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9 | | 1314 | | 1314 | | 1415 | | 1415 | | 1415 | | 1415 | | 1415 | | 1415 | | 14 | | 15 | | 16 | | | HEALTHCARE BUSINESS RESOURCES Consolidated PBART I – FINANCIAL INFORMATIONalance Sheets (Unaudited) HEALTHCARE BUSINESS RESOURCES INC.| | | | | | | | | Assets | | | | Current Assets: | | | | Cash and cash equivalents | $42,914 | $35,055 | | Interest receivable | 2,532 | - | | Total current assets | 45,446 | 35,055 | | | | | | Note receivable | 200,000 | - | | | | | | Total Assets | $245,446 | $35,055 | | | | | | Liabilities and Stockholders' Deficit | | | | | | | | Current Liabilities: | | | | Accounts payable | $52,639 | $36,486 | | Accrued expenses | 48,061 | 35,181 | | Note payable | 200,000 | - | | Total current liabilities | 300,700 | 71,667 | | | | | | Total Liabilities | 300,700 | 71,667 | | | | | | Commitments and contingencies | | | | | | | | Stockholders' Deficit: | | | | Common stock, $0.001 par value, 200,000,000 shares authorized, 19,737,000 and 19,590,000 shares issued and outstanding, respectively | 19,737 | 19,590 | | Additional paid-in capital | 1,912,908 | 1,591,283 | | Accumulated deficit | (1,987,899) | (1,647,485) | | Total Stockholders' Deficit | (55,254) | (36,612) | | | | | | Total Liabilities and Stockholders' Deficit | $245,446 | $35,055 |
As of November 30, 2020, and February 29, 2020
| | November 30, 2020 (Unaudited) | | | ASSETS | | | | Cash | $66,096 | $172,843 | | Total Current Assets | 66,096 | 172,843 | | | | | | Total Assets | $66,096 | $172,843 | | | | | | LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | Current Liabilities | | | | $49,447 | $- | Total current liabilities | 49,447 | - | | | | | | Total Liabilities | 49,447 | - | | | | | | COMMITMENTS AND CONTINGENCIES (See Note 5) | | | | | | | | Stockholders’ Equity | | | Common stock; $0.001 par value; 200,000,000 shares authorized, 19,590,000 shares issued and outstanding | 19,590 | 19,590 | | Additional paid in capital | 1,590,750 | 173,110 | | (1,593,691) | (19,857) | | Total Stockholders’ Equity | 16,649 | 172,843 | | Total Liabilities and Stockholders’ Equity | $66,096 | $172,843 |
TheSee accompanying notes are an integral part of these condensed financial statements.
HEALTHCARE BUSINESS RESOURCES INC.
CONDENSED STATEMENTS OF OPERATIONSForto the three and nine months ended November 30, 2020 and the period from September 9, 2019 (Inception) to November 30, 2019
(unaudited)
| | For the three months ended November 30, | For the nine months ended November 30, | For the period from September 9, 2019 (Inception) to November 30, | | | | | 2019 | | | | | | | Revenue | $- | $2,009 | $- | | | | | | | Operating Expenses | | | | | Advertising and marketing | - | 37,896 | - | | Professional fees | 39,393 | 96,824 | - | | Share based compensation | - | 1,417,640 | 950 | | Other business expenses | 20,512 | 23,483 | - | | Total Operating Expenses | 59,905 | 1,575,843 | 950 | | | | | | | Loss from operations | (59,905) | (1,573,834) | (950) | | | | | | | Net Loss before income taxes | (59,905) | (1,573,834) | (950) | | Income tax provision | | - | - | | Net loss after income taxes | $(59,905) | $(1,573,834) | $(950) | | | | | | | Net loss per common share - basic and fully diluted | $(0.00) | $(0.08) | $(0.00) | | | | | | | Weighted average shares outstanding – basic and diluted | 19,590,000 | 19,590,000 | 19,590,000 |
The accompanying notes are an integral part of these condensedunaudited consolidated financial statements.
HEALTHCARE BUSINESS RESOURCES INC. Consolidated CSONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITYtatements of Operations For the three and nine months ended November 30,May 31, 2021 and 2020 and the period from September 9, 2019 (Inception) to November 30, 2019 (unaudited)(Unaudited)
| | |
| | | | | | | | | Total Stockholders’ Equity | | | | | | | | | Balance, February 29, 2020 | 19,590,000 | $19,590 | $173,110 | $(19,857) | $172,843 | | | | | | | | | Net loss | - | - | - | (44,292) | (44,292) | | | | | | | | | Balance, May 31, 2020 | 19,590,000 | $19,590 | $173,110 | $(64,149) | $128,551 | | | | | | | | | Stock options issued for service | - | - | 1,417,640 | - | 1,417,640 | | | | | | | | | Net loss | - | - | - | (1,469,637) | (1,469,637) | | | | | | | | | Balance, August 31, 2020 | 19,590,000 | $19,590 | $1,590,750 | $(1,533,786) | $76,554 | | | | | | | | | Net loss | | | | (59,905) | (59,905) | | | | | | | | | Balance, November 30, 2020 | 19,590,000 | $19,950 | $1,590,750 | $(1,1,593,691) | $16,649 |
| | | | | | | | | Revenue: | | | | Revenue | $6,408 | $- | | | | | | Total revenue | 6,408 | - | | | | | | Operating expenses: | | | | General and administrative | 259,789 | 12,060 | | Professional fees | 86,588 | 32,232 | | | | | | Total operating expenses | 346,377 | 44,292 | | | | | | Loss from operations | (339,969) | (44,292) | | | | | | Other income (expense): | | | | Interest income | 2,532 | - | | Interest expense | (2,977) | - | | | | | | Total other income (expense), net | (445) | - | | | | | | Net loss | $(340,414) | $(44,292) | | | | | | Loss per share - basic and diluted | $(0.02) | $(0.00) | | Weighted average shares outstanding - basic and diluted | 19,699,385 | 19,590,000 |
| | | | | | Total Stockholders’ Equity | | |
| | | | | Balance, September 9, 2019 (Inception)
| - | - | - | - | - | | | | | | | | Shares issued for service
| 950,000 | 950 | | | 950 | | | | | | | | | Net loss | | | | (950) | (950) | | | | | | | | Balance, November 30, 2019 | 950,000 | 950 | | (950) | - |
TheSee accompanying notes are an integral part of these condensedto the unaudited consolidated financial statements.
