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Healthcare Business Resources

Filed: 20 Jul 21, 5:29pm
 

 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
   
(Mark One)
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: May 31, 2021
or
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number:  000-56214
 
Healthcare Business Resources Inc.
(Exact name of registrant as specified in its charter)
 
Delaware84-3639946
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
718 Thompson Lane, Suite 108-273 Nashville, TN
 
37204
(Address of principal executive offices)(Zip Code)
  
615-856-5542
(Registrant’s telephone number, including area code)
 
(Former name, former address and former fiscal year, if changed since last report)
 
  
 Securities registered pursuant to Section 12(b) of the Act: None
 
Title of each classTrading Symbol(s)Name of each exchange on which registered
   
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer
 
Smaller reporting company
  
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 19,853,000 shares of common stock as of July 20, 2021.
 

 
 
 
Healthcare Business Resources Inc.
Table of Contents
 

Page
  
  
 
F-1
F-1
F-2
F-3
F-4
F-5
9
14
14
15
15
15
15
15
15
15
16
 
 
 
 
 
HEALTHCARE BUSINESS RESOURCES
Consolidated Balance Sheets
(Unaudited)
 
 
 
May 31, 2021
 
 
February 28, 2021
 
 
 
 
 
 
 
 
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, 19,701,000 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 
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
F-1
 
 
HEALTHCARE BUSINESS RESOURCES
Consolidated Statements of Operations
For the three months ended May 31, 2021 and 2020
(Unaudited)
 
 
 
May 31, 2021
 
 
May 31, 2020
 
 
 
 
 
 
 
 
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 expenses:
    
    
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 
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
F-2
 
 
HEALTHCARE BUSINESS RESOURCES
Consolidated Statements of Stockholders' Equity (Deficit)
For the three months ended May 31, 2021 and 2020
(Unaudited)
 
 
 
 Common Stock
 
 
Additional
 
 
 
 
Total
 
 
Shares
 
 
Amounts
 
 
Paid-in
Capital
 
 
Accumulated
Deficit
 
 
 Stockholders’
Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 
 
    
    
    
    
    
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 
Stock-based compensation  
  - 
  - 
  252,852 
  - 
  252,852 
Net loss
  - 
  - 
  - 
  (340,414)
  (340,414)
Balance, May 31, 2021
  19,737,000 
 $19,737 
 $1,912,908 
 $(1,987,899)
 $(55,254)
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
F-3
 
 
HEALTHCARE BUSINESS RESOURCES
Consolidated Statements of Cash Flows
For the three months ended May 31, 2021 and 2020
(Unaudited)
 
 
 
May 31, 2021
 
 
May 31, 2020
 
 
 
  
 
 
     
 
Cash Flows from Operating Activities:
 
 
 
 
    
 
Net loss
 $(340,414)
 $(44,292)
Adjustments to reconcile net loss to net cash used in operating activities:
    
    
 
 Stock based compensation
 
  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 interest
 
 $- 
 $- 
 
 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.
 
 
F-4
 
 
HEALTHCARE BUSINESS RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1. NATURE OF BUSINESS AND GOING CONCERN
 
On September 9, 2019 (commencement of operations), Healthcare Business Resources, Inc. (“we”, “our”, the “Company”), a domestic corporation was organized in Delaware to provide consulting services to healthcare organizations. These services include management consulting related to sales, marketing, business development and advisory board function. The Company’s services are designed to help clients increase revenue, improve overall efficiency and effectiveness of their operations and grow strategically.
 
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 this report, 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 Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain 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 cash on hand is sufficient to fund its planned operations into but not beyond the near term. These factors raise substantial doubt regarding the Company’s ability to continue as 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 classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, or other third-party funding.
 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the condensed financial statements not misleading.  Operating results for the three months ended May 31, 2021, are not necessarily indicative of the final results that may be expected for the year ending February 28, 2022. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements 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.
 
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.
 
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.
 
 
F-5
 
 
The Company plans to recognize 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
  
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 May 31, 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 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 our financial incentives services 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.
 
Basic and Diluted 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 loss per share is calculated by dividing the Company’s net loss 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.
 
Recent Accounting Pronouncements
The Company 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 statements.
 
 
NOTE 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 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 Option Agreement.
 
PointClear is a health care focused information technology solutions company that provides 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 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 to Pointclear, with interest receivable of $2,532.
 
