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: August 31,2020
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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
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.
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: 19,590,000 shares
of common stock as of October 15, 2020
Healthcare Business Resources Inc.
Table of Contents
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Page
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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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2
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5
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6
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7
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7
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7
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7
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7
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7
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7
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7
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ii
PART I – FINANCIAL INFORMATION
HEALTHCARE BUSINESS RESOURCES INC.
CONDENSED BALANCE
SHEET
As of August 31, 2020 and February 29, 2020
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August 31, 2020
(Unaudited)
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February 29,
2019
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ASSETS
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Cash
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$77,380
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$172,843
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Total
Current Assets
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77,380
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172,843
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Total
Assets
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$77,380
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$172,843
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LIABILITIES
AND STOCKHOLDERS’ DEFICIT
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Current
Liabilities
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Accounts
payable
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$826
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$-
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Total
current liabilities
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826
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-
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Total
Liabilities
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826
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-
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COMMITMENTS
AND CONTINGENCIES (See Note 5)
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Stockholders’
Equity
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Common
stock; $0.001 par value; 200,000,000 shares
authorized,
19,590,000 shares
issued and outstanding
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19,590
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19,590
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Additional paid in
capital
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1,590,750
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173,110
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Accumulated
deficit
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(1,533,786)
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(19,857)
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Total
Stockholders’ Equity
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76,554
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172,843
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Total
Liabilities and Stockholders’ Equity
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$77,380
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$172,843
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The
accompanying notes are an integral part of these condensed
financial statements.
F-1
HEALTHCARE BUSINESS RESOURCES INC.
CONDENSED STATEMENTS
OF OPERATIONS
For the three and six months ended August 31, 2020
(unaudited)
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For the three
months
ended August
31,
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For the six
months
ended August
31,
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2020
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2020
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Revenues
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Revenue
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$2,009
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$2,009
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Operating
Expenses
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Advertising and
marketing
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25,896
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37,896
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Professional
fees
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25,200
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57,431
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Share based
compensation
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1,417,640
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1,417,640
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Other
expenses
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2,910
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2,971
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Total Operating
Expenses
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1,471,646
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1,515,938
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Loss from
operations
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(1,469,637)
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(1,513,929)
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Net
Loss before income taxes
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(1,469,637)
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(1,513,929)
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Income tax
provision
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-
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Net loss after income taxes
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$(1,469,637)
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$(1,513,929)
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Net loss per common
share - basic and fully diluted
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$(0.08)
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$(0.08)
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Weighted average
shares outstanding – basic and diluted
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19,590,000
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19,590,000
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The
accompanying notes are an integral part of these condensed
financial statements.
F-2
HEALTHCARE BUSINESS RESOURCES INC.
CONDENSED STATEMENTS OF
STOCKHOLDERS’ EQUITY
For the three and six months ended August 31, 2020
(unaudited)
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Common
Stock
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Shares
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Amounts
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Additional
Paid-in
Capital |
Accumulated
Deficit
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Total
Stockholders’ Equity
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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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-
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-
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-
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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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Stock options
issued for service
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-
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-
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1,417,640
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-
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1,417,640
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Net
loss
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(1,469,637)
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(1,469,637)
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Balance,
August 31, 2020
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19,590,000
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$19,590
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$1,590,750
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$(1,533,786)
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$76,554
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The
accompanying notes are an integral part of these condensed
financial statements.
F-3
HEALTHCARE BUSINESS RESOURCES INC.
CONDENSED STATEMENT OF CASH
FLOWS
For the six months ended August 20, 2020
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For the six months ended August 31, 2020
(unaudited)
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Cash flows from
operating activities:
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Net
loss
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$(1,513,929)
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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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1,417,640
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Changes in
operating assets and liabilities:
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Accounts
payable
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826
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Net cash used in
operating activities
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$(95,463)
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Cash flows from
investing activities
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$-
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Cash flows from
financing activities
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$-
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Net change in
cash
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(95,463)
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Cash,
at beginning of period
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172,843
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Cash,
at end of period
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$77,380
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Supplemental cash
flow information:
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Interest
paid
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-
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Income
taxes paid
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-
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The
accompanying notes are an integral part of these condensed
financial statements.
F-4
HEALTHCARE BUSINESS RECOURCES INC.