HEALTHCARE BUSINESS RESOURCES INC. Consolidated Statements of CSONDENSED STATEMENT OF CASH FLOWStockholders' Equity (Deficit) For the ninethree months ended November 30,May 31, 2021 and 2020 and for the period from September 9, 2019 (Inception) to November 30, 2019 (Unaudited) | | For the nine months ended November 30, 2020 (unaudited) | For the period from September 9, 2019 (Inception) to November 30, 2019 (unaudited) | | Cash flows from operating activities: | | | | Net loss | $(1,573,834) | $(950) | | Adjustments to reconcile net loss to net cash used in operating activities: | | | | Stock based compensation | 1,417,640 | 950 | | Changes in operating assets and liabilities: | | | | Accounts payable | 49,447 | | | Net cash used in operating activities | $(106,747) | - | | | | | | Cash flows from investing activities | $- | $- | | Cash flows from financing activities | | | | Net cash provided by financing activities shares issued to investors | $ - | $5,600 | | | | | | Net change in cash | $(106,747) | $5,600 | | Cash, at beginning of period | 172,843 | - | | Cash, at end of period | $66,096 | $5,600 | | | | | | Supplemental cash flow information: | | | | Interest paid | 7 | | | Income taxes paid | - | | | | | | Supplemental Schedule of Non-cash transactions: 20 to 1 forward stock dividend | - | 1,900 | | | | |
| | | | | | | | | | | | Stockholders’ Equity (Deficit)
| | | | | | | | Balance, February 29, 2020 | 19,590,000 | $19,590 | $173,110 | $(19,857) | $172,843 | | Net loss | - | - | - | (44,292) | (44,292) | | 19,590,000 | $19,590 | $173,110 | $(64,149) | $128,551 | | | | | | | | | Balance February 28, 2021 | 19,590,000 | 19,590 | 1,591,283 | (1,647,485) | (36,612) | Common shares issued for cash, net | 70,000 | 70 | 30,350 | - | 30,420 | Common shares issued for settlement of accounts payable | 77,000 | 77 | 38,423 | - | 38,500 | | - | - | 252,852 | - | 252,852 | | - | - | - | (340,414) | (340,414) | | Balance, May 31, 2021 | 19,737,000 | $19,737 | $1,912,908 | $(1,987,899) | $(55,254) |
The
See accompanying notes are an integral part of these condensedto the unaudited consolidated financial statements.
HEALTHCARE BUSINESS RECOURCESRESOURCES Consolidated Statements of Cash Flows For the three months ended May 31, 2021 and 2020 (Unaudited) | | | | | | | | | Cash Flows from Operating Activities: | | | | Net loss | $(340,414) | $(44,292) | | Adjustments to reconcile net loss to net cash used in operating activities: | | | | 252,852 | - | Changes in operating assets and liabilities: | | | Interest receivable | (2,532) | - | Accounts payable | 54,653 | 25,881 | Accrued expenses | 12,880 | - | | Net cash used in operating activities | (22,561) | (18,411) | | | | | Cash Flows from Investing Activities: | | | Note receivable | (200,000) | - | | Net cash used in investing activities | (200,000) | - | | | | | | Cash Flows from Financing Activities: | | | Proceeds on notes payable | 200,000 | - | Proceeds from equity issuance, net
| 30,420 | - | | Net cash provided by financing activities | 230,420 | - | | | | | | Net change in cash and cash equivalents | 7,859 | (18,411) | | | | | | Cash and cash equivalents, at beginning of period | 35,055 | 172,843 | | | | | | Cash and cash equivalents, at end of period | $42,914 | $154,432 | | | | | | Supplemental disclosures of cash flow information: | | | | $- | $- | Cash paid for income taxes | $- | $ | | | | - | Supplemental disclosure of non-cash investing and financing activities: Common shares issued for settlement of accounts payable | $38,500 | $- |
See accompanying notes to the unaudited consolidated financial statements.
HEALTHCARE BUSINESS RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTEOTE 1. NATURE OF BUSINESS AND GOING CONCERN
On September 9, 2019 (commencement of operations), Healthcare Business Resources, Inc. (the(“we”, “our”, the “Company”), a domestic corporation was organized in Delaware to provide consulting services.services to healthcare organizations. These services include management consulting related to sales, marketing, business development and advisory board functionsfunction. The Company’s services are designed to healthcare organizations;help clients increase revenue, improve overall efficiency and financial incentive program services to identify grants, tax creditseffectiveness of their operations and other government incentives for companies across a variety of industries including healthcare.grow strategically. Risks and Uncertainties
On March 5, 2021, HBR Pointclear, LLC, a Delaware limited liability company was incorporated. HBR Pointclear, LLC was formed to enter into an Option Agreement to Purchase Business Assets with PointClear Solutions, Inc.
In March 2020,this filing, unless context requires otherwise, references to “we,” “our,” “us” and “our Company” refer to Healthcare Business Resources Inc., a Delaware corporation, and its subsidiary HBR Pointclear, LLC. Liquidity and Going Concern These consolidated financial statements have been prepared on a going concern basis, which assumes the World Health Organization declaredCompany will continue to realize its assets and discharge its liabilities in the outbreaknormal course of a novel coronavirus disease (“COVID-19”)business. The continuation of the Company as a pandemic, which continuesgoing concern is dependent upon the ability of the Company to spread throughoutobtain equity financings to continue operations. The Company has a history of and expects to continue to report negative cash flows from operations and a net loss. Management believes that the U.S. COVID-19cash on hand is having an unprecedented impact onsufficient to fund its planned operations into but not beyond the U.S economynear term. These factors raise substantial doubt regarding the Company’s ability to continue as federal, state,a going concern twelve months from the issuance of these consolidated financial statements. These consolidated financial statements do not include any adjustments to the recoverability and local governments reactclassification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to this public health crisis.continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, or other third-party funding. On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 Outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally.
