Townhome Buildings - 100%
»» »» »» »» »» »» »» »» »»
HOM/HDS - 100%
»» »» »» »» »» »» »» »» »»
Shopping Plaza - 100%
33 Assisted Living Buildings - 100% Clubhouse/Recreation Center - 100% Linear Perimeter Wall - 100% 2 Security Gates - 100% 3 Swimming Pools - 100% 2 Maintenance Buildings - 100% Roads and Infrastructure - 33.3% Working Capital Reserves
822 SFR Homes & Cottages - 100% Acquisition of Home Care Agency - 100% 18-Hole Golf Course - 100% Convenient Store - 100% Day Care Facility - 100% Service/Retail - 100% Restaurant - 100% Roads and Infrastructure - 33.3%
Anchor Tenant - 100% 120 Beds/Skilled Nursing Home - 100% 177 Affordable Housing Units - 100% Medical Office Spaces - 100% Auto Service Center/Gas Station - 100% 300 Bin Self Storage - 100% Other Retail - 100% Roads and Infrastrusture - 33.3%
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1.1 The Services STAGE 1 Townhomes, ALFs, Guard Gates, Linear Wall, REC Center & Pool The initial and near-term revenue stream will be from the construction and operation of a 31.4 acre senior living townhome community consisting of 43 townhome buildings. These townhomes are mandated to be the 1st stage of the overall development by the City of Barstow in compliance with the terms of the Disposition and Development Agreement with the city. Along with the townhome buildings, 33 assisted living facility buildings, 2 security gates, the perimeter linear wall, the recreational center/clubhouse and a swimming pool will be constructed simultaneously within Stage 1.
STAGE 2 Home Care Agency Acquisition(s) with HOM/HDS Integration, Upscale Single Family Residences & 18-hole Golf Course Community The second phase of the businesses is the acquisition of the existing home care agency(s) that are currently producing over $2 million in EBITDA, construction of an 18-hole golf course surrounded by 822 upscale single family residential homes. Below is the master site plan for the 822 upscale single family homes that will meander in and around an 18-hole luxurious golf course. Across the street (Country Club Drive) from the golf course, and at the lower end of the site plan, is the proposed site of the senior-veterans housing development, which can be seen on the rendering below.
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The 41+acre site across US Rt. 66 is the location for the shopping plaza mentioned above and more fully described “Stage 3” on page 8.
Home Care Agency(s) Acquisition with HOM/HDS Introduction This is a hybrid combination of an existing business with a new technology that consists of coupling the existing home care agencies with the introduction of the Hospital Outpatient Module (“HOM”) and its accompanying Homecare Delivery Services (“HDS”), a patent-pending homecare monitoring concept that will complement all existing home and healthcare agencies. The HOM and HDS is a new and untried concept that will bring a level of care to the agencies that will be unmatched in the industry; that will eventually render nursing homes obsolete and have the effect of reducing the country’s health care budget significantly. The general business model includes the acquisition of existing home care agencies that are currently operating with a defined and measured history. Each agency will be well-established with a trained staff and management in place, including full accreditation and appropriate local licensure for Medicare and Medicaid reimbursement, and a positive cash flow. To complement and grow the home care agency, the HOM/HDS concept (http://www.hauserpro.com/hom) will become an integral part of the newly acquired home care agencies. We believe integration of HOM/HDS will not only increase levels of care but also significantly reduce costs and increase revenues. Integration of the HOM/HDS system into these existing centers will prove out the concept that will be a significant catalyst and disruptive technology in the home healthcare and senior living industries. The acquisition of existing home care agencies is the key and catalyst for this new and hybrid business venture. The first acquisition will be the American Private Duty agency in the Harlingen, TX, and will be used to introduce and demonstrate the HOM & HDS concepts. The agency has been serving the Rio Grande Valley since 1995 and has emerged as one of the leading multidisciplinary agencies in Cameron, Willacy, and Hidalgo Counties. The existing home care agencies that are being considered for acquisition are fully operational with trained and seasoned staff in place that are willing to continue with new ownership. The Harlingen, TX agency is the most readily adaptable to the Company’s business model. Their service area spans a 50 mile radius from their location, allowing them to cover all of the Rio Grande Valley. The company has two separate corporations: Vicki Roy Home Health Service, LP provides Personal Assistance Services (PAS), which is funded through the state Medicaid program; and Vicki Roy Home Health Care that provides skilled nursing through the Medicare program. Approximately 90% of their business comes from Medicaid and 10% is from Medicare. The current average PAS (Medicaid) census is about 800 clients and the Medicare census is 70. Referrals come from a number of doctors, discharge planners, case managers and word of mouth.
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The sellers feel (and we agree) there are ample opportunities for growth, especially because there have been a number of smaller agencies in the area that have recently shut down. With increased marketing, the company could easily see an immediate increase in business. The staff consists of approximately 600 employees, many of which have been there since the company was established. They are highly capable of running the company without much assistance from the owner, and they are all available to continue working for the company. Additionally, because they service a large number of Spanish speaking clients, most of their caregivers and nurses are bilingual. The current owner is looking to retire but will assist during a short transitional period as needed. The asking price for this opportunity is $10 Million. The HMO/HDS technology will not be introduced until after management has spent at least a year installing the appropriate administrative and operating procedures and systems; and incorporating them with the existing home care agency following the completion and demonstration of a fully functioning prototype of the HOM. The table below is a 5-year projection of the home care agency with the introduction of the HOM/HDS system starting in the 2016 operating year.
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STAGE 3 Shopping Plaza The third section of the business plan, namely a large anchored shopping center, will further compliment the residential accommodations and services being offered by the existing businesses.
Income Centers Anchor Tenants — There will be multiple anchor tenants at the Gadson Garden Regional Plaza. A reputable marketing firm will be engaged to investigate and make recommendations for the most suitable and available mid-size anchor tenants for the plaza. The initial premise will consider the more than 600 employees that will be hired at the nearby Wal-Mart distribution center; the 300+ employees that will be employed at the Gadson Garden Estates assisted living resort; the planned golf & resort community with it 800+ single family homes across from the assisted living development, and the entire southwest section of Barstow. Skilled Nursing Home — The skilled nursing home will have a complement of at least 120 beds, including 20 designated for patients suffering with dementia or Alzheimer’s disease. Although the SNF will be specifically for the residents at the GGE, it will also serve the entire Apple Valley and San Bernardino County regions. The bed rooms will be designed with a floor plan that is closely related to a residential suite at in a typical pavilion at the GGE assisted living development. Apartment (affordable housing) — The 177-unit apartment complex will be positioned in the middle of the construction site and will provide living quarters for many of the employees who will be working at the GGE across the street; but will also be available for many of the employees that will be employed at the Wal-Mart distribution center, which will be located less than a quarter of mile away. There will also be several retail shops and facilities on the lower level of the apartment complex, such as cleaners, laundry mat, beauty salon and barber shop, day care and teenager rec room. Medical Office Spaces — Because of the concentration of senior citizens, the medical spaces will be available to those health care and medical professionals who specialize in medical care for that segment of the population. Auto Service Center — A full services auto service station will be situated at a convenient location near the corner of Country Club Drive and Main Street, fronting directly on US Rt. 66 (Main Street). An automatic car wash service will be attached to the center and open to the general public.
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Self-storage Facility — A 300 bin self-storage facility will be placed at the rear end of the site, and will be made available to each resident at the GGE to accommodate their personal belongs that will not be allowed at their pavilion. Other Retail Spaces — A variety of other retail shops and businesses will be judiciously spread throughout the plaza, including a bank outlet, fast-food restaurant, upscale café, bakery, Starbuck’s, and others.
1.2 Financing Mr. Merritt is seeking to raise $133,000,000 from investors for STAGE 1 of the total project cost. The terms, dividend payouts, and aspects of the deal are based on prudent projections over a period of 3 to 5 years. This business plan assumes that the composite of investors will receive 33% of the Company’s stock, a regular stream of dividends, and a seat on the board of directors. The financing will be used for the following: »» 43 Townhome Buildings »» 33 Assisted Living Buildings »» Clubhouse/Recreation Center »» Linear Perimeter Wall »» 2 Security Gates »» 3 Swimming Pools »» 2 Maintenance Buildings »» Roads and Infrastructure
Mr. Merritt has expended well over $3 million toward the ownership of the land and these ventures to-date.
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1.3 Management Team Day To Day Operations Integral Senior Living (www.islllc.com) will assume the day-to-day administration of the senior housing development. Integral Senior Living is headquartered in Carlsbad, CA., and manages a progressive selection of senior residences to meet the growing needs of today’s aging population. It currently manages 55 independent, assisted living and memory care properties throughout California, Arizona, Utah, Idaho, Texas, Colorado, Oregon, Washington, Illinois, Michigan, Alabama, Oklahoma, Tennessee and Florida. It is ranked the 18th largest senior living provider in the U.S. according to Senior Housing News. ISL is founded on a care philosophy that fosters dignity and respect for residents and promotes their independence and individuality. The dedicated staff at each community is trained to maintain the highest standards of senior care services. The Company and its conceptual parts were founded by Mr. Merritt, who is a trained hospital administrator with over 20 years in the health care field and another 25 years of experience in various real estate ventures. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
Organization Global HOM Care Systems, Inc Gadson Garden Estates, LLC
MANAGEMENT Directors, Executive Officers and Key Employees Our directors, executive officers and key employees are listed below. The Board of Directors to the Company is the principal owners and determines the number of directors. All directors hold office until the next annual meeting of the Board or until their successors have been duly elected and qualified. Officers are hired by the Board of Directors and their terms of office are, except to the extent governed by employment contract, at the discretion of the Board. The Executive Committee has a compensation committee, which provides recommendations concerning salaries and other compensation to be paid to the executive officers, and is responsible for administering an Equity Incentive Plan. Although most of the individuals listed below have will not be hired until the Company is fully capitalized, each of them has been offered the respective positions. Board of Directors/Owners Robert J. Merritt President & Chairman William E Rising Director Solomon T Bennett Director Gladys Jackson, Pastor Director Robert B. Merritt Sr. Vice President Dr. Darcey H. Merritt Treasurer Open seat Investors Representative David de Castro Legal Counsel Open seat CPA Open seat Patent Attorney Open seat
Executive & Management Committee Robert J Merritt
Designer of the GGE Senior-Veterans housing development and creator of the Hospital Outpatient Module & Homecare Delivery Services
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Mr. Merritt is the inventor of the Hospital Outpatient Module and designer of the accompanying Homecare Delivery Service. He is a former hospital administrator with a master’s degree in hospital and nursing administration from the Yale University program in Public Health. Prior to taking the position as the first executive director for the National Association of Health Services Executives, he was the Special Assistant to the President of the New York City Health and Hospital Corporation. Mr. Merritt has received several awards and recognition for his creativity and skills, both during his training and in the field of health care, starting with the undergraduate award as the Most Outstanding Student of the Graduating Class from the New Haven University. Early into his career, the U.S. Jaycees christened him with the “Outstanding Young Men of America“ award in 1974. He was then listed in “Men of Achievement,” Cambridge, England. 13
Richard Umbdenstock President and Chief Executive Officer American Hospital Association
Roy L Hawkins, FACHE President, National Association of Health Services Executives,
Administrator, JohnsonWillis Hospital, Richman, VA
Pamela Cipriano PhD, RN, NEA-BC, FAAN
President, American Nurses Associations
Strategic Business and Marketing Plan
Richard J. Umbdenstock became president and chief executive officer of the American Hospital Association (AHA) on January 1, 2007. Previously, he was the elected AHA Board Chair in 2006. The AHA leads, represents and serves more than 5,000 member hospitals, health systems and other health care organizations, and 43,000 individual members. Umbdenstock’s career includes experience in hospital administration; health system governance, management and integration; association governance and management; HMO governance; and health care governance consulting. He has written several books and articles for the health care board audience and has authored national survey reports for AHA, HRET and ACHE. He received a B.A. degree in Politics from Fairfield University (CT), and a master’s in Health Services Administration from SUNY- Stony Brook. He is a Fellow of ACHE. Umbdenstock is Vice Chair of the National Quality Forum, serves on the Board of Enroll America, and co-chairs the CAQH Provider Council. He also serves on the National Priorities Partnership and the Center for Transforming Advanced Care Steering Committee. Hawkins previously served as the COO and deputy director of the 415-bed James A. Haley Veterans Hospital in Tampa, Fla. He spent 15 years with the VA system and has been recognized at both the regional and national levels for excellence in leadership, being selected as the 2011 Young Healthcare Executive of the Year by the National Association of Health Service Executives. He also was named by the Orlando Business Journal as a “Top 40 Under 40” honoree. Hawkins received his undergraduate degree in business administration from Howard University and his master’s in health services administration from Florida International University. He is the 2013-2015 President of the National Association of Health Services Executives and a Fellow of the American College of Healthcare Executives. Cipriano, senior director at Galloway Advisory by iVantage, which helps hospital groups, health care payers and providers improve their operations, outcomes and profits, succeeds Karen A. Daley, PhD, RN, FAAN. Cipriano, who is also a research associate professor at the University of Virginia School of Nursing, served as the inaugural editor-in-chief of ANA’s official journal, American Nurse Today, and is a member of the Virginia Nurses Association. Cipriano oversaw more than 3,000 University of Virginia Health Systems employees as the chief clinical officer and chief nursing officer. She earned her doctorate in executive nursing administration from the University of Utah in 1992 and a master’s of science in
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Pamela Cipriano PhD, RN, NEA-BC, FAAN
President, American Nurses Associations
physiological nursing from the University of Washington in 1981. She previously served two terms on the ANA Board of Directors, including one term as treasurer, and has served for more than 30 years on state and national committees for ANA and the American Academy of Nursing. From 2010 to 2011, Cipriano served as the Distinguished Nurse Scholar in Residence at the Institute of Medicine, where she helped study the safety of health information technology assisted care. She currently chairs the Task Force on Care Coordination at the American Academy of Nursing
Ad Hoc-Advisory Committee (The members of the Ad Hoc Advisory Committee will consist of the Investor pool that subscribe to the PPM that is drafted from this business plan)
Administrative Officers Mark Alan Effinger Chief Executive Officer
Strategic Business and Marketing Plan
Effinger is the chief evangelist and a founder of ExitPath. He views our business through a 16-year history of developing, building, funding and marketing discrete technologies. Founding seven companies, selling six, taking one into liquidation and one to Inc 500, has provided a fairly well rounded scope. Beginning in laser technologies he conceived, patented, manufactured and marketed the number one selling laser display system worldwide. Through acquisition, the company became one of the fastest growing private companies in the US, ranking 389th in the Inc. 500. Along the way he was a founder of Mere Image Design Group, Eclipse Technology, Continuum Software, Storm Systems, Access Communications, CFM, InterClient and held active roles in J. Steam, TechCoast and eAgency.
