Attached files
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark
One)
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☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the
quarterly period ended: May 31, 2021
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or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Commission
File Number: 000-56214
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Healthcare Business Resources Inc.
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(Exact
name of registrant as specified in its charter)
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Delaware
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84-3639946
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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718 Thompson Lane, Suite 108-273 Nashville, TN
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37204
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(Address
of principal executive offices)
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(Zip
Code)
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615-856-5542
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(Registrant’s
telephone number, including area code)
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(Former
name, former address and former fiscal year, if changed since last
report)
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Securities
registered pursuant to Section 12(b) of the Act: None
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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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.
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Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated
filer ☑
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Smaller
reporting company ☑
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Emerging
growth company ☑
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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
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Page
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F-1
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F-1
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F-2
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F-3
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F-4
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F-5
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9
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14
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14
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15
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15
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15
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15
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15
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15
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15
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16
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HEALTHCARE BUSINESS RESOURCES
Consolidated Balance Sheets
(Unaudited)
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May 31, 2021
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February 28, 2021
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Assets
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Current
Assets:
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Cash
and cash equivalents
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$42,914
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$35,055
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Interest
receivable
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2,532
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-
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Total
current assets
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45,446
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35,055
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Note
receivable
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200,000
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-
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Total
Assets
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$245,446
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$35,055
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Liabilities and Stockholders' Deficit
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Current
Liabilities:
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Accounts
payable
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$52,639
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$36,486
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Accrued
expenses
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48,061
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35,181
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Note
payable
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200,000
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-
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Total
current liabilities
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300,700
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71,667
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Total
Liabilities
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300,700
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71,667
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Commitments
and contingencies
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Stockholders'
Deficit:
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Common
stock, $0.001 par value, 200,000,000 shares authorized, 19,701,000
and 19,590,000 shares issued and outstanding,
respectively
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19,737
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19,590
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Additional
paid-in capital
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1,912,908
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1,591,283
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Accumulated
deficit
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(1,987,899)
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(1,647,485)
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Total
Stockholders' Deficit
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(55,254)
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(36,612)
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Total
Liabilities and Stockholders' Deficit
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$245,446
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$35,055
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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)
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May 31, 2021
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May 31, 2020
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Revenue:
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Revenue
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$6,408
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$-
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Total
revenue
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6,408
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-
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Operating
expenses:
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General
and administrative
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259,789
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12,060
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Professional
fees
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86,588
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32,232
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Total
operating expenses
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346,377
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44,292
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Loss
from operations
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(339,969)
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(44,292)
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Other
expenses:
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Interest
income
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2,532
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-
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Interest
expense
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(2,977)
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Total
other income (expense), net
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(445)
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Net
loss
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$(340,414)
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$(44,292)
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Loss
per share - basic and diluted
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$(0.02)
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$(0.00)
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Weighted
average shares outstanding - basic and diluted
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19,699,385
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19,590,000
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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)
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Common
Stock
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Additional
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Total
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Shares
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Amounts
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Paid-in
Capital |
Accumulated
Deficit
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Stockholders’
Equity
(Deficit)
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Balance,
February 29, 2020
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19,590,000
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$19,590
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$173,110
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$(19,857)
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$172,843
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Net
loss
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(44,292)
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(44,292)
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Balance,
May 31, 2020
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19,590,000
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$19,590
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$173,110
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$(64,149)
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$128,551
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Balance February 28, 2021
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19,590,000
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19,590
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1,591,283
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(1,647,485)
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(36,612)
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Common
shares issued for cash, net
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70,000
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70
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30,350
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-
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30,420
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Common
shares issued for settlement of accounts payable
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77,000
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77
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38,423
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-
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38,500
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Stock-based
compensation
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-
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-
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252,852
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252,852
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Net
loss
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-
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(340,414)
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(340,414)
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Balance,
May 31, 2021
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19,737,000
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$19,737
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$1,912,908
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$(1,987,899)
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$(55,254)
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See
accompanying notes to the unaudited consolidated financial
statements.
F-3
HEALTHCARE BUSINESS RESOURCES
Consolidated Statements of Cash
Flows
For the three months ended May 31, 2021 and 2020
(Unaudited)
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May 31,
2021
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May 31,
2020
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Cash Flows from Operating Activities:
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Net
loss
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$(340,414)
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$(44,292)
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Stock
based compensation
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252,852 -
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Changes
in operating assets and liabilities:
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Interest
receivable
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(2,532)
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-
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Accounts
payable
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54,653
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25,881
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Accrued
expenses
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12,880
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-
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Net
cash used in operating activities
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(22,561)
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(18,411)
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Cash Flows from Investing Activities:
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Note
receivable
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(200,000)
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-
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Net
cash used in investing activities
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(200,000)
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-
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Cash Flows from Financing Activities:
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Proceeds
on notes payable
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200,000
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-
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Proceeds
from equity issuance, net
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30,420
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-
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Net
cash provided by financing activities
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230,420
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-
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Net
change in cash and cash equivalents
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7,859
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(18,411)
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Cash
and cash equivalents, at beginning of period
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35,055
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172,843
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Cash
and cash equivalents, at end of period
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$42,914
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$154,432
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Supplemental
disclosures of cash flow information:
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Cash
paid for interest
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$-
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$-
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Cash
paid for income taxes
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$-
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$
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-
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Supplemental
disclosure of non-cash investing and financing
activities:
Common
shares issued for settlement of accounts payable
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$38,500
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$-
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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.
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Weighted Average
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Number of Options
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Exercise Price Per Share
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Outstanding
at February 28, 2021
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785,000
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$0.50
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Granted
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2,105,000
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0.50
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Exercised
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-
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-
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Forfeited
and expired
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(460,000)
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0.50
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Outstanding
at May 31, 2021
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2,430,000
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$0.50
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The following table discloses information regarding outstanding and
exercisable options at May 31, 2021:
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Outstanding
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Exercisable
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||
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Weighted Average
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Weighted Average
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Weighted Average
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Exercise Price
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Number of Options
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Exercise Price Per Share
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Remaining Life (Years)
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Number of Options
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Exercise Price Per Share
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$0.50
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2,430,000
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$0.50
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6.18
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1,407,750
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$0.50
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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:
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Expected
life
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5
years
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Volatility
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106.95- 108.26%
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Dividend
yield
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0%
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|
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
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.
10
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.
11
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.
12
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.
13
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.
14
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
|
|
|
15
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
|
|
16