The full impact of the COVID-19 Outbreak continues to evolve as of this date. As such, we cannot estimate the full magnitude that the pandemic will have on our business. If the COVID-19 Outbreak continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations for the Company’s fiscal year ending February 29, 2021 and beyond. Management is actively monitoring the impact of the global pandemic on its financial condition, liquidity, operations, industry, and workforce.
The impacts of the current COVID-19 pandemic are broad reaching and the impacts on the Company’s sales of advisory services is to date unknown. Due to the COVID-19 outbreak, there is significant uncertainty surrounding the potential impact on the Company’s future results of operations and cash flows and its ability to raise capital. Continued impacts of the pandemic could materially adversely affect the Company’s near-term and long-term revenues, earnings, liquidity, and cash flows as the Company’s customers may request temporary relief, delay or not make scheduled payments on their payment commitments. The Company is actively working with its clients to proactively manage the impact of the pandemic on its business and the business of the operators.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company prepares itsaccompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United StatesStated of America. The accompanyingAmerica (“U.S. GAAP”) for interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X.information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the Company’s opinion,The unaudited financial statements include all adjustments (consisting of normal recurring accruals) consideredadjustments) which are, in the opinion of management, necessary for a fair presentation have been included.in order to make the condensed financial statements not misleading. Operating results for the three and nine months ended November 30, 2020,May 31, 2021, are not necessarily indicative of the final results that may be expected for the full year. While management of the Company believes that the disclosures presented herein is adequate and not misleading,year ending February 28, 2022. For more complete financial information, these interimunaudited financial statements should be read in conjunction with the audited financial statements and the footnotes thereto for the period ended February 28, 2021, included in our Form 10-K filed with the SEC on June 7, 2021 (“Form 10-K”). Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 Outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 Outbreak continues to evolve as of this date. As such, we cannot estimate the full magnitude that thepandemic will have on our business. If the COVID-19 Outbreak continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations for the Company’s fiscal year ending February 29, 2020.2022 and beyond. Management is actively monitoring the impact of the global pandemic on its financial condition, liquidity, operations, industry, and workforce. Given the daily evolution of the COVID-19 Outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 Outbreak on its results of operations, financial condition, or liquidity for the Company’s fiscal year ending February 29, 2022. The accounting and reporting policiesimpacts of the Company conform with accounting principles generally accepted in the United States of America, and, as such, include amounts based on judgments, estimates, and assumptions made by management that affect the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statementscurrent COVID-19 pandemic are broad reaching and the reported amountsimpacts on the Company’s sales of revenues and expenses duringadvisory services is to date unknown. Due to the reporting period. Actual results could differ from those estimates. The CompanyCOVID-19 outbreak, there is in the development stage, which is defined as an entity devoting substantially all of its efforts to establishing a new business and for which its primary line of business has not yet began. The following is a description of the more significant accounting policies followed by the Company:uncertainty surrounding Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of November 30, 2020.
Revenue Recognition In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) or (“ASC Topic 606”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The new guidance provides a five-step process for recognizing revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also requires expanded qualitative and quantitative disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for public companies with annual reporting periods beginning after December 31, 2017 and is to be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial adoption. Early adoption is permitted for all entities but not before the original effective date for public entities. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. As an emerging growth company, the Company has an option to adopt with all other entities.
The Company plans to recognizerecognizes revenue from contracts with its customers under ASC Topic 606. As sales are expected to be primarily from sales of advisory services, the Company does not expect significant post-delivery obligations. Revenue from sales of advisory services is recorded over the period earned and are recognized under ASC Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements: ● Executed contracts with the Company’s customers that it believes are legally enforceable; ● Identification of the performance obligation within the respective contract, which is the delivery of service; ● Determination of the transaction price for each performance obligation in the respective contract; ● Allocation of the transaction price to each performance obligation; and ● Recognition of revenue only when the Company satisfies each performance obligation
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Emerging Growth Company
We charged clients a fee for our management consulting services based on time (e.g. hourly or project-based or monthly) or based on a percentage of cost savings or incremental revenue (e.g. revenue or cost savings). As of November 30, 2020,May 31, 2021, we have acquired one customer who has contracted with us to assess, evaluate and implementmarket its services in exchange for a performance-based fee equal to 50% of any fee collected by this customer from business referred by our financial incentive program services. Specifically, we contracted with a software company that delivers structured reporting and coding solutionsCompany to healthcare facilities ranging from small practices to large hospital systems. The client is owned by a non-affiliate Selling Stockholder.this customer. We contracted to provide financial incentive services, including assistance to identify potential grants, incentives, refunds, tax credits and future savings/and or programs that might be available as well as to make recommendations to optimize growth and profitability. Under the terms of the agreement, we and our third-party consultants will pursue any economic benefits identified on behalf of our client by performing additional services, including but not limited to further review of financial and tax information, tax planning, program application, accounting work and preparation and filing of tax returns and/or amendments and work with the client to optimize process improvement and documentation. Under the terms of our agreement, our fees are 5% of the economic benefit obtained as a result of our services, are earned upon performing of the services, but we have agreed to accept payment for services rendered to within 10 days of our client receiving any financial incentives from the United States Treasury or other Government organization. While wecannot estimate the value of the fee or fees we may obtain from this engagement, if any. As of May 31, 2021, we have generated limited management consulting services revenue and we are unable to determine how long, if ever, it will take to generate any management consulting services revenue. We cannot assure you that we will ever generate enough management consulting revenue to sustain our operations. We plan to charge clients a fee for this engagement to be approximately $7,500, there is no assuranceour financial incentives services primarily based on the economic benefit we will be successful at providing the services or that the client will receive the estimated economic benefit.
The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, (the "Securities Act"), as modifiedfacilitate from any incentive programs, when permitted by the Jumpstart our Business Startups Act of 2012, (the "JOBS Act"),any applicable rules and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies thatguidelines. Where contingency fees are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirementspermissible, fixed fee contracts may be used. As part of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Expenses
Expenses include sales and marketing costs, payroll and related benefit costs, insurance expenses,our incentive program services, we may be at risk for certain third-party accounting, legal and professionalconsulting fees and administrative overhead. Expensesuntil such time as we are recognized when incurred.reimbursed by our client, if ever.