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Administrative Officers Woody Kassin,
Mr.Kassin is the chief strategist and an Executive Partner in ExitPath. He possesses a wealth of entrepreneurial and financial experience, in conjunction with relevant domain expertise in a variety of disciplines, spanning both domestic and international endeavors. Recently, Mr. Kassin facilitated the acquisition of Dreampipe Technologies by Clarent Corporation (where he subsequently worked in Strategy and Business Development). Prior to Dreampipe, he was the CFO and interim COO for Struxicon, a technology company focused on the real estate and construction industries. Woody also worked at Ocean Communications (a leading Voice over IP company), where he assisted in growing the company to the completion of its S-1 filing. Prior to these entrepreneurial endeavors, Mr. Kassin worked at both Morgan Stanley and Bear Stearns in the High Yield and Special Situations Groups, in a variety of capacities (investment banking, sales, trading and research), focusing exclusively on the media and telecommunications sectors. He possesses an MBA from The Anderson School at UCLA and a BBA from the University of Michigan.
Jacques Nichols,
Jacques Nichols is our preeminent VC and Legal interface, successfully raising money for the likes of Nike, Avia, Mentor Gr4phics, FLIR Systems. Fabricland; . J.Stream; Dirt Bros, and over 100 additional companies. Jacques is known in the investment circles as the Founder of Venture Capital in the Pacific Northwest, representing the most prestigious firms in the nation, including many in Silicon Valley, Boston and overseas. Jacques is also a writer and one heck of a decent golfer. Crystal clear thinker. Attorney from 1961- to 1990. Stanford Undergraduate and Law School Grad. Her expertise will be especially critical in the growth and introduction of the Hospital Outpatient Module business venture.
Chief Financial Officer
Corporate Attorney
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Administrative Officers
Kathleen E. Dinsmore, Program Development & Marketing Coordinator
Ms. Dinsmore has vast experience in the field of health care delivery. She was Data Systems Coordinator for the Los Angeles County Department of Health Services where she served as ISB liaison to Medicaid Demonstration 1115 Waiver; prepared division budgets and developed enterprise-wide Data Security Policies. She was the Chief Marketing Officer for Rancho Los Amigos Medical Center, Downey, CA.; where she held several important positions. Prior to her stay at Rancho Los Amigos Medical Center, she was a private consultant with NBK Enterprises. Kathleen has equally vast background and experience in computer technology. She is proficient with DOS/ WINDOWS and MICINTOSH software, Word, Excel, PageMaker, Adobe Illustrator and Filemaker Pro. She has a Master’s Degree in Public Health from UCLA, an MBA from Univ. of Nebraska, Ms. Dinsmore has vast experience in the field of health care delivery. She was Data Systems Coordinator for the Los Angeles County Department of Health Services where she served as ISB liaison to Medicaid Demonstration 1115 Waiver; prepared division budgets and developed enterprisewide Data Security Policies. She was the Chief Marketing Officer for Rancho Los Amigos Medical Center, Downey, CA.; where she held several important positions. Prior to her stay at Rancho Los Amigos Medical Center, she was a private consultant with NBK Enterprises. Kathleen has equally vast background and experience in computer technology. She is proficient with DOS/ WINDOWS and MICINTOSH software, Word, Excel, PageMaker, Adobe Illustrator and Filemaker Pro. She has a Master’s Degree in Public Health from UCLA, an MBA from Univ. of Nebraska,
Mark Paul, Chief Development Officer
Strategic Business and Marketing Plan
Mark Paul has more than twenty years of executive level leadership experience. This includes 11 years at Fortune 500 companies (Ford Aerospace and Northrop Corporations) and 12 years of leadership, management, organizational, and process consulting as the president at Phoenix Management, Inc., and most recently as a partner at Synergy Consulting Group, LLC, an executive/ business development consultancy. In both companies, Mark has helped over 100 corporate clients significantly increase their revenue, profitability and company value, through consulting, interim executive work and/or through training. In his capacity as Chief Operating
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Administrative Officers
Officer of Chrome Data Corporation from 1995 to 1997, Mark transformed the company from a single DOS product company to a multiple Windows and Web-based products and services company. Results include driving a 67% improvement in sales; a 15x increase in valuation increase and a 10x cash improvement, while dramatically decreasing time-to-market. He has also held interim executive assignments, including VP of Marketing and Business Development. Recently, he helped a client increase the company’s value from an acquisition offer of $1 million to an offer of $16 million in less than six months, due to strategic advice and interim executive work. Prior to consulting, Mark spent eleven years at Ford and Northrop Corporation; where he was an “intrapreneur” - building a $50 million business unit in two years, and leading 250 people in line and project roles. Mr. Paul holds US Patent # 4,631,583, a degree in Physics from the University of California, Irvine, and performed post-graduate studies in technology management at the California Institute of Technology and California State University, Fullerton. Mark has served on boards of directors and advisors for various technology-based companies, and recently published The Entrepreneur’s Survival Guide (available on amazon.com). He is currently at work on The CXO’s Secrets to Success, due for release early next year.
Department Heads
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Administration William E Rising Legal/Insurance Arthur Pinckney Accounting/Comptroller Henry Gilmore Medical Director David Cradock, MD Nursing Director Wynona McLeod, RN Human Resources Clarence Henderson Property Maintenance Melbourne Shaffer Security Services Assurance Security Services Grounds & Landscaping Wyatt Freeman Supervising Nurse Reland Jackson, RN Food Service Director James B Jones, Jr. Events & Recreational Director Joi O Johnson Physical Therapist Daniel Lewis Jenkins Transportation Director Michael Franklin, Sr. Internet Technology Charles Wilkerson Medicare & Medicaid Director OPEN Media & Entertainment Director OPEN Restaurant Manager & Chef OPEN 18
Day-to-Day Staffing Pattern
Employee selection is the process of putting right men and women on right job. It is a procedure of matching organizational requirements with the skills and qualifications of people. Effective selection can be done only when there is effective matching. By selecting best candidate for the required job, the organization will get quality performance of employees. Moreover, the Company will face less of absenteeism and employee turnover problems. By selecting right candidate for the required job, organization will also save time and money. Proper screening of candidates takes place during selection procedure. All the potential candidates who apply for the given job are tested. But selection must be differentiated from recruitment, though these are two phases of employment process. Recruitment is considered to be a positive process as it motivates more of candidates to apply for the job. It creates a pool of applicants. It is just sourcing of data. While selection is a negative process as the inappropriate candidates are rejected here. Recruitment precedes selection in staffing process. Selection involves choosing the best candidate with best abilities, skills and knowledge for the required job. It is unlikely that the Barstow area will be able to provide the numbers and levels of skills that will be required by the development, therefore, it will be necessary to solicit qualified employees from all of Southern California. The managerial function of staffing involves manning the organization structure through proper and effective selection; appraisal and development of the personnel to fill the roles assigned to the employers/workforce will be an important function of management. Below is a projected staffing pattern for the Gadson Garden Estates development.
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Global HOM Care Systems, Inc Gadson Garden Estates, LLC
Ownership Robert J. Merritt General Manager/CEO/ Developer The Merritt Family Trust, Inc 1605 Cumberland Station Blvd. Madison, TN 37115 (626) 437-8677 William E Rising Assistant Manager 916 Stoneman Ave Alhambra, CA 91801 (626) 507-1027 Robert B. Merritt Executive Director 1605 Cumberland Station Blvd Madison, TN 37115 (888) 316-1728
Dr. Darcey H Merritt Secretary
83.5%
One Washington Square Village New York, NY 10012 (323) 839-4144
Gladys Jackson, Pastor Director 1.5%
5.5%
1.5%
Harvest Time Ministries 1605 Navarro Ave. Solomon T Bennett Account Executive
5.5%
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1664 Prospect Place Crown Heights Brooklyn, NY 11233
2.5%
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Principal Development Team Robert J Merritt, Owner/Creator Mr. Merritt was the founder and developer of a total life-care community for senior citizens in upstate New York, a $23 million project that included a 280-bed skilled nursing home facility, 182 housing units, a golf course, swimming pools, an out-patient medical clinic and other recreational services. He arranged for the financing, negotiated all project contracts, and initiated the entire Certificate of Need process through the Health System Agency and Department of Health, as well as the various federal funding agencies (the package was sold to land owners for the build-out). »» Founder, developer, President and Chairman of the Marcus Garvey Nursing Home, a new 300 bed skilled facility. From its inception, he personally raised over $10.6 million for the project; supervised the construction of the facility; prepared all operational program manuals, staffed-up for opening and served as the administrator in the first year of operations. »» The first executive director for The National Association of Health Services Executives (NAHSE www.nahse.org ). While developing the Marcus Garvey Nursing Home in Brooklyn, New York, was employed by the NAHSE to manage and run its first national headquarters in New York City; established chapters in twelve states; prepared proposal that was instrumental in obtaining the association’s first major grant from the Robert Wood Johnson Foundation ($369,000). »» The newly formed New York City Health and Hospital Corporation hired a member of the National Association of Health Services Executives as its president. Mr. Merritt was chosen as the President’s special assistant. Duties included the establishment of programs for the health care delivery system of the City’s prison health system; prepared a programmatical design for the $10 million project for the 14 prison detention centers, including impatient, outpatient and mental health services. Additional duties included the development of a Resource Utilization Program for the 18 hospitals on a standardized, uniformed shared-service basis of operations. The program dealt with utilization studies, incentive-budget allocation programs, cost benefit analysis, sub-system and simulation-model building, etc.
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Other Consultants & Sub-contractors There are several other consultants and sub-contractors that will be hired along the way, such as: Interior Design Consultants, Food Service Consultants, Landscaping Design Consultants, Human Resources Consultants, Medical/Dental Consultants, Recreational and Activities Consultant, Marketing & Promotion Specialists, Sales & Real Estate Coordinators, Licensure & Compliance Director, Mortgage & Finance Services, Medicaid & Medicare Consultant, Furniture & Equipment Buyer, Local, State and Federal Agency Representative, Legal & CPA Contractors.
Administrative Team (elect) Senior Administrator Property Management Acquisition Asset Management Legal/Insurance Security Sr. Medical Officer Supervising Nurse Maintenance Director Human Resources Comptroller Food Service Director Physical Therapist Dietician
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William Brady Arthur Pinckney James Roberson Saul Montrose Daniel Jenkins RB Merritt Dr. Ruth Horn Reland Jackson, RN Wyatt Freeman James Jones, Jr Charles Wilkerson Evelyn Sager Phyllis Meyers Joi Johnson
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Project & Construction Management Trans Global Group, Inc. Trans Global Group, Inc. in partnership with Merkel Development (http://www. merkeldevelopment.com/) is a full Service Construction Management and Development Company that offers turn-key efficient solutions for any size project. Trans Global Group, Inc. owns fifty percent of Merkel Development and together provides a full spectrum of management services that span the entire project duration from pre-construction to post-construction. Their Company’s focus is on green efficient construction, occupational safety and competitive timesaving solutions for their clients. We are dedicated to using the latest technology and innovative solutions in the industry to ensure your project’s on-time and on-budget success. As your project progresses, we will continually document each step of the process, communicate scheduled status updates and monitor all aspects of quality assurance. Their construction project management system provides:
Increased Accessibility:
»» Provides their entire office and field staff with the power to securely deliver real time, up-todate project information to team members at any time, with any Internet-connected device. Constant access to project data from the job site speeds up decision-making and thus, project efficiency.
Tracked Communications:
»» In order for a job to be successful, teams need a transparent environment where everyone is held accountable for their work. Trans Global tracks and archives change history across all versions. Every time a contract adjustment is made, a commitment is entered, or a change order is submitted, it’s tracked in the project management system.
Improved Visibility:
»» Provides stakeholders with 24/7 visibility into project status and health. The ability for their company to diagnose problems in real time and collaborate to resolve issues quickly increases their construction team’s efficiency and project margins by reducing wasted time and possible reworks.
Risk Avoidance:
»» Everything accomplished in their Project management system is tracked and archived, from email chains and RFI exchanges to change order approvals and daily log entries. The entire change history across all versions as well as documentation of who made those changes is tracked and archived, holding all their team members accountable at every stage of the project. Their management system results in a project that is well coordinated throughout all of the stages and can easily be tailored to meet the level of service required by their clients. With over 25 years of experience in Construction Development, combined with their expanded expertise in Construction Management, Technology and Engineering, we bring your project to completion on time and on budget. Strategic Business and Marketing Plan
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In addition to managing the entire project and performing many of the construction tasks with Merkel Development, Trans Global Group, Inc. will use a number of contractors throughout each Phase. A few of the contractors we will use are;
Skanska
Skanska is one of the world’s leading project development and construction groups, concentrated on selected home markets in the Nordic region, other European countries and in the U.S. With a focus on green construction, ethics, occupational health and safety, Skanska offers competitive solutions.
AECOM
AECOM delivers program and construction management services to clients around the world – from project concept to completion and commissioning. Led by their Tishman Construction and Hunt Construction Group operations — AECOM’s construction services business brings together the world’s leading builders. Across the United States, Hunt and Tishman’s strengths in diverse regions and complementary sectors form one of the nation’s leading builders and a powerful force in the industry.
www.skanska.com
http://aecom.com/
1.4 Sales Forecasts The management team expects a strong rate of growth at the start of operations, beginning with the existing homecare agency(s). Within 24 months from full subscription, it is estimated that the five projects will have been at least 20% operational. By 2019 all revenue streams will be 95% of capacity. Below are the expected financials over the next four years.