 
F-6
 
 
NOTE 4. NOTE PAYABLE
 
On March 15, 2021, our Company issued to Mark Huber 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
 
Common stock
 
During the three months ended May 31, 2021, the Company sold 70,000 shares of 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.
 
During the three months ended May 31, 2021, the Company issued 77,000 shares of common stock with a fair value of $38,500 to settle $38,500 of accounts payable.
 
Incentive Stock Options
 
During the three months May 31, 2021, the Board of Directors approved grants of 2,105,000 options to consultants. The options have an exercise price of $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 twenty five months.
 
During the three months ended 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.
 
 
 
 
 
 
Weighted Average
 
 
 
Number of Options
 
 
Exercise Price Per Share
 
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:
 
 
 
 
 
 
 
 
Outstanding
 
 
Exercisable   
 
 
 
 
 
 
 
 
Weighted Average
 
 
Weighted Average
 
 
 
 
 
Weighted Average
 
 
Exercise Price
 
 
Number of Options
 
 
Exercise Price Per Share
 
 
Remaining Life (Years)
 
 
Number of Options
 
 
Exercise Price Per Share
 
 $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 measured during the three months ended were calculated using the Black-Scholes option pricing model based on the following assumptions:
 
Expected life5 years
Volatility106.95- 108.26%
Dividend yield0%
Risk free interest rate
0.71% - 0.90%
 
 
F-7
 
 
NOTE 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’s financial condition, results of operations or cash flows.
 
NOTE 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 to Ethan Kellum 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.
 
 
F-8
 
 
ITEM 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on 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.
 
 
9
 
 
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;
financial incentive program services to identify grants, tax credits and other government incentives for companies across a variety of industries including 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 May 31, 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 May 31, 2021, we have generated limited 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 from financial 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.
 
 
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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 a prospective clients' challenges and 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 would take to continue to attract paying clients. 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 qualified 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 potential 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 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 are not evaluating any potential acquisition targets 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 May 31, 2021 compared to three months May 31, 2020
 
Revenues: We generated $6,408 of revenues for the three months ended May 31, 2021 compared to $0 for the three months ended May 31, 2020. Our revenues came from management consulting services performed for customers.
 
Operating Expenses: Operating expenses increased to $346,377 for the three months ended May 31, 2021 compared to $44,292 for the three months ended May 31, 2020. The increase in operating expenses were mainly attributed to increase in legal and professional expenses of $54,356 and stock based compensation of $252,852.
 
Liquidity and Capital Resources
 
On May 31, 2021, we had cash of $42,914 and we had working capital deficit of $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.
 
 
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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, 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 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. 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.
 
 
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Off-Balance Sheet Arrangements
 
As of May 31, 2021, we do not have any off-balance sheet arrangements 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 May 31, 2021.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
Not applicable.
 
ITEM 4. CONTROLS AND PROCEDURES.
 
Evaluation of Disclosure Controls and Procedures.
 
Our chief executive officer, who serves as our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the 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 procedures were not effective at ensuring that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.
 
The matters involving internal controls and procedures that our management considered to be material weaknesses in our internal control over financial reporting as of 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. There were no changes in our internal control over financial reporting during
 
the quarter ended May 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
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PART II – OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS.
 
Not Applicable.
 
ITEM 1A. RISK FACTORS.
 
Not Applicable.
 
ITEM 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:
 
March 2021 – May 2021 Private Placement
 
During 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.
 
ITEM 4. MINE SAFETY DISCLOSURES.
 
Not Applicable.

ITEM 5. OTHER INFORMATION.
 
Not Applicable.
 
 
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ITEM 6. EXHIBITS.
 
 EXHIBIT INDEX

SEC Reference Number Title of Document  
  Incorporated by reference to Company’s Form S-1 Registration Statement filed on 06/08/2020
  Incorporated by reference to Company’s Form S-1 Registration Statement filed on 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 Herewith

 Filed Herewith

 Filed Herewith
  Filed Herewith
101 XBRL data files of Financial Statements and Notes contained in this Quaterly Report on Form 10-K  
104 Cover Page Interactive Data File  
 
 
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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report signed on its behalf by the undersigned, thereunto duly authorized on July 20, 2021.
 
 
Healthcare Business Resources Inc.
Registrant
 
    

By:  
/s/ Stephen Epstein  
 
  
Stephen Epstein
 
  Chief Executive Officer and Chief Financial Officer 
 
 
 
 
 
 
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