Income Taxes
Income taxes are accounted for under the asset-and-liability method. Deferred tax assetsBasic and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the Enactment date. A valuation allowance is established for deferred tax assets that, based on management’s evaluation, are not expected to be realized.
Tax benefits of uncertain tax positions are recorded only where the position is “more likely than not” to be sustained based on their technical merits. The amount recognized is the amount that represents the largest amount of tax benefit that is greater than 50% likely of being ultimately realized. A liability is recognized for any benefit claimed or expected to be claimed, in a tax return in excess of the benefit recorded in the financial statements, along with any interest and penalty (if applicable) in such excess. The Company has no uncertain tax positions as of August 31, 2020.
Net loss per shareDiluted Loss Per Share
The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period. Diluted earningsloss per share is calculated by dividing the Company’s net incomeloss available to common stockholders by the diluted weighted average number of shares outstanding during the year. Diluted net loss per share is the same as basic net loss per share for periods where the Company reported a net loss because including the 3,000,000 dilutive securities would be anti-dilutive. Fair value of Financial InstrumentsRecent Accounting Pronouncements
The Company’sCompany does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial instruments consist primarily of cash and accounts payable. The carrying values of these financial instruments approximate their respective fair values as they are short-term in nature or carry interest rates that approximate market rate.statements. Other Recently Issued Accounting Guidance
DuringNOTE 3. NOTE RECEIVABLE
On March 12, 2021, our Company, through its wholly owned subsidiary HBR Pointclear, LLC, a Delaware limited liability company (“HBRP”); and PointClear Solutions, Inc., an Alabama corporation (“PointClear”) entered into an Option Agreement to Purchase Business Assets (the “Option Agreement”). The term of the period from September 9, 2019 through November 30, 2020,Option (the “Option Term”) commenced on March 12, 2021, and automatically expires on August 1, 2022 (the “Option Termination Date”), unless duly extended, exercised, or sooner terminated as provided in the FASB issued certain other accounting standard updatesOption Agreement. PointClear is a health care focused information technology solutions company that were not relevantprovides its clients technology driven solutions based upon its three core competencies; (i) Strategic planning, (ii) Digitization and Design, and (iii) Production and Implementation (the “Business”). Pursuant to the Company’s operations.Option Agreement, PointClear granted to HBRP an exclusive non-cancelable option (the “Option”) to require PointClear to enter into an Asset Purchase Agreement (the “Asset Purchase Agreement”) under which, HBRP may (i) purchase all of PointClear’s tangible and intangible assets used in, or useful to the Business (the “Business Assets”), and (ii) the assume certain defined liabilities and contracts related to the Business. The Option provides HBRP the right, but not the obligation, to (i) enter into the Asset Purchase Agreement at any time until August 1, 2022 (the “Option Term”), and (ii), require PointClear to sell the Business Assets and perform under the Asset Purchase Agreement.
Pursuant to the Option, HBRP shall arrange for a unsecured loan of up to $750,000 to PointClear (the “Improvement Loan”) pursuant to the Improvement Loan Agreement (the “Improvement Loan Agreement”), as consideration for obtaining rights under the Option.The loan agreement matures on the earlier of August 1, 2022, or the closing of the purchase of the Asset Purchase Agreement. PointClear is required to use the proceeds under the Improvement Loan to improve the Business and offset operating costs. If HBRP elects to exercise the Option it shall be obligated to pay to PointClear the consideration set forth in the Asset Purchase Agreement and comply with such other terms and conditions that are set forth in the Asset Purchase Agreement. The repayment of any monies lent under the Improvement Loan Agreement to PointClear will be determined based on whether or not HBRP elects to exercise the Option and enter into the Asset Purchase Agreement with Pointclear. The Option Agreement contains customary representations, warranties and covenants of PointClear and HBRP. As of May 31, 2021, the Company has loaned $200,000 of the $750,000 commitment to Pointclear, and recorded interest receivable of $2,532.
NOTE 3.4. NOTE PAYABLE On March 15, 2021, our Company issued a Promissory Note in the aggregate principal amount of $200,000 (the “Third Party Promissory Note”). The principal amount of $200,000 plus all interest under the Third Party Promissory Note will be due and payable two hundred seventy (270) days from March 15, 2021 (the “Maturity Date”). Interest on the Third Party Promissory Note will accrue at a rate of 3.0% per annum, beginning on March 15, 2021, until the principal amount and all accrued but unpaid interest shall have been paid. The Third Party Promissory Note is an unsecured debt obligation of the Company. As of May 31, 2021, the note payable balance was $200,000, with accrued interest of $1,266. NOTE 5. EQUITY Stock SplitCommon stock
On July 27, 2020,During the three months ended May 31, 2021, the Company effected a 20-for-1 stock splitsold 70,000 shares of itsour common stock in the formto investors who are “accredited investors,” as that term is definedRule 501(a) of a stock dividend.Regulation Dfor total consideration of $35,000, or $0.50 per share. The Company has retroactively restated its stockholders’ equity section by increasingpaid transaction fees of $4,580 resulting in net proceeds of $30,420.
During the three months ended May 31, 2021, the Company issued 77,000 shares of common stock and decreasing additional paid in capital for the parwith a fair value of the shares$38,500 to show the impactsettle $38,500 of the 20-to-1 increase in number of shares outstanding.accounts payable. Incentive Stock Options On August 8, 2020, we granted non-qualified stockDuring the three months May 31, 2021, the Board of Directors approved grants of 2,105,000 options to purchase up to 3,000,000 shares of our common stock at theconsultants. The options have an exercise price of $.50 per share for a ten-year term$0.50 and expire five-years following issuance. The total fair value of these option grants at issuance was $816,439. Of the newly granted options 528,750 vested at issuance and the remaining options vest over periods from five to certain of our officers, directors and consultants who are performing additional unanticipated work involved with executing the Company’s business plan and who are not being paid cash compensation.