NOTE: Investors will receive a 5% per year interest on the invested amount. The projected net profit will be an additional distribution, so that by 2019 the total ROI is expected to be over 17%.
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1.5 Expansion Plan The Company expects that the business will aggressively expand during the first three years of operation. The real estate sectors of the development will progress at a pace that will insure 95% completion for all phases within a 48-months period, with 20% having been finished and operational within the first 24 months following full subscription. The Company will receive a 5% interest return from the initial draw, which is expected to acheive a total return of more than 17% by the time the projects have reached 95% operational. The most promising and potential for growth in revenues will be produced by the expansion of the home care agency(s) with the introduction of the HOM/HDS (http://www.hauserpro.com/hom). The immediate and marketing strategy for the HOM/HDS will be establishing contracts with acute care hospitals to lease their empty bed-space for a HOM/HDS caregiver system. Among the country’s 5,000 hospitals there are over 960,000 beds. At any given time, an average of 30% of those beds is empty, or over 288,000 beds. The Company will initiate a marketing campaign to secure a contract with those hospitals with empty beds to agree to have a HOM unit and the accompanying caregivers utilize those bed spaces at a cost to the patient that is less than a third of what they would otherwise have to pay a typical acute care hospital. For example, on the average, a typical acute care hospital daily rates range from $1,200 to over $3,500 per day, depending on the illness and length of stay. With the use of their HOM/HDS system, the daily rate will be between $245.00 and $750.00 per day. With this arrangement, hospitals will be able to generate additional revenue from beds that are not being used; and the Company will have an established venue for positioning HOM/HDS units in ideal locations. It is unlikely that all of the hospitals will participate, but with the support and assistance of the American Hospital Association, an industry organization with which Mr. Merritt has had dealings in his capacity as the national Executive Director for NAHSE (National Association of Health Services Executives), it is projected that within the first 24 months following full subscription, some 1% of the nation’s hospitals will have one or more HOM/HDS systems. With that estimate, at least 960 (just 1% of the empty beds at the 50 hospitals) HOM/HDS will be placed at the 50 hospitals, producing over $210,240,000 (960 HOMs X $600.00 per day X 365 days). The expansion for the senior-veterans project and the other accompanying real estate will be demonstrated in Barstow, CA, then replicated in other parts of the country.
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2.0 Company and Financing Summary 2.1 Registered Name and Corporate Structure Global HOM Care Systems, Inc. and Gadson Garden Estates, LLC. The Company is registered as a corporation in the State of Nevada for Global HOM Care, under which the home care agency(s) and HOM/HDS will function. The real estate developments will operate under Gadson Garden Estates,. LLC, a California Limited Liability Company.
2.2 Required Funds 1st STAGE COST $34,937,500 $62,658,750 $6,975,000 $667,000 $815,000 $370,000 $2,500,000 $4,277,500 $19,799,250 $133,000,000
Column1 Townhome Units Assited Living Suites Clubhouse/Rec Center Linear Perimeter Wall Maintenance Buildings Security Gates & Sales Office Swimming Pool, tennis courts, etc Roads, infrastructure & landscaping Working Capital Reserves
2nd STAGE COST $5,000,000 $128,096,000 $5,000,000 $6,250,000 $900,000 $900,000 $3,720,000 $634,500 $1,000,000 $1,500,000 $153,000,500 3rd STAGE
OTAL PROJECT COST COST $5,000,000 $4,860,000 $43,812,500 $1,320,000 $665,000 $13,992,500 $850,000 $2,500,000 $4,000,000 $77,000,000
Column1
2nd STAGE COST $5,000,000 $128,096,000 $5,000,000 $6,250,000 $900,000 $900,000 $3,720,000 $634,500 $1,000,000 $1,500,000 $153,000,500 3rd STAGE
TOTAL PROJECT COST COST
HOM/HDS 822 SFR Homes & Cottages Acquisition of Home Care Agency 18-hole Golf Course Convenient Store Day Care Faciltiy Service/Retail Restaurant Road and Infrastructure Working Capital Reserves
Column1 HOM/HDS 822 SFR Homes & Cottages Acquisition of Home Care Agency 18-hole Golf Course Convenient Store Day Care Faciltiy Service/Retail Restaurant Road and Infrastructure Working Capital Reserves
3rd STAGE COST
$5,000,0 $4,860,0 $43,812,5 $1,320,0 $665,0 $13,992,5 $850,0 $2,500,0 $4,000,0 $77,000,0
Column1 $363,000,500
$5,000,000 Anchor Tenant $4,860,000 120 Bed-Skilled Nursing Home $43,812,500 177 Affordable Housing Units TOTAL PROJECT COST $1,320,000 Medical Office Spaces $665,000 Auto Service Center/Gas Station $363,000,500 $13,992,500 300 Bin Self-Storage $850,000 Other Retail $2,500,000 Roads and Infrastructure $4,000,000 Working Capital Reserves $77,000,000
Column1 $363,000,500
Anchor Tenant 120 Bed-Skilled Nursing Home 177 Affordable Housing Units Medical Office Spaces Auto Service Center/Gas Station 300 Bin Self-Storage Other Retail Roads and Infrastructure Working Capital Reserves
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2.3 Investor Equity Robert Merritt intends to sell 33% of the Company in exchange for the capital.
2.4 Management Equity Robert Merritt and the Company will retain 67% of the business once the capital is raised.
2.5 Exit Strategy Mr. Merritt may seek to sell the business to a third party for a significant earnings multiple, or in the alternative, he will refinance the assets of the Company within 24 months specifically to allow investors to exit if desired.
2.6 Investor Divestiture This will be discussed during negotiation and in the accompanying Private Placement Memorandum.
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3.0 Senior & Veterans Housing Below is a description of the real estate development segments of the Company’s plan.
3.1 Gadson Garden Estates and related real estate developments The Gadson Garden Estates is a housing concept that is revolutionary in its design and financial structure. The first of the Eldominium concept, as described by the owners, is to be built in Barstow, CA. The development will include residential townhomes for veterans and active senior citizens who are aged 55 and over, and an assisted living community. The development is also planned with a multi-purpose recreational center which will include restaurants and a variety of recreational amenities. The Gadson Garden Estates will be the only large-scale housing complex for seniors in the area. It is adjacent to the City of Barstow’s only public golf course, which is planned for an expansion from a 9-hole to a professionally designed, tournament class, 18-hole course with over 800 single family residences surrounding the golfing facility. Until the multi-purpose rec center is completed a virtual representation and physical model will be demonstrated in the sales office for general public viewing. The recreation center will have two commercial restaurants, two Olympic sized swimming pools, tennis and other recreational activities and will be open to the general public. The current Construction Program is planned with 166 four-plex town home type apartments for active seniors and veterans. Based on the existing inventory of senior housing in the Barstow EMA, demographic and economic characteristics of the EMA, trends in the senior housing market industry, and rates of senior housing in the Victorville area, it is generally recognized that a market exists for the proposed 463-unit development, but as a six-phased development.
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4.0 Strategic and Market Analysis
4.1 Economic Outlook The economic outlook for the senior housing industry is best considered by reputable housing professionals. Following are the opinions of well-respected members (pics. above) of the Senior Housing Council and thoughts about the economic outlook for senior housing: Matthew Phillips: Since the economy has improved, seniors’ housing — especially rental properties — have performed well. In our portfolio, we’ve seen increased occupancies and some good rate increases. In the underwriting we’re doing, our assumption is that, while there is more supply coming online over the next three or four years, we’re looking at 2 to 3 percent rate increases in stabilized properties. Margaret Wylde: It’s coming back well, almost to where it was before the recession. The active-adult communities that I know of are selling well, and new ones are in the pipeline. The independent living, assisted living, and memory care sectors also are doing quite well. The occupancy numbers are almost where they were before the recession, except for the markets where new product has been recently introduced. Because the seniors’ housing sector performed well during the recession compared with other sectors, many new investors are coming into this market area. I don’t think I’ve ever seen so many investors as we are seeing now.
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W. Aaron Conley: Occupancy rates are strong throughout many of the levels of care, from independent living through assisted living. The seniors’ housing sector has had returns that have surpassed the one-, five-, and eight-year bases of the apartment, retail, industrial, and office sectors, according to the National Council of Real Estate Investment Fiduciaries Property Index. The surge in the number of people about to turn 80 — which will continue for the next 20 or 30 years — is very promising for the industry. Of course, the average age of entry, especially for independent-living communities, is going up because people are still delaying their decision to move. But the increase in the numbers within this demographic will sustain the business over time. Jerry McDevitt: Integrating seniors into the surrounding community is an important trend that is gaining momentum. Locating communities in transit-oriented districts and walkable environments allows seniors to get around more easily and interact with people of all generations. These newer models of senior living provide options beyond the suburban independent- and assisted-living communities and the larger continuing care retirement communities [CCRCs]. Seniors are opting to move into urban neighborhoods, close to shops, restaurants, libraries, and theaters. The large, gated, age-restricted active senior housing communities that often didn’t allow children are becoming a thing of the past in some regions of the country. Sharon Grambow: We’re seeing the tail end of the silent generation enter senior housing communities, and they’re acting much like the baby boomers in that they want a lot of the newer technologies and more space. So we’re introducing products that are comparable to active-adult communities. Our newest community is spread out over 40 acres [16 ha], consisting mostly of detached homes, unlike a conventional congregate-living building. We’re adding amenities like pickleball courts, resistance pools, spas, and outdoor yoga and meditation areas. This generation is really focused on wellness. Phillips: We’re focused on activity spaces. In our new projects, we’re adding cyber cafés and dedicating more space to therapy and wellness. With the units themselves, more efficient units are becoming common, borrowing strategies from market-rate housing. We’re also offering multiple dining venues to keep things fresh, because if people are having the bulk of their meals in the same place, they want variety. Great dining experiences are really important, so on the service side of the equation, we focus a lot of time on staff training and culinary training. Wylde: A lot of providers are upgrading dining areas, replacing one large dining area with two or three, or creating alternative dining areas, such as a bistro and a café to supplement the main dining area. Many more communities are adding bars or lounges and getting a liquor license. We recently conducted a study and found that those who live in a community with a bar or lounge are happier than those who don’t. So it makes a difference.
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Conley: We’re seeing a lot more renovations, especially of older products. Before the recession, the size of units was increasing, especially in independent living. The thought process was that people were downsizing from 2,500- to 3,000-square-foot [230 to 280 sq m] homes to apartments, so the apartment sizes should come as close as possible to the square footage of those homes. But post-recession, units are a lot smaller, with more compact, more efficient footprints.
4.2 Business Strategies Senior housing The Company has been underway with the development of the 463-unit senior-veterans housing complex and is within six months from ground breaking on the first phase of the project. Over the past few years, Mr. Merritt has expended over $3 million for land acquisition, predevelopmental site work, including architectural and civil engineering, and have brought the development to within 2 months from full entitlements. He has entered into a contract with Trans Global Group, Inc. in partnership with Merkel Development (www.merkeldevelopment. com) to take over the construction and development activities for the entire development. Veterans Housing As the U.S. continues to condense the size of its military, returning veterans are having a widespread impact on civilian life. Many are entering the private sector while others struggle to find work and adequate housing. Many are benefiting from advanced medical care while others suffer from inattention. Despite the ups and downs of every veteran’s transition, one area of civilian life that a great number of veterans are finding success in is housing, and they have the VA loan to thank for it, coupled with these boons is strong support from various veteran housing charities. Organizations like Operation Homefront, the Military Warriors Support Foundation, Home Strong USA, and Purple Heart Homes all help put veterans into homes. They do this by taking donated houses from banks and passing them on to veterans. Bank of America, JPMorgan Chase, Wells Fargo Home Mortgage, and others have pitched in. Combined, well over 3,000 homes have been donated to veterans. In 2009, the Obama Administration set a goal of ending homelessness among veterans by the end of 2015. Despite progress in recent years, this goal remains far off. A HUD assessment on one night in January 2014 counted 49,900 homeless veterans: 17,900 sleeping in the street, in cars, or in other places not meant for human habitation and 32,000 in emergency shelters, transitional housing, or similar arrangements. Many more veterans experience homelessness over the course of a year than at any point in time. During 2012, the most recent year for which complete data are available, 138,000 veterans stayed in a shelter for at least one night. Moreover, many veterans who are not homeless nevertheless struggle to afford housing. In 2012, some 1.79 million low-income veterans lived in households that paid more than 30 percent of their income for rent and utilities, and 762,000 lived in households that paid more than 50
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percent. Government programs and the private sector widely regard housing as unaffordable if it costs more than 30 percent of a household’s income. Families that pay substantially more often must divert funds away from other basic needs. They also are at greater risk of having to move frequently, entering into stressful and insecure arrangements such as doubling up with friends and family or becoming homeless. A veteran himself, Mr. Merritt has designed the development to include townhomes that will be available at Gadson Garden Estates designed and operated specifically for the benefits of veterans throughout the State of California.
4.3 Customer Profile Seniors who are 55 years and older, and veterans in need of quality housing will be our customer profile. However, the recreation center and club house will be open to the general community.
4.4 Competition Seniors and retirees have many options for assisted living facilities throughout Southern California, any one of which have amenities and services that will meet the needs for most seniors. Hence, competition for the standard life-style at such facilities will be great. The principal exception will be the design, size and layout of the units at the Company’s facilities; and above all, the introduction and use of the Universal Healthcare Annuity Trust Fund, a proprietary program that has no match in the country and one that will become a model for institutionalized individuals throughout the country.