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
NOTE 1. NATURE OF BUSINESS
On
September 9, 2019 (commencement of operations), Healthcare Business
Resources Inc. (the “Company”), a domestic corporation
was organized in Delaware to provide consulting services. These
services include management consulting related to sales, marketing,
business development and advisory board functions to healthcare
organizations; and financial incentive program services to identify
grants, tax credits and other government incentives for companies
across a variety of industries including healthcare.
In
March 2020, the World Health Organization declared the outbreak of
a novel coronavirus disease (“COVID-19”) as a pandemic,
which continues to spread throughout the U.S. COVID-19 is having an
unprecedented impact on the U.S economy as federal, state, and
local governments react to this public health crisis.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The
Company prepares its financial statements in accordance with
accounting principles generally accepted in the United States of
America. The accompanying interim unaudited financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information in accordance with
Article 8 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
Company’s opinion, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three and six months
ended August 31, 2020, are not necessarily indicative of the
results for the full year. While management of the Company believes
that the disclosures presented herein is adequate and not
misleading, these interim financial statements should be read in
conjunction with the audited financial statements and the footnotes
thereto for the period ended February 29, 2020.
The
Company had no activity from March 1, 2019 to August 31, 2019.
Accordingly, the condensed statements of operations, statement of
changes in stockholders’ equity and condensed statement of
cash flows for the comparative period of March 1, 2019 through
August 31, 2019 are not presented.
The
accounting and reporting policies of the Company conform with
accounting principles generally accepted in the United States of
America, and, as such, include amounts based on judgments,
estimates, and assumptions made by management that affect the
reported amounts of assets and liabilities and contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The
Company is in the development stage, which is defined as an entity
devoting substantially all of its efforts to establishing a new
business and for which its primary line of business has not yet
began. The following is a description of the more significant
accounting policies followed by the Company:
Use of Estimates
The
preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Cash
The
Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. There were
no cash equivalents as of August 31, 2020.
Revenue Recognition
In May
2014, the Financial Accounting Standards Board issued Accounting
Standards Update No. 2014-09, Revenue from Contracts with
Customers (“ASU 2014-09”) or (“ASC
Topic 606”), which supersedes nearly all existing revenue
recognition guidance under U.S. GAAP. The new guidance provides a
five-step process for recognizing revenue that depicts the transfer
of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. The new guidance
also requires expanded qualitative and quantitative disclosures
related to the nature, amount, timing and uncertainty of revenue
and cash flows arising from contracts with customers. The new
guidance is effective for public companies with annual reporting
periods beginning after December 31, 2017, and is to be applied
either retrospectively to each prior reporting period presented or
retrospectively with the cumulative effect of initially applying it
recognized at the date of initial adoption. Early adoption is
permitted for all entities but not before the original effective
date for public entities. All other entities should apply the
guidance in ASU 2014-09 to annual reporting periods beginning after
December 15, 2018, and interim reporting periods within annual
reporting periods beginning after December 15, 2019. As an emerging
growth company, the Company has an option to adopt with all other
entities.
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;
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Identification of
the performance obligation within the respective contract, which is
the delivery of service;
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Determination of
the transaction price for each performance obligation in the
respective contract;
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Allocation of the
transaction price to each performance obligation; and
●
Recognition of
revenue only when the Company satisfies each performance
obligation
As of
August 31, 2020, we have acquired one customer who has contracted
with us to assess, evaluate and implement our financial incentive
program services. Specifically, we contracted with a software
company that delivers structured reporting and coding solutions to
healthcare facilities ranging from small practices to large
hospital systems. The client is owned by a non-affiliate Selling
Stockholder. We contracted to provide financial incentive services,
including assistance to identify potential grants, incentives,
refunds, tax credits and future savings/and or programs that might
be available as well as to make recommendations to optimize growth
and profitability. Under the terms of the agreement, we and our
third-party consultants will pursue any economic benefits
identified on behalf of our client by performing additional
services, including but not limited to further review of financial
and tax information, tax planning, program application, accounting
work and preparation and filing of tax returns and/or amendments
and work with the client to optimize process improvement and
documentation. Under the terms of our agreement, our fees are 5% of
the economic benefit obtained as a result of our services, are
earned upon performing of the services, but we have agreed to
accept payment for services rendered to within 10 days of our
client receiving any financial incentives from the United States
Treasury or other Government organization. While we estimate the
value of our fee for this engagement to be approximately $7,500,
there is no assurance we will be successful at providing the
services or that the client will receive the estimated economic
benefit.
We plan
to charge clients a fee for our management consulting services
based on time (e.g. hourly or monthly) or based on a percentage of
cost savings or incremental revenue (e.g. revenue or cost savings).