The table below summarizes information related to options issued and vested during the nine months ended November 30, 2020:
| Options Granted | | Weighted Avg. Exercise price | Weighted Avg. Grant date fair value | Weighted Avg remaining life (in years) | | Outstanding at March 1, 2020 | - | - | - | - | | Granted | 3,000,000 | $0.50 | $1,417,640 | 10 | | Exercised | - | - | - | - | | Forfeited and expired | - | - | - | - | | Outstanding at November30, 2020 | 3,000,000 | $0.50 | $1,417,640 | 10 | | Vested at November 30, 2020 | 3,000,000 | $0.50 | $1,417,640 | 10 |
During the ninethree months ended November 30, 2020,May 31, 2021, the Company recognized $252,852 of stock-based compensation related to outstanding stock options. At May 31, 2021, the Company had $398,138 of unrecognized expenses related to options. | | | | | | | | | Outstanding at February 28, 2021 | 785,000 | $0.50 | | Granted | 2,105,000 | 0.50 | | Exercised | - | - | | Forfeited and expired | (460,000) | 0.50 | | Outstanding at May 31, 2021 | 2,430,000 | $0.50 |
The following table discloses information regarding outstanding and exercisable options at May 31, 2021: | | | | | | | | | | | | | | | | $0.50 | 2,430,000 | $0.50 | 6.18 | 1,407,750 | $0.50 |
As of May 31, 2021, the options vested and outstanding had no intrinsic value. The aggregate fair value of the options granted was $1,417,640 of which all had vested. The fair value ofmeasured during the options was determinedthree months ended were calculated using the Black-Scholes option pricing model withbased on the following assumptions: | Expected life | | | Volatility | 120.59%
106.95- 108.26% | | Dividend yield | 0%
0% | | Risk free interest rate | 0.59%0.71% - 0.90%
|
NOTE 4. INCOME TAXES
No provision for federal income taxes has been recognized for the three and six months ended November 30, 2020 has the Company incurred a net operating loss for income tax purposes and has no carry back potential. The components of deferred tax asset at November 30, 2020, are as follow:
| | Net operating loss | $330,505
| Less: Valuation Allowance | $(330,505)
| Net Deferred tax asset | $-
|
A valuation allowance is recorded if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets may not be realized. At November 30, 2020, the Company recorded a valuation allowance for the entire deferred tax asset due to the uncertainty surrounding the timing of realizing certain tax benefits in future income tax returns. The Company has carryforward losses available to offset future taxable income amounting to $1,513,000 which expire on 2035.
NOTE 5.6. COMMITMENTS AND CONTINGENCIES The Company is not aware of any other commitments or contingencies that would have a material adverse effect on the Company���sCompany’s financial condition, results of operations or cash flows. NOTE 6.7. RISK CONCENTRATIONS Financial instruments that potentially expose the Company to certain concentrations of credit risk include cash in bank accounts. The cash deposits, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). Beginning January 1, 2013, as per FDIC, all deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit are standardly insured for up to $250,000. The standard insurance coverage is per depositor, per insured bank. NOTE 8. SUBSEQUENT EVENTS Between June 1, 2021 and July 15, 2021, the Company issued 116,000 shares of common stock for net cash proceeds of $58,000. On June 10, 2021, our Company issued to Kenneth Hawkins, a member of our Company’s board of directors, a promissory note in the aggregate principal amount of $50,000 (the “$50,000 Promissory Note”). The principal amount of $50,000 plus all interest under the $50,000 Promissory Note will be due and payable two hundred seventy (270) days from June 10, 2021. Interest on the $50,000 Promissory Note will accrue at a rate of 12.0% per annum, beginning on June 10, 2021, until the principal amount and all accrued but unpaid interest shall have been paid. The $50,000 Promissory Note is an unsecured debt obligation of the Company. On June 11, 2021, our Company issued a promissory note in the aggregate principal amount of $25,000 (the “$25,000 Promissory Note”). The principal amount of $25,000 plus all interest under the $25,000 Promissory Note will be due and payable two hundred seventy (270) days from the date the principal amount is received by our Company. Interest on the $25,000 Promissory Note will accrue at a rate of 12.5% per annum, beginning on the date the principal amount is received by our Company until the principal amount and all accrued but unpaid interest shall have been paid. The $25,000 Promissory Note is an unsecured debt obligation of the Company. Our Company received the principal amount of the $25,000 Promissory Note on June 11, 2021. On June 18, 2021, we and HBR Sub, Inc., a Delaware corporation and our wholly owned subsidiary entered into and closed an Agreement and Plan of Merger (the “Merger Agreement”), with UserTech U.S. LLC, a Delaware limited liability company (“UPlus”) and UPlus Health, LLC, a Delaware limited liability company and a wholly-owned subsidiary of UPlus (“UPlus Health”). Pursuant to the Merger Agreement, and subject to the terms and conditions contained therein, HBR Sub, Inc. was merged with and into UPlus Health, with UPlus Health surviving the merger on the terms and subject to the conditions set forth in the Merger Agreement and certain ancillary agreements. UPlus Health is now our Company’s wholly owned subsidiary. The consideration for the merger consisted of our Company’s issuance to UPlus of 1,000,000 shares of our common stock and a three-year warrant to purchase 1,400,000 shares of our common stock for $0.50 per share, subject to the Special Adjustments described in the Merger Agreement, which includes UPlus’ right to unwind the merger in the event we fail to meet the Financial Metrics Plan described in the Merger Agreement. On September 29, 2021, the Company, through HBRP and PointClear entered into a Separation and Settlement Agreement (“Separation and Settlement Agreement”), effective October 1, 2021, and terminated their mutual obligations under the Option Agreement and Improvement Loan Agreement. Pursuant to the Separation and Settlement Agreement, with respect to the: (i) Option Agreement, the Option Agreement is cancelled and none of the parties have any current or future rights or obligations under the Option Agreement; (ii) Improvement Loan Agreement, the principal owed by PointClear under the Improvement Loan Agreement is reduced to $150,000. Within 30 days of October 1, 2021, PointClear shall pay to HBRP, or its designee, $25,000 which shall reduce the principal owed under the Improvement Loan Agreement to $125,000. PointClear shall pay to HBRP, or its designee, $25,000 upon receipt from CHC of the amount owed following “Final Acceptance” testing. Any balance remaining under the Improvement Loan Agreement is hereby converted to a 60-month term loan pursuant to Section 2.05 of the Improvement Loan Agreement, and its repayment shall remain subject to the Improvement Loan Agreement; and (iii)Consulting and Company Stock Option Agreements, the Consulting Agreements by and between HBRP and Shawn Ewing, Thomas White, David Karabinos and Daren McCormick are hereby cancelled by mutual consent and no money or consideration is owed or payable to any party thereunder according to the terms of such Consulting Agreements. The Company stock option agreements by and between the Company and Shawn Ewing, Thomas White and Daren McCormick are hereby cancelled by mutual consent and any option shares, vested or unvested are hereby terminated.
ITEMITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Forward-Looking Information This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. Examples of forward-looking statements include: ● the timing of the development of future products; ● projections of costs, revenue, earnings, capital structure and other financial items; ● statements of our plans and objectives; ● statements regarding the capabilities of our business operations; ● statements of expected future economic performance; ● statements regarding competition in our market; and ● assumptions underlying statements regarding us or our business. The ultimate correctness of these forward-looking statements depends upon several known and unknown risks and events. We discuss our known material risks under “Risk Factors” in our most recent Registration StatementAnnual Report on Form S-110-K filed with the Securities and Exchange Commission on September 22, 2020.June 7, 2021. However, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the Securities and Exchange Commission, particularly any future Annual Reports on Form 10- K, any Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast. We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast by our forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
Overview We operate primarily in the healthcare industry and provide services that include management consulting related to sales, marketing, business development and advisory board functions to healthcare organizations; and financial incentive program services to identify grants, tax credits and other government incentives for companies across a variety of industries including healthcare. Unless the context otherwise requires, all references to “our Company,” “we,” “our” or “us” and other similar terms means Healthcare Business Resources Inc. and its subsidiary HBR Business Development, LLC.
Principal Services We are in our development stage. We plan to generate revenue by providing consulting services. These services include: ● management consulting related to sales, marketing, business development and advisory board functions to healthcare organizations; and ● financial incentive program services to identify grants, tax credits and other government incentives for companies across a variety of industries including healthcare.healthcare; and ● technology consulting and engineering services. Our management, board of advisors and board of directors have extensive experience in market expansion strategies, financial analysis, acquisition integration, management consulting and training, healthcare law, corporate law, capital markets, mergers and acquisitions. We believe the combined experience, knowledge, credibility and connections of our people are unique and potentially valuable to prospective clients. As a result, even though we are a new business with limited revenues to date, we believe we will successfully execute our business plan. Management consulting services Our management consulting services are designed to help clients increase revenue, improve overall efficiency of their operations, grow strategically and increase profitability. We provide clients with advice and assistance tailored to address each client’s challenges and opportunities, with a focus on healthcare organizations that face operational and financial changes. We believe that distressed companies respond to challenges by restructuring their business and capital structure, while healthy companies strive to capitalize on opportunities by improving operations, reducing costs and maximizing revenue. Many organizations have limited resources dedicated to respond effectively to challenges and opportunities. As a result, we believe many organizations seek to supplement their internal resources with experienced independent consultants like us. As part of our management consulting services, we will perform an initial review of a prospective clients relevant financial, tax and business documentation at no cost to determine areas for potential corporate improvement and growth opportunities. We plan to charge clients a fee for our management consulting services based on time (e.g., hourly or project-based or monthly) or based on a percentage of cost savings or incremental revenue (e.g. revenue or cost savings). As of AugustMay 31, 2020,2021, we have acquired one customer who has contracted with us to market its services in exchange for a performance-based fee equal to 50% of any fee collected by this customer from business referred by our Company to this customer. We cannot estimate the value of the fee or fees we may obtain from this engagement, if any. As of AugustMay 31, 2020,2021, we have generated limited management consulting services revenue and we are unable to determine how long, if ever, it will take to generate any management consulting services revenue. We cannot assure you that we will ever generate enough management consulting revenue to sustain our operations. Financial incentive program services Our financial incentive program services are designed to identify grants, tax credits and other government incentives for companies across a variety of industries including healthcare. We will assist with advising on and documenting business processes related to such credits and rebates and work with certified public accounting firms and business owners to compile reports and documentation required to apply for various financial incentive programs. As part of our financial incentive program services, we will perform an initial review of a prospective client’s relevant financial, tax and business documentation at no cost to determine the potential economic benefits from various federal and state incentive programs. We plan to charge clients a fee primarily based on the economic benefit we facilitate from any incentive programs, when permitted by any applicable rules and guidelines. Where contingency fees are not permissible, fixed fee contracts may be used. As part of our incentive program services, we may be at risk for certain third-party accounting, legal and consulting fees until such time as we are reimbursed by our client, if ever. As of May 31, 2021,we generated no revenue fromfinancial incentive program services. Currently, have multiple consulting opportunities in various stages of active review by potential customers; however, we cannot assure you that any of these potential customers will engage our Company for services. Further, we cannot assure you that we will ever generate enough financial incentive program revenue to sustain our Company’s operations.