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5.0 Marketing Plan and Strategies Marketing Strategies The marketing program for the development will target a wide range of senior citizens. The general thrust of the marketing plan will be built around the feature that will allow a resident (both condo buyers and renters) full and free health, dental and drug insurance coverage. The cost for this feature will be included in the price for the condo and monthly rents for those residents of the assisted living units. This is an ambitious and unique concept that will have the effect of providing the development national recognition, and will demonstrate the way future health and medical insurance coverage can and should be financed. An all-inclusive, well-planned and managed marketing strategy will be developed by First Marketing Group International (See www.firstmarketinggroup.com) to organize and achieve the projected sales for the development. It will be important to develop and present a professional advertising and marketing plan with first-class marketing material. First Marketing Group is capable of providing such a plan. During construction of the first phase units, there will be a trailer which will be used as a temporary marketing and sales center. The center will include visitor parking, and a graphic presentation, with a virtual reality experience for all visitors, with detailed information about the entire development. The models will be professionally decorated and furnished by two interior decoration firms: Interior Spaces of Santa Monica, CA Interior Concepts of Los Angeles, CA These companies will provide a full range of interior décor for the model units. With the assistance and supervision of First Marketing Group, a signage program featuring onsite and off-site signage will promote the awareness of the project along I-15 and all other major highways leading into the Barstow area. Printed material, including brochures, flyers, web sites, hand-outs, and direct mail, radio and television ads will be prepared for promulgation. Newspaper advertising (display and classified ads) will be placed in local, state and national newspapers. Financing: A contract with a lending institution will be on-site for those wishing to make arrangement for financing. This service will also include a convenient component that allows potential residents to have a professional moving company handle all of the duties of packing and moving the resident into their new home. The Company will maintain a sizable amount of print and traditional advertising methods within local markets to promote the homes and properties that the Company is selling. Strategic Business and Marketing Plan
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5.1 Pricing Although the entire development will be dedicated to the rental market, the design and master plan is flexible and will accommodate those wanting to purchase their units instead of renting them. Each section of this business plan will describe pricing for each project respectively. However, in general the various rental rates for the various income centers are indicated below:
INCOME CENTER Home Care Agency(s) HOM & HDS Assisted Living Suite
RENTAL RATE (average)
PRICE FOR PURCHASE (average)
$30.00 per hr. $600.00 per day $3,000 per month
Townhome Apartments: 1-BR unit
$737.00 per month
$225,000
2-BR unit
$950.00 per month
$275,000
3-BR unit
$1250.00 per month
$325,000
Shopping Plaza retail space Golf Course Green Fees
$1.00 per sq.ft. $60.00 per round
SFR home Monthly Maintenance Fee (TH)
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$375,000 $75.00 per month
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6.0 Organizational Plan and Personnel Summary 6.1 Corporate Organization
Senior Management
Operations Staff
Administrative Staff
Property Acquisition
Accounting
Rental Management
Sales - Marketing
Administrative
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Senior Housing Project Home Care Agency Shopping Plaza HOM/HDS Golf Course Community Working Capital Reserves
INCOME CENTER
Senior-‐Veteran Housing Development: 1st Stage 2nd Stage 3rd Stage 1st Stage: Working Capital Reserves TOTAL FUNDING
52.26%
15.80%
$ 106,000,000 $ 15,000,000 $ 77,000,000 $ 5,000,000 $ 147,000,000 $ 13,000,000 $ 363,000,000
Capitalization
$ 120,000,000 $ 153,000,000 $ 77,000,000 $ 13,000,000 $ 363,000,000
LOAN DRAW DOWN IN TRAUNCHES
33% share of Net Proceeds on SFR sales (annualized over 30 yrs.) 33% share of profits ROI to Lender
Cummulative Return On Investment to Lenders
Schedualed Gross Annual Income from All Projects Less: Vacancies & Bad Debts Adjusted Gross Annual Income Less: Operating Expenses NET OPERATING INCOME Less: Minimun ROI Payments to Investors(*)
Gadson Garden Estates GGE Shopping Plaza Home Care Agency Golf Course SFR Community HOM &HDS (on 9600 hospitals @$600/day)*15% (**) Reserves (*)
5%
$741,444 $56,616,574 $57,358,018
Annual Revenues at 95% Operations $ 14,595,718 $ 5,000,000 $ 9,397,800 $ 315,360,000 $ 5,738,109 $ 13,000,000 $ 363,091,627
May 15, 2015 November 15, 2016 May 15, 2018 May 15, 2015
DATE
Gross Annual Income $ 14,595,718 $ 9,397,800 $ 5,000,000 $ 5,738,109 $ 315,360,000 $ 13,000,000 $ 363,091,627
$ 49,445,158 $ 899,676 $ 2,038,264 $ 56,928,979 $ 18,786,563 $ 38,142,416 $ 56,928,979
$ 32,963,438 $ 599,784 $ 1,358,843 $ 37,952,652 $ 12,524,375 $ 25,428,277 $ 37,952,652
3 $ 164,817,192 48 $ 2,998,919 $ 6,794,215 $ 189,763,262 DISTRIBUTIONS TO OWNERS PPM Investors 33.00% GGE Owners 67.00%
$ 2,288,456 $ 783,948 $ 1,473,477
$ 1,525,638 $ 522,632 $ 982,318
36 $ 7,628,188 $ 2,613,159 24 $ 4,911,590
At 30% of operating capacity
30% 32 months At 20% of operating capacity
20% 24 months Projected Annual Net Cash Flow (at 95%)
Projected Months to Complete
Days 365 550 546
Based on the projection that at least 4.5% of the 960,0000 empy hospital beds will be equipped with a HOM/ HDS system (or 43,200 beds) so that the hospital will be able to generate revenue for otherwise empty beds, this income center will produce $315,360,000 per year (43,200 X $600 per day X 365 days=$315,360,000) for the company.
$ 363,091,627 $ 18,154,581 $ 344,937,046 45% $ 155,221,671 $ 189,715,375 5.00% $18,150,000 LEFT FOR DISTRIBUTIONS $ 171,565,375
Total Costs $ 106,000,000 $ 77,000,000 $ 15,000,000 $ 147,000,000 $ 5,000,000 $ 13,000,000 $ 363,000,000
PROJECTED COST, PROFIT & LOSS FOR ALL PROJECTS
$ 43,835,314 $ 88,998,970 $ 132,834,284
$ 115,372,034 $ 2,099,243 $ 4,755,950 $ 132,834,284
$ 5,339,731 $ 1,829,212 $ 3,438,113
At 70% of operating capacity
70% 48 months
$ 62,621,877 $ 127,141,386 $ 189,763,262
At 95% of operating capacity ROI per YEAR 17%
7.0 Financial Plan
7.1 Underlying Assumptions The Company has based its pro forma financial statements on the following: »» The Company will have an annual revenue growth rate of 12% per year. »» The Owner will receive $133,000,000 of investor funds to develop the first stage of the business. »» The Company will not seek debt financing in the first three years of operations. »» The home care agency(s) will be re-fitted to incorporate the introduction of the HOM/HDS, and the company will seek to place the HOM/HDS system in at least 50 hospitals within 24 months from full subscription. »» The immediate acquisition of an existing home care agency(s) that will produce positive cash flow. »» The first phase of the Gadson Garden Estates senior veterans housing complex will break ground within six months from the full subscription of this offering. »» The shopping plaza and its various retail and commercial tenants will become ready for lease up within 12 months from full subscription. »» We believe, the Company will be able to refinance the entire $133 million of the investors’ funds within 24 months from full subscription.
7.2 Sensitivity Analysis The Company’s revenues can change depending on the general economic climate of the real estate and housing industries. In times of economic recession, the Company may have issues with its top line income as fewer sales will be made and rental income may decrease. However, the Company will generate income from its home care agency and HOM/HDS business, which will reduce the risks associated with the more unpredictable real estate ventures.
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7.3 Source of Funds (for STAGE 1)
7.4 General Assumptions
Interest Rate Paid to Investors
7.0%
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7.5 Cash Flow Analysis
7.6 Breakeven Analysis
2016
2017
2018
7.7 Business P & L Statement 10- Year Profit and Loss Statement
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Gadson Garden Regional Plaza Commercial/Retail Regional Shopping Plaza
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Projected Market Value Analysis Following groundbreaking for the Gadson Garden Estates project, plans will begin for the development of the 41+acres of commercial land which is located across the street from the GGE housing development. Using a NNN lease method, income estimates of $9.4 million will be generated per year. The estimated market value for the Regional Shopping Plaza is $103,443,327 (NOI divided by 6.1% cap rate). Scheduled Annual Gross Rental Income
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Projected Development Cost
Sq Ft Anchor Tenant Skilled Nursing Home 177 Apt. Units Medical Offices Auto Service Center Self-Storage Facilities Other Retail
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Cost/SF 120,000 36,000 278,000 12,000 7,000 218,000 10,000 681,000
$120 $135 $125 $110 $95 $65 $85
Total Cost $14,400,000 $4,860,000 $34,750,000 $1,320,000 $665,000 $14,170,000 $850,000 $71,015,000
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APPENDIX A : Hospital Outpatient Module (Business Plan) HOSPITAL OUTPATIENT MODULE
HOM & HDS Hospital Outpatient Module & Homecare Delivery Services
GHCS
Creator: Robert J Merritt 600 N Pacific Ave, Ste. 353 Glendale California, 91203 TEL: 888-274-4205
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EXECUTIVE SUMMARY Global HOM Care Systems is a business whose operations specialize in monitoring home bound patients and providing healthcare services to the general public. Based out of Glendale, CA., GHCS (GHCS) intends to provide reliable service, cost competitive prices and a friendly atmosphere for its employees and clients. GHCS strives to excel in the Healthcare business by providing an alternative to the skilled nursing home concept. We will offer comprehensive, interactive Internet life-sign monitoring systems available to home-bound patients all over the global with constant observation and health care services. We will remain highly competitive and will maintain high standards to ensure maximum customer satisfaction. GHCS’ key objective is to capture market share in the Healthcare industry by offering competitively priced goods and services, quality product line, building a strong and skilled personnel team that will solidify our foundation, sustain the growth of the company and to increase progressively, out annual sales by at least 5% per year. Furthermore, GHCS intends to support its growth through continuous emphasis on customer satisfaction, introduction to product enhancements and/or additional services, and establishing long term relations with our suppliers and vendors. With continued growth and success GHCS’ operations are scheduled to expand throughout California and nationwide in the long term. GHCS’ product line holds leverage over its competition because it provides reliable service, competitive prices and friendly atmosphere. GHCS’ main product line consists of the patented Hospital Outpatient Module; and its primary function consists of providing constant life-sign monitoring and observation, hands-on caregiver services., immediate access by all medical and healthcare professionals, a communication and patient diagnostic system equal to that of a live attending physician, a reduction in the average daily cost for constant life-sign monitoring and home care services. GHCS is set apart from its competitors because the fundamental benefits to the user/patient is the convenience of having medical and homecare services and facilities delivered to the home site, and at a cost that is less than one-third of what similar services would cost in other venues. The average per diem cost for a typical acute care hospital is well over ($3,000) three thousand dollars. By comparison, the average rate for the HOM/HDS system is estimated at $545 per day. The principal distinction between the HOM/HDS concepts is the tremendous cost savings. The other dissimilarity is that this business model will give families an alternative to the dreaded reputation of nursing homes. In that sense, this venture is unparalleled.
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Start-Up Development Phase
The principal objectives for this grant application are (1) to acquire the estimated $640,000 that is needed to build a functioning and fully workable prototype of the Hospital Outpatient Module (HOM) equipment; (2) to obtain non-provisional domestic and international patent protection for the equipment and the health delivery process; and (3) to prepare a comprehensive operating plan for the health delivery component of the business model. Following the successful completion and demonstration of a working prototype, the business venture will be launched to introduce the concept to the general public. Beyond the creation of the HOM product, a business operation will emerge for the operations of a business venture that is described in this grant application. A small office and a core staff of two or three associates will be hired to assist the owners to accomplish the objective of this start-up period. It is anticipated that this phase of the business venture will cover 8 to 12 months, from the initial availability of funds. The successful completion of this start-up period, the second stage of funding ($10 million) will be sought for the implementation of the regional test marketing and introduction of the new managed care health care system. Prototype Development Following the completion of final engineering, structural, electronic and communication plans, a manufacturer will be engaged to construct a single, working prototype, complete with communication links to the Internet and a GPS satellite demonstration. It is estimated that the prototype will be completed within six months from the demonstration of the prototype unit. Patent Protection Presently, the HOM and health delivery system has patent pending protection (Pat. No. 60/382449). Patent attorney, Michael I. Knoll, will prepare the non-provisional patent application. Health Delivery System (HDS) A detailed and comprehensive operating and procedural plan will be drafted, based upon preliminary feasibility and industry studies. Advice, recommendations and consent will be obtained from reputable experts in the fields of health and medical care, communication, computer sciences, and licensing authorities.
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Test Marketing Prior to the introduction of the HOM/HDS managed care concept, a selected region of the country will be used to mark-test the business model in its entirety. The testing phase will cover at least one full year before implementing the nationwide expansion. The lessons learned from this testing (with the use of 10 to 12 units online) will determine the parameters of the expansion phase. The success of the business is validated and ensured by the skilled and committed core staff, comprised of: 5 Accountants 200 Sales people 36 Customer service 27 Administrators 75 Technical supporters 5 Software designers 3 Website designers 3 Video directors/producers 10 HOM designers
Strategic Business and Marketing Plan
...all with a combined 288 years of experience in the industry. To fulfill its goals and objectives, GHCS requires funding in the amount of $640,000 to effect demonstration of a prototype of the HOM; followed with the requirement of $5,000,000.00 to ensure its successful launch the business venture.
51
The funding stages for this business venture will be the following: Prototype Development
$640,000
Fully functioning prototype
Core Staffing & Operations
$5,000,000
beginning inventory, cash, repairs/construction, deposits, fixtures, insurance, professional fees, licenses and permits, rent, maintenance services, office supplies, office expenses, unanticipated business expenses, credit card fees, delivery charges, dues and subscriptions, health insurance, payroll taxes, wages, salary of owner(s), sales tax, telephone, utilities, advertising/promotions, medical consultants, contingencies, equipment, website hosting, website set up,
Initial Market Testing Campaign
$10,000,000
The HOM/HDS will be marketed to the general population of Southern California for further market testing.