As of August 31, 2020, 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 August 31, 2020, 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.
Emerging Growth Company
The Company is an "emerging growth company," as defined in Section
2(a) of the Securities Act of 1933, as amended, (the "Securities
Act"), as modified by the Jumpstart our Business Startups Act of
2012, (the "JOBS Act"), and it may take advantage of certain
exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with
the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy
statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously
approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth
companies from being required to comply with new or revised
financial accounting standards until private companies (that is,
those that have not had a Securities Act registration
statementdeclared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the
new or revised financial accounting standards. The JOBS Act
provides that a company can elect to opt out of the extended
transition period and comply with the requirements that apply to
non-emerging growth companies but any such election to opt out is
irrevocable. The Company has elected not to opt out of such
extended transition period which means that when a standard is
issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company,
can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the
Company's financial statements with another public company which is
neither an emerging growth company nor an emerging growth company
which has opted out of using the extended transition period
difficult or impossible because of the potential differences in
accounting standards used.
Expenses
Expenses
include sales and marketing costs, payroll and related benefit
costs, insurance expenses, legal and professional fees and
administrative overhead. Expenses are recognized when
incurred.
Income Taxes
Income
taxes are accounted for under the asset-and-liability method.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carry-forwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the Enactment date. A valuation allowance is
established for deferred tax assets that, based on
management’s
evaluation, are not expected to be realized.
F-6
Tax
benefits of uncertain tax positions are recorded only where the
position is “more likely than not” to be sustained
based on their technical merits. The amount recognized is the
amount that represents the largest amount of tax benefit that is
greater than 50% likely of being ultimately realized. A liability
is recognized for any benefit claimed or expected to be claimed, in
a tax return in excess of the benefit recorded in the financial
statements, along with any interest and penalty (if applicable) in
such excess. The Company has no uncertain tax positions as of
August 31, 2020.
Net loss per 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 earnings per share is calculated by dividing the
Company’s net income available to common stockholders by the
diluted weighted average number of shares outstanding during the
year. Diluted net loss per share is the same as basic net loss per
share for periods where the Company reported a net loss because
including the 3,000,000 dilutive securities would be
anti-dilutive.
Fair value of Financial Instruments
The
Company’s financial instruments consist primarily of cash and
accounts payables. The carrying values of these financial
instruments approximate their respective fair values as they are
short-term in nature or carry interest rates that approximate
market rate.
Other Recently Issued Accounting Guidance
During
the period from September 9, 2019 through August 31, 2020, the FASB
issued certain other accounting standard updates that were not
relevant to the Company’s operations.
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, 2021 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, the we are not able to estimate the
effects of the COVID-19 Outbreak on its results of operations,
financial condition, or liquidity for the Company’s fiscal
year ending February 29, 2021.
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.
NOTE 3. EQUITY
Stock Split
On July
27, 2020, the Company effected a 20-for-1 stock split of its common
stock in the form of a stock dividend. The Company has
retroactively restated its stockholders’ equity section by
increasing common stock and decreasing additional paid in capital
for the par value of the shares to show the impact of the 20-to-1
increase in number of shares outstanding.
Incentive Stock Options
On
August 8, 2020, we granted non-qualified stock options to purchase
up to 3,000,000 shares of our common stock at the exercise price of
$.50 per share for a ten-year term to certain of our officers,
directors and consultants who are performing additional unanticipated work involved with
executing the Company’s business plan and who are not being
paid cash compensation.
The table below summarizes information related to options issued
and vested during the three and six months ended August 31,
2020:
Options
Granted
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#
of
Options
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Weighted Avg.