Technology consulting and engineering services Our technology consulting and engineering services include digital strategy, design, development, and management services, with expertise in enterprise software, mobile and web-based application solutions. These services are designed to help clients speed innovation, expand market share, drive revenue, and encourage patient satisfaction and population health. As part of our technology consulting and engineering services, we perform an initial review of aprospective clients' challengesand relevant technologies to determine areas for potential improvement and growth opportunities. We charge clients a fee for our technology consulting and engineering services based on the project. As of May 31, 2021,we generated no revenue from technology consulting and engineering services and we are unable to determine how long, if ever, it wouldtake to continue to attract payingclients. We cannot assure you that we will ever generate enough revenue to sustain our operations. Strategy The key elements of our business model and growth strategy are as follows: 1. Attract highly qualifiedhighlyqualified advisors and consultants. We believe performance-based compensation, including stock option plan participation, will enable us to attract top talent. In the near term, we plan to primarily engage independent advisors and consultants to minimize our fixed operating expenses. To date, we have entered into advisory board agreements with advisors who have healthcare industry experience in market expansion strategies, financial analysis, acquisition integration, management consulting and training, healthcare law, corporate law, capital markets, mergers and acquisitions. 2. Grow our network of potentialpotential clients. We plan to grow our network of healthcare and other organizations that could benefit from our services. To be successful, we must establish and strengthen the awareness of our brand. We believe that maintaining and enhancing our brand recognition is an important aspect of our efforts to generate revenue. In the near term, we plan to promote awareness of our services through public relations efforts, social media outreach, Internet marketing and business development partnerships. Our goal is to attract healthcare and other organizations who are primarily interested in growing their business through sales, marketing and business development. 3. Pursue strategic acquisitionsstrategic acquisitions. We intend to evaluate select acquisitions of complementary businesses as another means to broaden the scope of our capabilities and our client base. For example, we are interested in acquiring companies that provide consulting, training, education, marketing, audits, cost recovery, group purchasing, compliance, certification, security, information technology and other non-clinical healthcare business services. We believe strategic acquisitions can enable us to scale our revenue with less business risk.While we haveare not pursuedevaluating any potential acquisition targets to date or have any agreements to acquire any business at this time, any future acquisition may result in unforeseen operating difficulties and expenditures particularly if the key personnel of the acquired company choose not to work for us and we may have difficulty retaining the customers of any acquired business due to changes in management and ownership. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for ongoing development of our business. Results of Operations for the three months ended November 30,May 31, 2021 compared to three months May 31, 2020 and for the period from September 9, 2019 to November 30, 2019 Revenues: We generated no$6,408 of revenues for the three months ended November 30, 2020.
Operating Expenses: Overall operating expenses increasedMay 31, 2021 compared to $59,905$0 for the three months ended November 30, 2020 generally because of the Increase in legal & professional expenses of 39,393 and other business expenses of 20,513 as compared to stock based compensation of $950 for the period from September 9, 2019 (Inception to November 30, 2019.
Results of Operations for the nine months ended November 30, 2020 and for the period from September 9, 2019 to November 30, 2019
Revenues: We generated $2,009 of revenues for the nine months ended November 30,May 31, 2020. Our revenues came from management consulting services performed for customers.
Operating Expenses: Operating expenses increased to $346,377 for the nine-monthsthree months ended November, 30, 2020, ourMay 31, 2021 compared to $44,292 for the three months ended May 31, 2020. The increase in operating expenses were $1,575,843 and were comprised mainly of the stock options issuedattributed to members of management and other consultants with a fair market value of $1,417,640increase in lieu of cash compensation and total advertising and marketing expenses of $37,896 and legal and professional feesexpenses of $96,824. Our expenses for the period from September 9, 2019 to November 30, 2019 was $950 related to$54,356 and stock based compensation issued to the founders.of $252,852. Liquidity and Capital Resources Our balance sheet as of November 30, 2020 as compared to February 29, 2020 reflects a decrease ofOn May 31, 2021, we had cash of $106,747 due primarily to a net loss$42,914 and we had working capital deficit of $1,573,834 with an offset of the non-cash addback related to the stock- based compensation attributable to the stock options issued to management and consultants.$255,254.
In the future, we plan to try and raise additional capital through the issuance of additional shares of common stock or preferred stock. If we issue additional shares of common stock in the future, our then-existing stockholders may face substantial dilution. No assurance can be given that we will obtain access to capital markets in the future or that adequate financing to satisfy the cash requirements of implementing our business strategies will be available on acceptable terms. Our inability to gain access to capital markets or obtain acceptable financing could have a material adverse effect upon the results of our operations and financial condition. Our failure to raise additional funds if needed in the future will adversely affect our business operations, which may require us to suspend our operations and lead you to lose your entire investment. It is likely that our operating losses will increase in the future and it is very possible we will never achieve or sustain profitability. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall or other unanticipated changes in our industry. Any failure by us to accurately make predictions would have a material adverse effect on our business, results of operations and financial condition.
Summary of Cash Flows Cash used in operating activities Net cash used in operating activities was $22,561 and $18,411 for the three months ended May 31, 2021 and 2020, respectively, and mainly included stock based compensation, loss on settlement of accounts payable, professional fees to our consultants, attorneys and accountants. Cash used in investing activities Net cash used by investing activities was $200,000 for the three months ended May 31, 2021. The amount used in 2021 is related to our option agreement with Pointclear Solution, Inc. We had no investing activities for the three months ended May 31, 2020. Cash provided by financing activities Net cash provided by financing activities was $230,420 for the three months ended May 31, 2021, related to the sale of common stock and proceeds from note payable. We had no financing activities for the three months ended May 31, 2020. COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 Outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 Outbreak continues to evolve as of this date. As such, we cannot estimate the full magnitude that the pandemic will have on our business. If the COVID-19 Outbreak continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations for the Company’s fiscal year ending February 29, 20212022 and beyond. Management is actively monitoring the impact of the global pandemic on its financial condition, liquidity, operations, industry, and workforce. Given the daily evolution of the COVID-19 Outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 Outbreak on its results of operations, financial condition, or liquidity for the Company’s fiscal year ending February 29, 2021.2022. The impacts of the current COVID-19 pandemic are broad reaching and the impacts on the Company’s sales of advisory services is to date unknown. Due to the COVID-19 outbreak, there is significant uncertainty surrounding the potential impact on the Company’s future results of operations and cash flows and its ability to raise capital. Continued impacts of the pandemic could materially adversely affect the Company’s near-term and long-term revenues, earnings, liquidity, and cash flows as the Company’s customers may request temporary relief, delay or not make scheduled payments on their payment commitments. The Company is actively working with its operators to proactively manage the impact of the pandemic on its business and the business of the operators. Critical Accounting Policies Our critical accounting policies, including the assumptions and judgments underlying them are disclosed in the Notes to the Financial Statements.below. We have consistently applied these policies in all material respects. We do not believe that our operations to date have involved uncertainty of accounting treatment, subjective judgment, or estimates, to any significant degree.