Introduction to the general public $50,000,000
Funding will be allocated towards establishing a solid foundation for the business venture. GHCS estimates its first year sales to reach $36.2 million, with net earnings of over $3.8 million. After five years, sales are expected to reach over $5 billion after the HOM/HDS system has been expanded nationwide, with net earnings of more than $1.2 billion. These estimates assumes that the HOM/HDS operation of the Company will be successful in attracting at least 10% of the nation’s 5,000 hospitals to contract for a HOM/HDS system (or 500*$750*365=$136.8 million), plus at least one-one hundredth of 1% of the 35 million home-bound and institutionalized patients that will use a HOM/HDS system (or 35,000*$450*365=$5.7 billion). Based on our projections, and following the successful demonstration of a fully workable prototype. With the increasing demands in the Healthcare industry it is projected that the Company will successfully capture a sizeable portion of its target market, meet our financial objectives and fulfill the mission.
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Company Description The company is a startup (early stage), and is developed around an inventive medical apparatus called the Hospital Outpatient Module (HOM). The HOM is a portable/mobile hospital bedroom, fully equipped with the components of a medical treatment room, a nurse’s station and an adjustable, computerized hospital bed. It is to be delivered to a home, apartment, clinic, doctor’s office, public institution, etc.; and then linked to a Central Monitoring Center via the Internet for round-the-clock patient monitoring, at any location on the globe. A working prototype will be completed within six months from the initial $640,000 capitalization. Go to: http://www.hauserpro.com/hom for a visual presentation (a new and upgraded website in currently under constructions). Business Model Overview The HOM concept is much like the idea of a paper clip: it is so simple and obvious that “someone must have done it before.” Fact is, no one has. The HOM equipment and the accompanying homecare and monitoring systems will be a satisfying alternative to placing a loved-one in a nursing home. It will minimize the need for lengthy stays in a hospital; it will provide a readily available and portable “MASH” unit for the military; it will reduce the national health care expenditure by as much as one-third; and it will be reimbursable through Medicare and Medicaid and other third-party payers. Objectives The business model will evolve in four stages. Following the development and demonstration of a fully functioning prototype, the startup phase requires an infusion of $5,000,000 to install a core developmental staff to prepare for the 12-month test marketing effort. The second stage of funding will require $10 million to cover the test-marketing period. In the third stage, the company will initiate a nationwide expansion plan. In the fourth and final funding stage, an IPO will be prepared to raise $50 million for a global expansion. In this initial stage, investors will be issued convertible preferred stock in the company. Product/Service Overview This business venture consists of a product (the HOM) and a service (Homecare Delivery Service). The product is unique and unparalleled in the health field. The “e-bed” (middle section of the unit) will be marketed to the general public as a comfortable at-home, in-bed entertainment and workstation. In its fully equipped homecare form, the HOM will be accompanied by an organized, well-managed homecare service, including 24-hour coverage and weekly doctor’s visits to each unit in the field.
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Market Overview and Potential The general thrust of the marketing plan will be to place a HOM unit in every imaginable type of setting during the test-marketing year to determine and evaluate the product and service from every aspect. The projected markets for the business will include nursing home residents (1.5 million), home-bound patients (25.3 million), assisted living homecare elderly (6.3 million); heart-surgery rehab patients (765,000); respiratory outpatients (520,000); kidney dialysis patients (360,000); comatose patients (175,000); the military (50,000); and public institutions (125,000). Among these 35 million potential users of the HOM/HDS, it is estimated that at least 1% (or just over 1 million users) will be in use (either lease or buy) on any given day after the 5th operating year, producing well over $2 billion in revenue per year. Human Capital The inventor and creator of the HOM equipment and its homecare service component is Robert J. Merritt, a trained hospital administrator and graduate of the Yale University School of Hospital Administration. Merritt has engaged the services of a professional “venture startup consultant” to work alongside him to complete the incubation of the company’s formation, including developing a core business vision and operating plan, perform market sizing, competitive analysis and validation. A Board of Advisors has been assembled, consisting of highly respected healthcare professionals and communication experts. Prior to the test-marketing phase, the complement of homecare aides will be required to complete an intensive and comprehensive training program that will assure that they are capable to operate and use the HOM equipment to its fullest extent. Its products will be sought for their quality and reliability. We will treat each customer with respect and we will be recognized for our integrity and superior customer service. Global HOM Care Systems is a Nevada corporation. Company ownership is established as follows: NAME
TITLE
OWNERSHIP
Robert J Merritt
Inventor/Owner/CEO
85%
Dr. Darcey H Merritt
Secretary/Treasurer
5%
Robert B Merritt
President
5%
Solomon T Bennett-Merritt
Director
5%
The Company will establish its headquarters in Las Vegas, Nevada, with local offices in Southern California, Florida and Tennessee; and will lease suitable business space to support its operations and maintain its machinery, equipment, computers, furniture, and prototype of the HOM, supplies and medical apparatus. Management intends to construct an interactive website, www.HOM-HDS.com within the first year of operations to focus on how it can profitably use the Internet to market for its products. Sales will be encouraged, and recognition will be achieved with the use of the company’s website and social media efforts. Strategic Business and Marketing Plan
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MARKETING PLAN Market Analysis According to the US Census Bureau 2013 survey, California has a total population of 36,457,549. The available market is defined with an average household income of $56,645.00 for potential users of the HOM/HDS system. The qualified available workforce is calculated as 18,064,498 for the State of California. The target market for the HOM/HDS product and services is estimated as 903,225 in Los Angeles County alone. GHCS’ target market has been clearly defined by demographic characteristics, consumer lifestyle and behavior. As such our product is geared towards the following consumer profile: all consumers regardless of age, both genders, all household incomes, employed in any labour force, any level of education and pertains to any social class. This group will remain loyal, will purchase frequent and is characterized as being regular end users. Target Market The winds have changed from acute, in-hospital care to outpatient facilities and clinics. The primary reason for this change is directly related to cost considerations. The number of patients with end-stage kidney disease, for example, has grown to 9 percent per year over the past decade to well over 360,000 in the U.S. alone. Dialysis patients need treatment for the rest of their lives unless they get a kidney transplant. The Model (B) HOM unit would be especially useful for many of those 360,000 patients, who could be treated in the comfort of their residences, and at a much lower cost. Another chronic illness that will benefit from a HOM are those patients with respiratory therapy requirements. Home respiratory therapy generates $3.5 billion to $44 billion in annual sales. This sector is growing at 8% per year. This market is driven by the rise in emphysema, chronic bronchitis and asthma. As baby boomers age, demand rises for home health care and outpatient services. People are also living longer, so services are needed for longer stretches of time. The HOM care services will provide the appropriate blending of home health care, medical informatics, personal life-sign monitoring, and Internet interaction, all at a competitive price. Preliminary estimates of the potential market for HOM care health system are listed below: Projected Market for the HOM & HDS Nursing home residents Home-bound patients Assisted-living home care elderly
1,500,000 25,300,000 6,300,000
Heart-surgery rehab patients
765,000
Respiratory outpatients
520,000
Kidney dialysis patients
360,000
Comatose patients
175,000
Source: Health Care Financing Administration Office of the Actuary Organization for Economic Cooperation and Development
It will be these nearly 35 million patients (in the U.S. alone) that will represent the immediate market for the HOM care health system and its services. In the company’s first full year of operation, it is estimated that the business will place just 351 units in operation. That number will increase considerable in the second operating year. Note: In the above listing, “product” refers to both physical products and services.
Marketing Strategy GHCS’ pricing has been strategically set to stay in line with operating costs. As such, GHCS will initially launch industry rate pricing to attract prospects and help build client base. Since the HOM Care Systems hopes to appeal to the average end user, it anticipates repeat sales volume. Underlying factors that determine our pricing strategy are manufacturing costs, competitors’ prices and market value. GHCS intends to review its pricing strategy on a quarterly basis to ensure potential profits are not compromised and potential sales revenues are not lost. Furthermore we intend to review the revenue to expense ratio to secure a consistent cash flow. GHCS has developed a comprehensive advertising and promotion strategy which is scheduled to be launched upon receipt of funding. To support its expansion efforts, GHCS’ advertising campaign includes the following media outlets in order of probable effectiveness: »» newspaper/magazine advertisements »» television commercial »» trade shows »» Internet announcement As part of this strategy, GHCS will carry estimated total advertising cost that will be commensurate with market penetration. Robert J Merritt, Dr. Darcey H Merritt and Robert B Merritt will also use personal experience, training and understanding of customers’ needs to generate new clients and maintain the existing clientele. They are heavily invested in the company’s success and will not solely rely on personnel to generate business.
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Competition and Competitive Analysis GHCS has clearly identified several competitors in its primary area of operations. GHCS recognizes the need to continually monitor its competitors’ performance and pledges to take immediate measures to stay ahead of the competition. GHCS recognizes that its competitors’ performance will play a substantial role to its overall success and growth. Thus we intend to devote necessary resources to remain informed with changes in consumer behavior, segment dynamics, market trends and the overall industry to minimize any unfavorable impact.
RISK FACTORS Health Care Industry Risks We may not be able to protect the Website address for our product and service that is important to our business. Our product and service address, or domain name, is important to our business. The regulation of domain names is subject to change. Some proposed changes include the creation of additional top-level domains in addition to the current top-level domains, such as “. com,” “.net” and “.org.” It is also possible that the requirements for holding a domain name could change. Therefore, we may not be able to obtain or maintain relevant domain names for all of the areas of our business. It may also be difficult for us to prevent third parties from acquiring domain names that are similar to ours, that infringe our trademarks or that otherwise decrease the value of our intellectual property. We depend on increased use of the Internet to expand our health care related products and services. If the Internet fails to become a viable marketplace for health care content and information, our business will not grow. Broad acceptance and adoption of the Internet by consumers and businesses when searching for health care and related products and services will only occur if the Internet provides them with greater efficiencies and improved access to information.
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Government regulations and legal uncertainties could affect the growth of the Internet. A number of legislative and regulatory proposals under consideration by federal, state, local and foreign governmental organizations may lead to laws or regulations concerning various aspects of the Internet, including online content, user privacy, access charges, liability for third- party activities and jurisdiction. Additionally, it is uncertain as to how existing laws will be applied to the Internet. The adoption of new laws or the application of existing laws may decrease the growth in the use of the Internet, which could in turn decrease the usage and demand for our services or increase our cost of doing business. Some local telephone carriers have asserted that the increasing popularity and use of the Internet have burdened the existing telecommunications infrastructure, and that many areas with high Internet use have begun to experience interruptions in telephone service. These carriers have petitioned the Federal Communications Commission to impose access fees on Internet service providers and online service providers. If access fees are imposed, the costs of communicating on the Internet could increase substantially, potentially slowing the increasing use of the Internet. This could in turn decrease demand for our services or increase our cost of doing business. Taxation of Internet transactions could slow the use of the Internet. The tax treatment of the Internet and electronic commerce is currently unsettled. A number of proposals have been made at the federal, state and local level and by various foreign governments to impose taxes on the sale of goods and services and other Internet activities. Recently, the Internet Tax Information Act was signed into law placing a three-year moratorium on new state and local taxes on Internet commerce. However, future laws may impose taxes or other regulations on Internet commerce, which could substantially impair the growth of electronic commerce. We depend on continued improvements to our computer network and the infrastructure of the Internet. Any failure of our computer systems that causes interruption or slower response time of our product and services or services could result in a smaller number of users of our product and service. If sustained or repeated, these performance issues could reduce the attractiveness of our product and services to consumers and our products and services to health care professionals, providers of health care related products and services and other Internet advertisers. Increases in the volume of our product and service traffic could also strain the capacity of our existing computer systems, which could lead to slower response times or system failures. This would cause the number of homecare search inquiries, other revenue producing offerings and our informational offerings to decline, any of which could hurt our revenue growth and our brand loyalty. We may need to incur additional costs to upgrade our computer systems in order to accommodate increased demand if our systems cannot handle current or higher volumes of traffic.
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The recent growth in Internet traffic has caused frequent periods of decreased performance. Our ability to increase the speed with which we provide services to consumers and to increase the scope of these services is limited by and dependent upon the speed and reliability of the Internet. Consequently, the emergence and growth of the market for our services is dependent on the performance of and future improvements to the Internet. Our internal network infrastructure could be disrupted. Our operations depend upon our ability to maintain and protect our computer systems. Although we have not experienced any material outages to date, we currently do not have a redundant system for our product and service and other services at an alternate site. Therefore, our systems are vulnerable to damage from break-ins, unauthorized access, vandalism, fire, earthquakes, power loss, telecommunications failures and similar events. Although we maintain insurance against fires and general business interruptions, the amount of coverage may not be adequate in any particular case. Experienced computer programmers, or hackers, may attempt to penetrate our network security from time to time. Although we have not experienced any material security breaches to date, a hacker who penetrates our network security could misappropriate proprietary information or cause interruptions in our services. We might be required to expend significant capital and resources to protect against, or to alleviate, problems caused by hackers. We do not currently have a fully redundant system for our product and service. We also may not have a timely remedy against a hacker who is able to penetrate our network security. In addition to purposeful security breaches, the inadvertent transmission of computer viruses could expose us to litigation or to a material risk of loss. We could face liability for information on our product and services and for products and services sold over the Internet. We provide third-party content on our product and service, particularly health care listings. We could be exposed to liability with respect to this third-party information. Persons might assert, among other things, that, by directly or indirectly providing links to product and services operated by third parties, we should be liable for copyright or trademark infringement or other wrongful actions by the third parties operating those product and services. They could also assert that our third party information contains errors or omissions, and consumers could seek damages for losses incurred if they rely upon incorrect information. We may enter into agreements with other companies under which we share with these other companies’ revenues resulting from the purchase of services through direct links to or from our product and service. These arrangements may expose us to additional legal risks and uncertainties, including local, state, federal and foreign government regulation and potential liabilities to consumers of these services, even if we do not provide the services ourselves. We cannot assure you that any indemnification provided to us in our agreements with these parties, if available, will be adequate. Even if these claims do not result in liability to us, we could incur significant costs in investigating and defending against these claims. Our general liability insurance may not cover all potential claims to which we are exposed and may not be adequate to indemnify us for all liability that may be imposed. Strategic Business and Marketing Plan
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GHCS has performed a competitive analysis of the following competitors to determine how it can attract customers.