Exercise price
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Weighted Avg. Grant
date fair value
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Weighted Avg
remaining life (in years)
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Outstanding at
March 1, 2020
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-
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-
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-
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-
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Granted
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3,000,000
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$0.50
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$1,417,640
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10
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Exercised
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-
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-
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-
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-
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Forfeited and
expired
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-
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-
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-
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-
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Outstanding at
August 31, 2020
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3,000,000
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$0.50
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$1,417,640
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10
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Vested at August
31, 2020
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3,000,000
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$0.50
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$1,417,640
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10
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F-7
During
the six months ended August 31, 2020, the fair value of the options
granted was $1,417,640 of which all had vested. The fair value of
the options was determined using the Black-Scholes option pricing
model with the following assumptions:
Expected
life
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10 years
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Volatility
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120.59%
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Dividend
yield
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0%
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Risk free interest
rate
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0.59%
|
NOTE 4. INCOME TAXES
No
provision for federal income taxes has been recognized for the
three and six months ended August 31, 2020 has the Company incurred
a net operating loss for income tax purposes and has no carry back
potential. The components of deferred tax asset at August 31, 2020,
are as follow:
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2020
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Net operating
loss
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$317,900
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Less: Valuation
Allowance
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$(317,900)
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Net Deferred tax
asset
|
$-
|
A
valuation allowance is recorded if, based on the weight of
available evidence, it is more likely than not that some portion or
all of the deferred tax assets may not be realized. At August 31,
2020, the Company recorded a valuation allowance for the entire
deferred tax asset due to the uncertainty surrounding the timing of
realizing certain tax benefits in future income tax returns. The
Company has carryforward losses available to offset future taxable
income amounting to $1,513,000 which expire on 2035.
NOTE 5. 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 6. 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.
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 Registration Statement on Form S-1 filed with the Securities
and Exchange Commission on September 22, 2020. 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.
2
Principal Services
We are
in our development stage. We plan to generate revenue by providing
consulting services. These services include:
●
management
consulting related to sales, marketing, business development and
advisory board functions to healthcare organizations;
and
●
financial incentive
program services to identify grants, tax credits and other
government incentives for companies across a variety of industries
including healthcare.
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 monthly) or based on a percentage of
cost savings or incremental revenue (e.g. revenue or cost savings).
As of August 31, 2020, 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 August 31, 2020, we have generated
limited management consulting services revenue and we are unable to
determine how long, if ever, it will take to generate any
management consulting services revenue. We cannot assure you that
we will ever generate enough management consulting revenue to
sustain our operations.
Financial incentive program services
Our
financial incentive program services are designed to identify
grants, tax credits and other government incentives for companies
across a variety of industries including healthcare. We will assist
with advising on and documenting business processes related to such
credits and rebates and work with certified public accounting firms
and business owners to compile reports and documentation required
to apply for various financial incentive programs.
As part
of our financial incentive program services, we will perform an
initial review of a prospective client’s relevant financial,
tax and business documentation at no cost to determine the
potential economic benefits from various federal and state
incentive programs.
We plan
to charge clients a fee primarily based on the economic benefit we
facilitate from any incentive programs, when permitted by any
applicable rules and guidelines. Where contingency fees are not
permissible, fixed fee contracts may be used. As part of our
incentive program services, we may be at risk for certain
third-party accounting, legal and consulting fees until such time
as we are reimbursed by our client, if ever.
3
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.
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 have not pursued any potential acquisition targets
to date or have any agreements to acquire any business at this
time, any future acquisition may result in unforeseen operating
difficulties and expenditures particularly if the key personnel of
the acquired company choose not to work for us and we may have
difficulty retaining the customers of any acquired business due to
changes in management and ownership. Acquisitions may also disrupt
our ongoing business, divert our resources and require significant
management attention that would otherwise be available for ongoing
development of our business.
Results of Operations for the three months ended August 31,
2020
The
Company was not in existence at August 31, 2019; therefore, no
comparable data is presented.
Revenues: We generated $2,009 of revenues for the three
months ended August 31, 2020. Our revenues came from management
consulting services performed for our customer.
Operating Expenses: Overall operating expenses increased to
$1,471,646 for the three months ended August 31, generally because
of the issuance of stock options to our management team and other
consultants in lieu of cash compensation with a fair market value
of $1,417,640 and advertising and marketing expenses of $25,896 and
legal and professional fees of $25,200 related to our S-1
filing.
Results of Operations for the six months ended August 31,
2020
The
Company was not in existence at August 31, 2019; therefore, no
comparable data is presented.
Revenues: We generated $2,009 of revenues for the six months
ended Augustly 31, 2020. Our revenues came from management
consulting services performed for customers.
Operating Expenses: Our operating expenses were $1,513,929
and were comprised mainly of the stock options issued to members of
management and other consultants with a fair market value of
$1,417,640 in lieu of cash compensation and total advertising and
marketing expenses of $37,896 and legal and professional fees of
$57,431 related to filing of our S-1 with the Securities and
Exchange Commission.
4
Liquidity and Capital Resources
Our
balance sheet as of August 31, 2020 as compared to February 29,
2020 reflects a decrease of cash of $95,463 due primarily to a net
loss of $1,513,929 with an offset of the non-cash addback related
to the stock- based compensation attributable to the stock options
issued to management and consultants.