Revenue Recognition In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) or (“ASC Topic 606”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The new guidance provides a five-step process for recognizing revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also requires expanded qualitative and quantitative disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for public companies with annual reporting periods beginning after December 31, 2017 and is to be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial adoption. Early adoption is permitted for all entities but not before the original effective date for public entities. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019.
The Company recognizes revenue from contracts with its customers under ASC Topic 606. As sales are expected to be primarily from sales of advisory services, the Company does not expect significant post-delivery obligations. Revenue from sales of advisory services is recorded over the period earned and are recognized under ASC Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements: ● Executed contracts with the Company’s customers that it believes are legally enforceable; ● Identification of the performance obligation within the respective contract, which is the delivery of service; ● Determination of the transaction price for each performance obligation in the respective contract; ● Allocation of the transaction price to each performance obligation; and ● Recognition of revenue only when the Company satisfies each performance obligation Off-Balance Sheet Arrangements As of November 30, 2020, weMay 31, 2021, we do not have an interest in any off-balance sheet arrangementsas defined in Item 303(a)(4) of Regulation S-K that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. Contractual Obligations There have been no material changes outside the ordinary course of business in our contractual commitments during the three months ended November 30, 2020.May 31, 2021. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. ITEMITEM 4. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures. Our management, with the participation ofchief executive officer, who serves as our Principal Executive Officerprincipal executive officer and Principal Financial Officer,principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2020. The term “disclosure controls and procedures,” as(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange ActAct), as of 1934, meansthe end of the period covered by this report on Form 10-K. Based on this evaluation, our principal executive officer/principal financial officer concluded that as a result of the material weakness in our internal control over financial reporting discussed below, our disclosure controls and other procedures of a company that are designed to ensurewere not effective at ensuring that information required to be disclosed by a company in the reports that it fileswe file or submitssubmit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’sSecurities and Exchange Commission's rules and forms. Disclosure controlsforms and procedures include controls and procedures designed to ensure that such information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’sour management, including its principalour chief executive officer and principalour chief financial officers,officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any The matters involving internal controls and procedures no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives andthat our management necessarily applies its judgment in evaluating the cost- benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of November 30, 2020, our Principal Executive Officer and Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. In connection with management’s assessment of our internal control over financial reporting, we identified the followingconsidered to be material weaknessesin our internal control over financial reporting as of November 30, 2020:May 31, 2021 include the following:
● We do not have written documentation of our internal control policies and procedures. ● Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. To the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard 1305) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. In light of the material weakness described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented. Changes in Internal Control Over Financial Reporting. ThereOther than noted above, there were no changes in our internal control over financial reporting duringthe quarter ended November 30, 2020May 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION ITEMITEM 1. LEGAL PROCEEDINGS. Not Applicable. ITEMITEM 1A. RISK FACTORS. The following risk factors supplement the Risk Factors described in our Form S-1 Registration Statement filed on September 22, 2020and should be read in conjunction therewith.Not Applicable.
The novel strain of coronavirus (“COVID-19”) could have an adverse effect on our business operations.
In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The World Health Organization has declared COVID-19 to constitute a global pandemic. Disruptions to our business operations could occur as a result of quarantines of employees and suppliers in areas affected by the outbreak, facility closures, and travel and logistics restrictions in connection with the outbreak.
ITEMITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Set forth below is information regarding all securities issued by our Company during the period covered by this report: Not Applicable.
March 2021 – May 2021 Private Placement ITEMDuring March 2021 – May 2021, we issued 70,000 shares of to our common stock to investors who are “accredited investors,” as that term is defined Rule 501(a) of Regulation D for total consideration of $35,000, or $0.50 per share. The Company paid transaction fees of $4,580 resulting in net proceeds of $30,420.March 2021 – May 2021 Option Grants - Consultants During March 2021 – May 2021, we granted non-qualified stock options to purchase up to 2,105,000 shares of our common stock at the exercise price of $0.50 per share to consultants. March 2021 Private Placement - Consultant Shares In March 2021 we issued a total of 77,000 shares of our common stock to two separate consultants in exchange for $38,500 in total consulting services, or $0.50 per share, for services rendered by these persons to our Company. In connection with the above transactions, no general solicitation occurred, no commission or other remuneration was paid, and no underwriter participated. We relied upon on the exemption from registration provided in Section 4(a)(2), Regulation D, Regulation S and Rule 701 of the Securities Act. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not Applicable. ITEMITEM 4. MINE SAFETY DISCLOSURES.Not Applicable.
ITEM 5. OTHER INFORMATION. Not Applicable. ITEM 5. OTHER INFORMATION.Not Applicable.
EXHIBIT INDEX
SEC Reference Number | | Title of Document | Location | | | | | | Incorporated by reference to ourCompany’s Form S-1 Registration Statement filed on June 8, 06/08/2020 | | Bylaws | | | Incorporated by reference to ourCompany’s Form S-1 Registration Statement filed on June 8, 09/22/2020 | | | | | Incorporated by reference to Company’s Form 8-K filed on 03/18/2021 | | | | | Incorporated by reference to Company’s Form 8-K filed on 03/18/2021 | | | | | Incorporated by reference to Company’s Form 8-K filed on 03/18/2021 | | | | | Incorporated by reference to Company’s Form 8-K filed on 03/18/2021 | | | | | Incorporated by reference to Company’s Form 8-K filed on 03/18/2021 | | | | | Filed herewithHerewith | | | | | Filed herewithHerewith | | | | | Filed herewithHerewith | | | | | Filed herewithHerewith
| | 101 | | XBRL data files of Condensed Financial Statements and Notes contained in this QuarterlyQuaterly Report on Form 10-Q10-K | | | | 104 | | Cover Page Interactive Data File | | |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 1,October 5, 2021.
| | Healthcare Business Resources Inc.Registrant | | | | | | |
| By: | /s/ Stephen Epstein | | | | | Stephen Epstein | | | | | Chief Executive Officer and Chief Financial Officer | |
|