COMPETITORS Company Name Strengths: Weaknesses:
Skilled Nursing Homes Staff/patient ratio, Dietary resources Lack of personal attention and average daily living support.
Company Name Strengths: Weaknesses:
Acute Care Hospitals Availability and variety of medical professionals. Extraordinary cost difference.
Company Name Assisted Living Facilities Strengths: Security Weaknesses: Unfamiliarity of community surroundings.
GHCS holds leverage over its competition because it provides reliable service, cost competitive prices, friendly atmosphere and it will attract clients because we offer affordable cost, convenience and superior service. Referral advertising and word-of-mouth marketing will be key components in attaining new clients. Management is confident that prospects will hear positive word-of-mouth marketing and will seek us out. Given the personal nature of communications between individuals, we believe that our business will gain an added layer of credibility over our competition. Our objective is to treat each customer with respect and we will be recognized for our integrity and superior service. Our research shows that individuals are more inclined to believe word-of-mouth marketing than other promotional methods. With the emergence of Web 2.0, mainly Facebook, You Tube, My Space and Digg, word-of-mouth marketing will flow through these social networks and strengthen our position and recognition in a cost effective manner. GHCS’ entry against competition will be eased by its choice of distribution channel. We will employ direct selling such as outbound sales force, mail order campaign, Internet and telephone sales, agents who will sell directly on our behalf to end users, distributors such as wholesalers who will sell directly to retailers, retailers also known as dealers or resellers who will sell directly to end users, a zero-level channel otherwise known as establishing direct contact with end users with no intermediaries involved. Our research has shown that this is the most cost effective mode to reach our target market. Our selected distribution channel is well designed and takes into account the link between sales activities and marketing efforts to better reach and serve our end users. It addresses consumer needs and preserves our role in an increasingly fluid channel structure. Service levels and operational performance will be enhanced and costs will be controlled.
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GROWTH STRATEGY Operation Plan GHCS intends to service its customers by fulfilling the following needs: »» Continued and constant life-sign monitoring via the Internet. »» Assisted living caregiver services. »» Immediate access and interaction with attending physician and other healthcare professionals.
New to the industry, the Hospital Outpatient Module product line will be manufactured off-site and supplied in-house. GHCS intends to adopt an aggressive approach to ensure it responds to its customers’ demands, fulfills prompt and courteous delivery, and remains cost efficient and committed to providing added-value to its existing product line. Determining factors in ensuring that GHCS provides a reliable service and/or quality product line are establishing cost-efficient delivery modes, continued research & development enhancements, upholding exceptional service level. Global HOM management will remain focused on providing customer support and after-saleservice by the best way to provide repeat sales and services will be by word-of-mouth and references from health professionals...
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Management Team GHCS is owned by Robert J Merritt, Dr. Darcey H Merritt and Robert B Merritt whose many years of experience in the Healthcare industry is a true asset to the business, however, management will hire the most reputable and renown healthcare professionals in the nation to make up its core staff. An organization’s core is defined by its administrative/management team. It encompasses the vision, goals and commitment of the company. These key players have the knowledge, commitment and drive that this organization requires to become a success and achieve recognition in the industry. GHCS plans to keep wage and salary expenses to a minimum. To achieve this objective, and at full operating capacity, GHCS will hire a total of 18,500 employees within the first three years of operations. The company will engage outside managers to launch the business: Management Outsourcing Representatives: Mark Effinger, Chief Executive Officer Effinger is the chief evangelist and a founder of ExitPath. He views our business through a 16-year history of developing, building, funding and marketing discrete technologies. Founding seven companies, selling six, taking one into liquidation and one to Inc 500, has provided a fairly well rounded scope. Beginning in laser technologies he conceived, patented, manufactured and marketed the number one selling laser display system worldwide. Through acquisition, the company became one of the fastest growing private companies in the US, ranking 389th in the Inc. 500. Along the way he was a founder of Mere Image Design Group, Eclipse Technology, Continuum Software, Storm Systems, Access Communications, CFM, InterClient and held active roles in J. Steam, Tech Coast and eAgency. Woody Kassin, Chief Financial Officer — Kassin is the chief strategist and an Executive Partner in ExitPath. He possesses a wealth of entrepreneurial and financial experience, in conjunction with relevant domain expertise in a variety of disciplines, spanning both domestic and international endeavors. Kathleen E. Dinsmore Security Policies. She was the Chief Marketing Officer for Rancho Los Amigos Medical Center, Downey, and CA.; where she held several important positions. Prior to her stay at Rancho Los Amigos Medical Center, she was a private consultant with NBK Enterprises. Kathleen has equally vast background and experience in computer technology. She is proficient with DOS/WINDOWS and MICINTOSH software, Word, Excel, PageMaker, Adobe Illustrator and Filemaker Pro. She has a Masters Degree in Public Health from UCLA, an MBA from Univ. of Nebraska,
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Mark Paul, Chief Operating Officer — Mark Paul has more than twenty years of executive level leadership experience. This includes 11 years at Fortune 500 companies (Ford Aerospace and Northrop Corporations) and 12 years of leadership, management, organizational, and process consulting as the president at Phoenix Management, Inc., and most recently as a partner at Synergy Consulting Group, LLC, an executive/ business development consultancy. In both companies, Mark has helped over 100 corporate clients significantly increase their revenue, profitability and company value, through consulting, interim executive work and/ or through training. In his capacity as Chief Operating Officer of Chrome Data Corporation from 1995 to 1997, Mark transformed the company from a single DOS product company to a multiple Windows and Web-based products and services company. Results include driving a 67% improvement in sales; a 15x increase in valuation increase and a 10x cash improvement, while dramatically decreasing time-to-market. He has also held interim executive assignments, including VP of Marketing and Business Development. Recently, he helped a client increase the company’s value from an acquisition offer of $1 million to an offer of $16 million in less than six months, due to strategic advice and interim executive work. Prior to consulting, Mark spent eleven years at Ford and Northrop Corporation; where he was an “intrapreneur” - building a $50 million business unit in two years, and leading 250 people in line and project roles. Mr. Paul holds US Patent # 4,631,583, a degree in Physics from the University of California, Irvine, and performed post-graduate studies in technology management at the California Institute of Technology and California State University, Fullerton. Mark has served on boards of directors and advisors for various technology-based companies, and recently published The Entrepreneur’s Survival Guide (available on amazon.com). He is currently at work on The CXO’s Secrets to Success, due for release early next year. Robert J. Merritt — Mr. Merritt is the inventor of the Hospital Outpatient Module and designer of the accompanying Homecare Delivery Service. He is a former hospital administrator with a master’s degree in hospital and nursing administration from the Yale University program in Public Health. Prior to taking the position as the first executive director for the National Association of Health Services Executives, he was the Special Assistant to the President of the New York City Health and Hospital Corporation. Mr. Merritt has received several awards and recognition for his creativity and skills, both during his training and in the field of health care, starting with the undergraduate award as the Most Outstanding Student of the Graduating Class from the New Haven University. Early into his career, the U.S. Jaycees christened him with the “Outstanding Young Men of America “award in 1974. He was then listed in “Men of Achievement,” Cambridge, England.
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OPERATING BUDGET GHCS Profit and Loss Statement for YEAR 1 Gross Sales
$
Less: Sales Returns and Allowances
31,205,328.00 1,560,266.40
Net Sales
$
29,645,061.60
EXPENSES Advertising
$592,746.00
Repairs
7,650.00
Deposits
25,500.00
Insurance
51,000.00
Licenses and permits
10,200.00
Professional fees
204,000.00
Rent
45,900.00
Maintenance Services
765,000.00
Office Supplies
357,000.00
Office Expenses
3,872,700.00
Unanticipated Business Expenses
25,500.00
Credit card fees
2,550.00
Delivery Expenses
3,442,500.00
Dues and Subscriptions
1,020.00
Health insurance
765,000.00
Payroll taxes
5,247,500.00
Property Taxes
5,100.00
Salary Owner(s)
867,000.00
Sales Tax
255,000.00
Telephone
127,500.00
Utilities
357,000.00
Vehicle Expenses
1,912,500.00
Wages
6,757,648.00
Website hosting
57,700.00
Total Expenses
$
25,755,214.00
NET INCOME (LOSS)
$
3,889,847.60
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GHCS forecasts annual payroll of $19,035,250 in the first operating year. Projected sales of $36,205,000.00 support personnel costs in its first year of operations.
FINANCIAL PROJECTIONS GHCS SALES FORECAST YEAR 1 TOTAL PROJECTED ANNUAL SALES: $36,205,000.00 MONTH
UNITS SOLD & LEASED
AVERAGE MONTHLY RATE
REVENUES
15
$103,150
$154,7250
FEBRUARY
17
$103,150
$1,753,550
MARCH
19
$103,150
$1,959,850
APRIL
17
$103,150
$1,753,550
MAY
33
$103,150
$3,403,950
JUNE
24
$103,150
$2,475,600
JULY
25
$103,150
$2,580,750
AUGUST
26
$103,150
$2,683,900
SEPTEMBER
27
$103,150
$2,787,050
OCTOBER
38
$103,150
$3,919,700
NOVEMBER
49
$103,150
$5,054,350
DECEMBER
61
$103,150
$6,292,150
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ANNUAL REVENUES
65
GHCS SALES FORECAST 5-YEAR PROFORMA
HOSPITAL OUTPATIENT MODULE FIVE YEAR OPERATING BUDGET PROJECTIONS
Total User Population Starting 3/2015 R&D Yr Start-Up
34,500,000 2nd Operating Year
1st Operating Year Units Placed
Units Placed
3rd Operating. Year Units Placed
4th Operating Year Units Placed
5th Operating Year Units Placed
REVENUE CENTERS UNITS LEASED Full-Service Moderate Service Minimal Service UNITS SOLD E-Bed Module Monitoring Module Full HOM Units Adjusted Gross Income Proceeds from Initial Investment Total Operating Income EXPENSE CENTERS Corporate Payroll & Benefits Executive Staff CMC Staff & Operations Regional Staff & Overhead Warehouse/Distribution/Packaging Maintenance & Repairs Gen. Admin. & Overhead Caregivers Service Contracts START-UP/ R&D Administrative Staff/Benefits Gen. Admin. & Overhead Patent Appli (dom.& International) Marketing/Promotion Prototype Development Eng./Design/Software Technical Consultants GROSS ANNUAL EXPENSES Plus: Cost of Manufacturing & Production Total Operating Exenses
Price/Unit $ 450 $ 300 $ 250 $ $ $ $
1,000 2,500 3,000 5,000
$ 10,500
2.65% 7.48% 5.27% 4.99% 1.21% 4.09% 35.31% 61.00% 750,000 325,000 75,000 1,500,000 640,000 910,000 800,000
52 83 146 281
8,499,938 9,066,600 13,363,791
5175 5175 4313 14,663
10 25 35 70
25,000 75,000 175,000
11 26 37 74
45.00% 30.00% 25.00% 100.00%
NET OPERATING INCOME Less: Return of Initial Capitalization Line of Credit Paydown NET INCOME (before taxes) Less:Corporate Taxes NET PROFIT AND CASH FLOW
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31,205,328 5,000,000 36,205,328
23.81% 28.57% 47.62% 100.00%
$ $ $
849,993,750 566,662,500 393,515,625
8,021 8,021 6,684 22,727
26,250 78,750 183,750
16 41 57 114
1,810,460,625
$ $ $
1,317,490,313 878,326,875 609,949,219
12,834 12,834 10,695 36,363
40,688 122,063 284,813
26 65 91 182
2,806,213,969
$ $ $
2,107,984,500 1,405,323,000 975,918,750
22,460 22,460 18,716 63,635
65,100 195,300 455,700
46 114 159 319
4,489,942,350
3,688,972,875 2,459,315,250 1,707,857,813
$ $ $
113,925 341,775 797,475 7,857,399,113
1,810,460,625
2,806,213,969
4,489,942,350
7,857,399,113
1,075,024 3,034,406 2,137,877 2,024,290 490,860 1,659,187 14,324,182 24,745,825
1,397,531 3,944,728 2,779,240 2,631,577 638,118 2,156,943 18,621,436 32,169,573
1,816,790 5,128,146 3,613,012 3,421,049 829,553 2,804,027 24,207,867 41,820,445
2,725,185 7,692,219 5,419,518 5,131,574 1,244,330 4,206,040 36,311,801 62,730,667
5,000,000 24,035,250 1,755,013 25,790,263
24,745,825 73,680,000 98,425,825
32,169,573 92,100,000 124,269,573
41,820,445 115,125,000 156,945,445
62,730,667 143,906,250 206,636,917
10,415,065
1,712,034,800
2,681,944,396
4,332,996,905
7,650,762,196
5,000,000
5,000,000 5,000,000 1,702,034,800 425,508,700 $1,276,526,100
5,000,000 5,000,000 2,671,944,396 667,986,099 $2,003,958,297
5,000,000 3,000,000 4,324,996,905 1,081,249,226 $3,243,747,679
7,650,762,196 1,912,690,549 $5,738,071,647
826,941 2,334,159 1,644,521 1,557,146 377,584 1,276,298 11,018,601 19,035,250
5,415,065 1,516,218 $3,898,847
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Marketing Objectives The general thrust of the marketing plan will be to place a HOM unit in every imaginable type of setting during the test-marketing year to determine and evaluate the product and service from every aspect. The projected markets for the business will include nursing home residents (1.5 million), home-bound patients (25.3 million), and assisted living homecare elderly (6.3 million); heart-surgery rehab patients (765,000); respiratory outpatients (520,000); kidney dialysis patients (360,000); comatose patients (175,000); the military (50,000); and public institutions (125,000). Among these 35 million potential users of the HOM/HDS, it is estimated that ultimately, at least 5% (or 1.75 million users) will lease or buy a HOM and its service component on any given day.