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.
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, 2021 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, the we are not able to estimate the
effects of the COVID-19 Outbreak on its results of operations,
financial condition, or liquidity for the Company’s fiscal
year ending February 29, 2021.
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.
Off-Balance Sheet Arrangements
As of August 31, 2020, we do not
have an interest in any off-balance sheet
arrangements as defined in Item
303(a)(4) of Regulation S-K that have or are reasonably
likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources that is material to investors.
Contractual Obligations
There
have been no material changes outside the ordinary course of
business in our contractual commitments during
the three months ended August 31, 2020.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
Not
applicable.
5
ITEM 4. CONTROLS AND
PROCEDURES.
Evaluation of Disclosure Controls and Procedures.
Our
management, with the participation of our Principal Executive
Officer and Principal Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures as of
August 31, 2020. The term “disclosure controls and
procedures,” as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, means controls and other
procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports
that it files or submits under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported, within the time
periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include controls and procedures designed to
ensure that information required to be disclosed by a company in
the reports that it files or submits under the Securities Exchange
Act of 1934 is accumulated and communicated to the Company’s
management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions
regarding required disclosure. Management recognizes that any
controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the
cost- benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures
as of August 31, 2020, our Principal Executive Officer and
Principal Financial Officer concluded that, as of such date, our
disclosure controls and procedures were effective at the reasonable
assurance level.
In
connection with management’s assessment of our internal
control over financial reporting, we identified the following
material weaknesses in our internal control over financial
reporting as of August 31, 2020:
●
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.
Changes in Internal Control Over Financial
Reporting. There were no changes in our internal control
over financial reporting during the quarter ended August 31, 2020
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
6
PART II – OTHER
INFORMATION
ITEM 1. LEGAL
PROCEEDINGS.
Not
Applicable.
ITEM 1A. RISK
FACTORS.
The
following risk factors supplement the Risk Factors described in our
Form S-1 Registration Statement filed on September 22, 2020and
should be read in conjunction therewith.
The novel strain of coronavirus (“COVID-19”) could have
an adverse effect on our business operations.
In
December 2019, a novel strain of coronavirus
(“COVID-19”) was reported in Wuhan, China. The World
Health Organization has declared COVID-19 to constitute a global
pandemic. Disruptions to our
business operations could occur as a result
of quarantines of
employees and suppliers in areas affected by the outbreak,
facility closures, and travel and logistics restrictions in
connection with the outbreak.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS.
During
the period covered by this report, our Company has sold the
following securities without registering the securities under the
Securities Act:
|
|
Date
|
Security
|
August
2020
|
3,000,000
non-qualified stock options to purchase shares of Company common
stock at the exercise price of $.50 per share issued in exchange
for services.
|
No
underwriters were utilized and no commissions or fees were paid
with respect to any of the above transactions. We relied on
Sections 4(a)(2) and 4(a)(5) of the Securities Act and Rule 506(b)
of Regulation D of the Securities Act since the transactions did
not involve any public offering.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES.
Not
Applicable.
ITEM 4. MINE SAFETY
DISCLOSURES.
Not
Applicable.
ITEM 5. OTHER
INFORMATION.
Not
Applicable.
ITEM 6. EXHIBITS.
SEC Reference
Number
|
Title of Document
|
Location
|
Certificate of Incorporation
|
Incorporated by reference to our Form S-1 Registration Statement
filed on June 8, 2020
|
|
Bylaws
|
Incorporated
by reference to our Form S-1 Registration Statement filed on June
8, 2020
|
|
Certification
pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,
as amended, executed by the Principal Executive Officer of the
Company
|
Filed
herewith
|
|
Certification
pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,
as amended, executed by the Principal Financial Officer of the
Company
|
Filed
herewith
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, executed by the Principal
Executive Officer of the Company
|
Filed
herewith
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, executed by the Principal
Financial Officer of the Company
|
Filed
herewith
|
|
101
|
XBRL
data files of Condensed Financial Statements and Notes contained in
this Quarterly Report on Form 10-Q
|
|
7
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 to be signed on
its behalf by the undersigned, thereunto duly authorized on October
16, 2020.
|
Healthcare Business
Resources Inc.
Registrant
|
|
|
|
|
|
|
|
By:
|
/s/ Stephen
Epstein
|
|
|
|
Stephen
Epstein
|
|
|
|
Chief
Executive Officer and Chief Financial Officer
|
|
8