Segmentation Home bound elderly This segment of the market will represent the principal customers for the company. The marketing campaign will present the business as an alternative to a nursing home. It is estimated that over 28 million elderly persons are living alone and in need of some level of average daily assistance. These persons are going to great lengths to avoid the nursing home experience. Post-operative patients Data published by the Division of Health Care Statistics, U.S. Department of Health and Human Services has reported that over 41% of all admissions to acute care hospitals in the nation could be better and more economically cared for at home. That 41% represent more than 2 million admissions. The HOM & HDS would be the ideal solutions for those unwarranted admissions. Comatose patients Unofficial estimates of the total number of comatose patients who are hospital-bound is 175,000. Source: U.S. Census, 2000. Acute Respiratory Patients Respiratory diseases such as asthma, chronic obstructive pulmonary disease (COPD) and tuberculosis kill one in four people in the U.S. The premature infant with underdeveloped lungs, the third grader with cystic fibrosis, the teenager with asthma, the student with AIDS, the wife with pneumonia, the CEO with bronchitis, the coach with lung cancer, the coal miner with black lung, or even the veteran with emphysema--people from all walks of life are often cared for by respiratory therapists. However, more and more Medicare patients today are not afforded that necessity. When the Medicare/Medicaid program was first developed, respiratory care was fully recognized
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as a viable component of hospital services. However, the scope of respiratory care services has developed significantly beyond the hospital setting. Where respiratory patients were once confined to hospital beds, they may now be cared for in skilled nursing facilities or even in their own homes. But in the past 25 years the Health Care Financing Administration (HCFA) has failed to advance coverage policies for respiratory care in those other settings. This failure to provide adequate reimbursement for respiratory services has consequently led facilities to use increasingly more lesser-skilled healthcare providers in an effort to cut costs. This decrease in utilization of respiratory therapists in Medicare skilled nursing facilities has produced poorer outcomes and ultimately higher costs. More than 520,000 patients could benefit from the use of HOM & HDS. All other segments The remaining segments of the market that is, schools, colleges, universities, sports arenas, medical clinics, doctors’ offices, shopping malls, etc. will be those sectors to which the HOM and HDS will be sold outright. The segments above will be eligible for the lease program and reimbursable through Medicare and Medicaid.
Size The winds have changed from acute, in-hospital care to outpatient facilities and clinics. The primary reason for this change is directly related to cost considerations. The number of patients with end-stage kidney disease, for example, has grown to 9 percent per year over the past decade to well over 360,000 in the U.S. alone. Dialysis patients need treatment for the rest of their lives unless they get a kidney transplant. The Model (B) HOM unit would be especially useful for many of those 360,000 patients, who could be treated in the comfort of their residences, and at a much lower cost. Another chronic illness that will benefit from a HOM is those patients with respiratory therapy requirements. Home respiratory therapy generates $3.5 billion to $44 billion in annual sales. This sector is growing at 8% per year. This market is driven by the rise in emphysema, chronic bronchitis and asthma. As baby boomers age, demand rises for home health care and outpatient services. People are also living longer, so services are needed for longer stretches of time. The HOM care services will provide the appropriate blending of home health care, medical informatics, personal life-sign monitoring, and Internet interaction, all at a competitive price. Preliminary estimates of the potential market for HOM care health system are listed below:
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Environment We have no operating history. Global HOM Care Systems, Inc. was incorporated on March 14, 2002 and initially funded on February 15, 2002. To date we have engaged primarily in finalizing our business plan, developing our products and services, establishing the corporate and other formalities necessary to begin operations, and negotiating relationships with strategic business partners. Accordingly, we have no operating history on which to base an evaluation of our business and prospects. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by technology companies in their early stages of development. We cannot assure you that we will be successful in addressing the risks we may encounter, and our failure to do so could have a material adverse effect on our business, prospects, financial condition and results of operations.
Alternatives The alternative to the Hospital Outpatient Module and Homecare Delivery Service is the status quo home and healthcare systems. There are various home care services available, however as was noted in a letter to this company from Jay T. Allman, Director of Business Analysis, Office of Management and Budget of the American Medical Association, “ you should be aware that there are other companies out there going to market with potentially similar services.... They appear to offer several monitoring products, but I haven’t noticed that they combine these products with anything comparable to your “full-service” and moderate service” levels.” In a letter from Mr. Stuart Guterman, Director of the Office of Research, Development and Information of the Department of Health & Human Services, Centers for Medicare and Medicaid Services, and the company was given the most encouraging news of al, regarding the possibility that the HOM & HDS may qualify for reimbursement through the federal Medicare and Medicaid. Mr. Guterman stated, “...CMS encourages the use of ambulatory services when feasible with the goal of providing high quality care in the least restrictive environment. Payment policies are aligned with this objective and ambulatory care is a reimbursable expense in the Medicare structure.” Satellite & Internet Observation — The patient will be observed and monitored via satellite and Internet, or from a designated physician’s office, clinic, hospital and/or the CMC; all linked to a HOM unit anywhere in the range of the geosynronous global positioning satellite system. (The weekly charge is $98 for each module in use).
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Support The mantra for the company is “ultimate client satisfaction.” Operational, managerial, manufacturing and efficiency standards will be of the highest level. Standard operating procedures will be measured and evaluated at all levels. Nothing less than excellence will be acceptable. During the startup year and the test-marketing period, the CMC will be located in California. In the first operating year, a regional office will be setup in each of the three time zones (Eastern, Central and Pacific). The regional offices will be patterned after the original CMC in California. A Regional Executive Director will oversee the operations of each regional office. The manufacturing plant is located in Carthrage, TN. The warehousing and distribution will be conducted from that location. The HOM units will be assembled, packaged and shipped from that central site. The regional offices will provide trained repair technicians to be either dispatched to the site of the HOM in the field, or will be available to provide technical support to the caregivers and patients. The maintenance techs will be responsible for the proper and successful operations of each unit in the field.
Central Monitoring Center At the peak of operations, and following a comprehensive R&D period, the business will be analogous to a new “managed care” health care model that is planned specifically for chronic and long-term care patients. With an intensive use of the most advanced computer technology and communications systems, the business will be administered and implemented through a Central Monitoring Center (CMC) that will be centrally located to cover a global spectrum. The principal responsibility of the CMC is to maintain constant monitoring and observation of each “on-line patient,” and to coordinate the expansive complement of health information and professionals on behalf of the patients. With the use of personalized and private e-mail addresses, patients will be able to interact with their physicians, other health professionals, friend and relative via the Internet. The patient will be equipped with a network of wearable or ingestible sensors that will allow observers to monitor the patients’ vital signs. Automatic and sensitive alarms will alert the CMC the moment default levels have been matched. Pervasive telemetry connections will provide the CMC opportunities to collect and analyze an array of medical information for the attending physicians and the patients. There will be three basic levels of care and services. A full-service regimen will provide 24-hour caregiver service. This level will consist of three, 8-hour shifts. Additionally, a private physician will personally visit the patient for at least one hour per week. A moderate service level will provide 8 hours of caregiver service, plus a one-hour visit per week by a physician. The minimal service level will provide 4 hours of caregiver service and will be primarily a monitoring service. One of the HOM units (Model B) will be designed to accommodate specific conditions, such as those patients who are chronic respiratory sufferers, or those who are
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in long-term commas. The minimal service level will also accommodate those individuals who would prefer to avoid being placed in a skilled nursing home. The CMC will be staffed with at least seven (7) Patient Monitors (more if required) on each of three 8-hour shifts. The Patient Monitors (PM) will be the personal health care “ombudsmen” and representatives for a group of patients. The PM will maintain on-going oversight of the “online patients” and manage their medical needs for as long as they are “on- line users” of the HOM and the GHC services. All delivery, dispatch and interactive communication will be managed and coordinated by the Patient Monitors located at the CMC. The financial strategies for this health care delivery system will be incorporated with existing payment methods. The HOM care system will qualify for Medicare, Medicaid and other third party insurance payers. It is estimated that Global HOM Care Systems, Inc. will reduce the overall health care expenditure in the U.S. by more than (25%) twenty-five percent Our executive offices are located 600 N Pacific Ave.., Glendale, CA ; our telephone number is (818) 545-8128. Our Product and service address is www.homcarewilltravel.com. Information contained on our Product and service does not constitute a part of this memorandum.
Target(s) There are well over 28 million individuals in the U.S. alone, who have opted to remain in their homes (with very expensive average-daily-living support), rather than being placed in a nursing home. Moreover, it is estimated that nearly 80 percent of those already in nursing homes, would prefer being cared for at their own residence. Additionally, approximately 10 percent of the nation’s hospital admissions could be better treated at home with a HOM unit and caregiver. That 10 percent represents over 520,000 patients. The average daily rate for a hospital stay is over $2,200 (nationwide average), and the average stay is five days (health care tab of over $5.7 billion over a five day period). The average rate for the use of Global’s HOM and service is $245 per day. If those 520,000 used the HOM and its services for the same five days, it would have cost approximately $637 million, which would have reduced the national health care budget by some $5 billion for the five days. When that saving is annualized, the benefit and reduction in national health cost would have been more than $365 billion. The potential uses for the HOM and its accompanying homecare service will be applicable in various venues and environments, such as hospitals, doctor’s offices, civic centers, public facilities, even the military branches
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Image Strategic Advantages Brand identity — Since the HOM monitoring unit is a new and untried invention, its brand identity will have the advantage of un-initiation. For a substantial period, the HOM logo and market identity will be unique and readily recognizable. Proprietary Technology — The Hospital Outpatient Module and its accompanying delivery process has patent pending status (Patent Pending # 60/382,449). Strategic Partnership — Strategic relationship will be built with all potential disciplines and venues in which the HOM unit and its service can be used, such as, hospitals, nursing homes, medical clinics, doctor’s offices, public and private recreational facilities, schools and colleges, industrial plants, military branches and underdeveloped countries market, and since there is no other product and service is available, the ability to switch to another similar service.
Promotion PROMOTIONAL & ADVERTISING The Company will hire a top rated, “Fifth Avenue” type marketing firm to prepare and present the company and its services to the market place
Manufacturing Standards The company will endeavor to develop an image of efficiency, quality of service and economies of scale. The mantra for the company is “ultimate client satisfaction.” Operational, managerial, manufacturing and efficiency standards will be of the highest level. Standard operating procedures will be measured and evaluated at all levels. Nothing less than excellence will be acceptable. To complement the HOM equipment, and what is an integral part of the of the inventive business process, is the Homecare Delivery Service. This service component includes homecare services by professional caregivers, regular doctor visits, and 24-hour observation by Patient Monitors at a central monitoring center. The units are designed and will be marketed in various models to accommodate types and levels of care required by the patients. The homebound patient will be observed via any computer or access to the Internet, by family members, attending physician, clinic and hospital professionals, and from anywhere on the globe. Depending on the level of care required, the patient will be visited by a doctor at least once a week. A caregiver will accompany each unit placed in the field; the level of coverage will depend on the patient’s needs and desires.
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Publicity We would like to generate free press by: »» Promoting our sound environmental practices to the local and national news service; »» Co-sponsoring national seminars and infomercials; »» Offering training and exhibition clinics at national health conventions and meetings; »» Getting one or more professional organizations or organizations to endorse the company’s product and service.
Advertising The Company will hire a top rated, “Fifth Avenue” type marketing firm to prepare and present the company and its services to the market place. In order to establish and maintain a consistent and uniform corporate presence, the central office will design, print and distribute all of the company’s printed material. The company’s marketing efforts will be directed toward executing a strategy that demonstrates cost savings and quality of care. The company will develop strong alliances with key organizations to help bring awareness and credibility to the product and service. These alliances will include all major health care organizations, including the American Medical Association, the American Hospital Association, the American Nurses Association, the American Nursing Home Association, all state and local health departments, health insurers and governmental health care agencies. All of these alliances will become an integral part of the company’s marketing strategy. Little time and money will be spent on direct consumer advertising, but will rely on direct sales efforts through national health care distributors, viral marketing, publicity, word of mouth, and strategic alliances to drive users to the service.
Pricing Our objective is to achieve the maximum income possible from operations. The company will lease the HOM equipment and services to the larger segment of users, that is, those users who will be eligible for reimbursement through Medicare, Medicaid and other third-party coverage. For other sectors of the market, they will be required to purchase the equipment and services directly. Following the test-marketing phase, a set price will be established for the product and service. Potential buyers will include wealthy individuals and celebrities who would prefer to recuperate in the comforts of their homes; physicians who are cost conscientious and would rather monitor their patients at their office before admitting them to a costly hospital setting; medical clinics, schools and colleges, sports facilities, and other places where large numbers of people frequent. The company will provide a financing plan for those not able to pay the full price for a unit. The purchase price will include the cost for caregivers service, if desired. Strategic Business and Marketing Plan
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Distribution The main channel of distribution will be direct to our customers, through referrals from hospitals, doctors and other health care professionals. The Company will hire a top rated, “Fifth Avenue” type marketing firm to prepare and present the company and its services to the market place.
Logistics A five-year contract will be negotiated with a suitable manufacturer to mass produce, warehouse and distribute the HOM units. The central office will be responsible for delivery of each HOM unit, including setup and initial training. HOM units will be delivered via UPS, FedEx and other major carriers. The regional offices will be the point of delivery. The company will acquire specially designed trucks for delivery to final destinations. The regional offices will provide trained repair technicians to be either dispatched to the site of the HOM in the field, or will be available to provide technical support to the caregivers and patients. The maintenance techs will be responsible for the proper and successful operations of each unit in the field.
Support All regional directors, caregivers, patient monitors, delivery and customer service personnel will be required to have at least 40 hours of special training before full employment. Additionally, extended and on-going training will be mandated at least annually following employment. Highly comprehensive and all-encompassing insurance package will be maintained to cover any and all contingencies, both real and imagined. The headquarter office will maintain uniform supplies and equipment for the regional offices. All office utilities will be maintained and serviced through the headquarter office for the first few years in order to establish a benchmark for future expansion. Computer and software consultants will be on-call, continually, to assure that the entire system is working properly at all times.
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Competitive Analysis Global HOM Care Health Systems, Inc. (GHC) must be described and classified as an outpatient/homecare sector of the medical industry. Companies in this sector range from rehab and other outpatient facilities to firms that provide kidney dialysis and respiratory service. Each part of the industry faces its own issues, but all operate freestanding units and face varied competition, often mom-and-pop companies Most provide services outside a standard hospital setting; some operate contract facilities within hospitals. All are gaining from the aging population and longer life expectancy. The firms must provide quality care at a lower cost than hospital and nursing homes in order to compete. HealthSouth Corporation runs 2,000 facilities for rehab and other services. LinCare Holding, Inc. is a national player in the home respiratory therapy field. These two leaders combine to hold about 30 percent of the market.
WHO’S WHO IN THE GROUP Ranked by Earnings Per Share and Relative Strength Company
EPS Rank
REL STR
MKT Value ($ mill.)
REVENUE ($ mill.)
RehabCare Group
95
99
$566
$416
U.S. Physical Therapy
92
98
64
60
LinCare Holdings
89
98
2,760
666
DaVita
78
99
1,116
1,487
Dynacq. Int’l
70
93
72
26
HealthSouth Group
53
99
5,231
4,119
Apira HealthCare Group
17
98
1,328
998
9
94
247
1,520
Centiva Health Services
Comment: The top eight of 28 medical outpatient/home care companies ranked by a combination of their earnings per share and relative strength ratings. Source: Health Care Financing Administration DaVita, the leader in dialysis services, grew from $80 million in yearly sales and 3,000 patients in 1994, to $1.5 billion in sales and 40,000 patients by the end of 1998. But integration woes and high debt cause its stock to slip to 80% of its value in 1999. As a result of the trend toward outpatient services over the past decade, half of all U.S. hospital beds are vacant. That means hospitals have to find a way to make money on that space.
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That’s where GHC could play an important role for acute hospitals to offset its losses on vacant beds. A hospital might set aside several rooms that are dedicated only to patients who could be cared for much more economically by GHC and its services on site. Where a patient would need to pay as much as $2,000 (per patient-day) for in-patient care at a typical hospital, a similar level of care and services could be purchased for about $470 per day with the full-service level provided by HOM and its complement of caregivers.
Telemedicine Providers are beginning to test concepts in telemedicine that let clinics and doctors help and monitor their patients online. However, the concept that come the closest to GHC and its HOM is the Kodak Care Station, a combination videophone and medical station that lets a homebound patient communicate with a nurse via a video conferencing unit, which has built-in stethoscope, thermometer, blood pressure cuff, etc., to monitor life-signs, and is linked to a local hospital. Patients are able to talk and interact with a health professional at the hospital through a videophone hooked to the web. There are over 190 similar programs in operation nationwide, linked to over 2 million homebound patients. The Kodak unit cost more than $3,000, plus a nurse’s station that is located at the local hospital that costs over $40,000. American Telecare, Inc. (ATI) of Eden Prairie, Minn. sells a telemedicine videophone system called Aviva. A Newport Beach, CA. company, LifeMasters, Inc. claims its web-based system of home nurse monitoring reduces emergency room costs by 62 percent. The HOM telemedicine concept goes much farther than what is currently available. GHC also incorporates the much-needed human factor by providing in-home caregivers to operate the equipment and give the “TLC” that is obviously missing with a simple videophone conversation. The current financing and reimbursement methods used in the U.S. health system provide coverage by the government, the employers and private insurance companies. The segment of the population that will use the HOM/HDS service will be supported by Medicare and private insurance policies. Presently, Medicare pays 80 percent of the patient’s medical bills. The remaining 20 percent is paid by the patient through private insurance payers. The HOM/HDS management will be structured so that its services will qualify for all governmental and third party coverage.
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HOM Design Specifics The management team combines the experiences of executives and an advisory board with extensive backgrounds in managing and developing successful businesses within the health, communications, computer and retail fields. Global HOM Care Systems, Inc. currently has two executive on board (at deferred salaries), and is in the process of identifying and hiring additional support staff, which will be involved with the preparation and implementation of the test- marketing phase. Upon obtaining its first round of funding, the company will engage the services of ExitPath and its management team to fully implement the business as outlined in the Business Plan. The company’s executives and operations will commence in the State of California.
Component Parts & Features of the HOM Hospital E-Bed — A fully automatic, adjustable, recessed and fold-up hospital bed is built into the module. The adjustments can be positioned up, down and in a partial sitting angle. The night and tray stand is attached to the side of the bed. The e-Bed is the middle section of the HOM unit. It contains the central feature of the Hospital Outpatient Module. The hospital style, fully automatic and adjustable bed is equipped with controls and sensors to provide life- sign analysis of the patient/occupant. When the right and left sections, to make-up the complete HOM equipment, accompany the e-bed section it is used to monitor a patient’s life-signs, e.g., blood pressure, heart rate, temperature, pulse, EEG, EKG, and other health vital health signs. When the e-bed is not needed to monitor life-signs, but is only used as a comforting, entertainment and observation unit, the built-in plasma TV/monitor and web cam that are connected to the bed will allow the user to “internetuate” with the world…from the comfort of the bed. This section will be sold to the public and to those who do not require medical care or health services delivered to the home. There are at least three different models of the HOM equipment. Each designed to accommodate the specific needs of the patient. For example, for the patient who requires dialysis treatment or chronic respiratory treatment, the model B unit will be used. This model contains the e-bed and all of its features, plus open shelves on each side to provide for the necessary medical equipment for blood transfusions and dialysis treatment. Plasma TV and Video Monitor — Attached to the foot of the e-bed is a television and flatscreen video monitor that is remotely controlled. The patient is able to raise and lower the TV/ monitor into the plasma console. Mounted on top of the monitor is a rotating digital camera. The camera is linked to a geosynchronous positioning satellite system for those who do not have access to the Internet. The patient is able to position the TV/monitor to whatever positions that is most convenient. Patient Monitoring System — The rotating web camera, with its wide-angle and super- zoom lens, will be linked to the GPS system and the Internet. The communication infrastructure is designed with various kinds of highly advanced communication systems, i.e., fiber optic, Digital Subscriber Language, wireless radio, cellular and standard telephone lines, depending upon the Strategic Business and Marketing Plan
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location of the patients. The camera unit will also be linked to the Central Monitoring Center (CMC), as well as to hospitals, clinics, doctor’s offices, and to family and friends who have access to the patient’s private e-mail address that is controlled and monitored by the Patient Monitor at the CMC. Life Signs Monitors — Cardiac and respiratory monitors are standards equipment on the HOM unit to keep abreast of the patient’s condition at any time during the day or night. These monitors will also be tied to the computer program for analysis and trends development. Health professionals (doctors and nurses) are able to interact with the patient at various intervals during the day, and to be provided with either “computer-voice generated” or hardcopy printout of the patient’s current or historical health condition. The monitors are positioned so that the health professionals can read them over the Internet, and from any location on the globe. Personal Entertainment Panel — Attached to the e-bed is an adjustable and swivel panel that allows the patient to control the adjustments of the e-bed, lighting, plasma TV/monitor, the emergency alarms, and to direct communication with a Patient Monitor at the Central Monitoring Center. A wireless computer keyboard is used to interact with the unit. The panel is also used as a food tray and workstation. Life-Sign Monitoring Panel — To the other side of the e-bed, a second panel contains receptacles and controls for use by the patient and caregivers to activate and view life-sign vectors, that is, temperature, blood pressure, heart rate, blood-sugar levels, respiratory data and much more. An Internet tuner is built-in so that the HOM software package will provide computer generated voice alarms and instructions when life signs levels reach their default points. With the use of a network of wearable and ingestible sensors, the HOM unit is able to provide health professionals with a standard, hardcopy print-out or visual presentation of the patient’s medical condition, both current status, as well as historical charts of trends in lifesigns. E-Bed Platform Frame — A standard bed-frame that is designed to accommodate various models of adjustable beds, with multiple positions to provide the ultimate in comfort for the patient or general users. Internet Tuner — It is now possible to install the Internet Protocol Circuitry into the HOM software package so that each of its life-sign sensor-monitors will react with audio and video responses. For example, instead of simply being alerted with a “beep” or “flashing lights” to create an alarm, the HOM unit has a uniquely designed software application that allows the unit to communicate with the patient in the appropriate and chosen language when a life-sign has reached its default level. For example, with a computer generated, personable and human-like voice-over speech, the HOM unit will warn: “Mary, your body temperature has reached 104 degrees.” You should lower your temperature by taking your medication.” Alternatively, a pleasant and familiar voice might say: “Your heart rate is elevated. Take your…medication, immediately.” The Internet tuner will also allow these warnings and instructions to be transmitted to the Patient Monitor at the Central Monitoring Center, the attending physician, nurse; or a friend or relative might receive the warnings as well all of this accomplished over the Internet. Strategic Business and Marketing Plan
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Patient Artificial Language (PAL) — A proprietary software application is another standard feature of the HOM unit that allows the e-bed equipment to perform the voice-over functions described above. The voice-over broadband, speech-enabled application provides real- time communication that will use artificially intelligent interaction with the patient. In addition to alerting and instructing the patient with information regarding their vital signs, the application will also provide real-time, online communication to attending physicians and other health professionals with access to the patient’s private and secured e-mail address. This technology is provided by the built-in Internet Tuner Ethernet bandwidth that is connected to the system’s monitoring and sensoring devices Utility Closets & Storage Bins — Storage for cleaning supplies and chemicals, clean towels, bedding and gowns are designed into the unit. Equipment Storage Compartments — Areas for portable medical apparatus and other equipment; such as for EEG/EKG, cardiac defibrillator, dialysis and respiratory units, digital x- ray, oxygen and IV canisters, etc. Backup Power Source (Generator/Battery) — In the event of a power outage, the module is equipped with a backup generator or battery which will automatically activate seconds after there is an interruption in the electrical power. The backup power source will also serve to complement locations where there is not adequate electrical power or voltage. Administrative Storage Compartment — The left section of the HOM unit contains the administrative equipment and facilities that will be used by caregivers and attending health professionals. This compartment will be stocked with various administrative and office supplies for the computer, printer/fax/scanner and camera. It will also maintain stationery, printer and fax paper, forms and other miscellaneous office supplies. Computer Work Station — In order to facilitate the visiting physicians and other health professionals, to access and review medical records, and to complete necessary forms and reports, a computer workstation is attached to the left section. Overhead Lighting System — Built onto the top of the e-bed is a unique lighting system that is remotely controlled by the patient or caregiver. The light can be adjusted to particular angles and can be raised or lowered in the intensity and brightness. Bedpan Compartment — Although the HOM will most likely be located at a residence, the unit has a compartment that is used to store a bedpan for emergencies.
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Compensation of Directors Each of the Company’s non-employee directors received an option to purchase 25,000 shares of the Company’s Common Stock at a price of $1.00 per share upon joining the board of directors. These options become exercisable in equal installments of 8,333 shares on each of the first, second and third anniversaries of the date the option was granted and terminates on the fourth anniversary of the date of grant. Each non-employee director also received cash compensation of $2,000 per month for his/her service as a director of the Company during 2000 starting with the month that each became a director. As part of the Company’s cash expense reduction plan, for the first six months of 2003, each director received a five-year option for the purchase of 24,000 shares exercisable at a price of $3.50 per share. The Company intends to present a plan at the next Board of Director’s meeting based on input from the Compensation Committee of the Board to provide for additional option grants in lieu of resuming cash compensation for the next twelve-month period. Directors may be reimbursed for actual out-of- pocket expenses incurred by them in attending meetings and in the performance of their duties as directors. Director Liability and Indemnification Our bylaws require that we indemnify our officers and directors from certain claims, liabilities and expenses under certain circumstances and subject to certain limitations and the provisions of Delaware law. Under Delaware law, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, against expenses actually and reasonably incurred by him in connection with an action, suit or proceeding if the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation. With respect to a criminal action or proceeding, such officer, director or employee must have had no reasonable cause to believe his conduct was unlawful. We have obtained a director and officer liability insurance policy with limits of $1,000,000. We are negotiating to increase our director and officer insurance limits. To the extent that indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons as described above, or otherwise, we have been informed that in the opinion of the Securities and Exchange Commission that such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. Executive Compensation We have entered into employment agreements with each of our executive officers and key employees. These agreements can be terminated by us at any time, subject to certain severance obligations as described below, and by the employee upon thirty (30) days advance written notice. The employment agreements also include a confidentiality clause, a non-compete provision, and provisions restricting the solicitation of employees or customers.
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Market Status This business model is profoundly unique and will have the dual effect of reducing this country’s healthcare expenditure. Following the test-marketing year, the company will endeavor to place at least 500 units for lease, and another 220 units for sale. At this level of market penetration, it is projected that the business will generate some $122 million in annual revenues in the second operating year, on just 500/220 units. The “e-bed” (i.e., the middle section of the units) will be marketed to the general public at a price of approximately $12,000 per bed. At the projected growth rate of 28% for the next five years, by the fifth operating year, it is estimated that profits will jump to over $200 million, on $518 million in annual sales. Initial investors will exit from the 2nd stage of funding, or exercise their option to remain invested through the IPO offering. The most critical funding phase for this venture is the initial seed capital that is required for the business. A functioning prototype will be completed by the spring of 2016. A patent application will be submitted prior to the Initial Public Offering. A manufacturer has committed to invest up to $150,000 to complete the prototype and promotional presentations, in exchange for stock options. The “e-bed” will be the first to be marketed to the eral public, which will begin during the 2017 Christmas season. Interested investors are encouraged to contact us soon; for at the point the full amount of $5,000,000 is pledged, we will discontinue this initial private solicitation.
Strategic Business and Marketing Plan
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