The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Financial Statements and Supplementary Data" and our consolidated financial statements, related notes, and other financial information appearing in this Annual Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in "Risk Factors" and "Forward-Looking Statements."





Overview

The Company, through its two wholly owned operating subsidiaries, NuAxess and PR345 n/k/a OpenAxess, Inc., business, is engaged in providing a full spectrum of benefit and insurance related staffing and business consulting services, principally to smaller and mid-sized employers, offering innovative means of providing their employees with multiple levels of employee benefits including major medical health insurance, as well as providing other financial and business consulting services. The Company has entered into third-party agreements with select strategic partners to provide comprehensive programs administered through its vendor relationship agreements. The Company offers programs that include innovative and affordable major medical health insurance plans and other employee benefit products and services. The NuAxess Smart Healthcare Plan is a proprietary health plan that is an ERISA-qualified, self-insured plan, that includes wellness and prevention programs, among other features. Our primary markets are small and mid-size group employers, sometimes referred to as the 'gig' economy.

Material Developments During Fiscal 2021





Results of Operations

Comparison of the fiscal year ended September 30, 2021 to the fiscal year ended September 30, 20120





Revenue

During the year ended September 30, 2021 the Company received $39,863,450 in revenue principally from staffing and business consulting services and we incurred $38,461,445 in expense directly related to this revenue compared to $17,378,502 in revenue and $17,254,140 during the year ended September 30, 2020.





10


  Table of Contents




Expenses

Operating expenses for the fiscal year ended September 30, 2021 were $4,788,851 compared to $ 2,567,960 for the same period of the prior year, representing an increase of 83%, due principally to an increase in officers fees, payroll expense and research and development. The main components of general and administrative expenses in fiscal 2021 consisted of approximately $1,178,144 in consulting fees, $86,332 in office expense$42,176 in stock transfer fees and approximately $135,420 in commission fees. The professional fees were $272,816. During the prior year, the main components of general and administrative expenses consisted of approximately $1,175,522 in consulting fees, $45,765 in stock transfer fees and approximately $50,487 in commission fees.





Working Capital

The Company's net loss for the years ended September 30, 2021 and September 30, 2020 were $10,843,658 and $8,255,367, respectively. The $2,588,291 increase in net loss for fiscal year 2021, as compared to fiscal year 2020, is due primarily to an increase in non-cash gains and losses related to new convertible debt financings and also to an increase in general and administrative and payroll expenses as a result of the change in business focus and the implementation of our new business plan.

During the fiscal year ended September 30, 2021, our principal sources of liquidity included cash received from convertible notes payable, notes payable, and sales of preferred stock. During the fiscal year ended September 30, 2020 our principal source of liquidity included cash received from convertible notes payable, notes payable and assignment of receivables. We intend to use new capital in the form of new equity or debt to further advance objectives.

Net cash used by operating activities totaled $3,521,708 and $1,087,108 for the years ending September 30, 2021 and 2020, respectively. The change between 2021 and 2020 is primarily due to an increase in non-cash losses on extinguishment of debt and issuance of common stock, offset by a gain on revaluation of derivative liabilities.

Net cash used by investing activities totaled $95,718 and $0 for the years ending September 30, 2021 and 2020, respectively. The change between 2021 and 2020 is primarily attributed to option trading in 2021 that did not occur in 2020 and a short-term loan in 2021.

Net cash provided by financing activities totaled $3,308,726 and $1,536,282 for the years ending September 30, 2021 and 2020, respectively. The change between 2021 and 2020 is primarily attributed to an increase in proceeds from notes payable in 2021, as compared to 2020. The cash decreased to $155,328 at September 30, 2021 from $463,874 at September 30, 2020.

As reflected in our accompanying financial statements, other than approximately $3,823,658 received from the issuance of notes payable and convertible notes during the fiscal year ended September 30, 2021, we have negative working capital, and an accumulated deficit of $27,753,783 and $16,910,125 for the years ending September 30, 2021 and September 30, 2020, respectively. Notwithstanding our belief that we will be able to continue to raise capital through the issuance of equity and, to a reduced level if at all, convertible notes. The Company believes that it will be able to raise the requisite amount of equity capital at terms and condition acceptable to the Company, of which there can be no assurance, these factors indicate that we may be unable to continue in existence in the absence of receiving additional funding.

In addition to our operating expenses which average approximately $392,000 per month, management's plans for the next twelve months include approximately $4 million of cash expenditures for development and expansion of our health insurance and employee benefits business operations. While there can be no assurance, the Company believes that it will be able to generate sufficient capital from operations, equity and/or debt financing to fully-implement its business plan of offering principally to smaller and mid-sized employers a full spectrum of employee benefit and insurance services enabling employers to offer a variety of plans providing their employees with multiple levels of benefits including major medical health insurance, as well as providing financial and business consulting services.





Dividend Policy

We have never declared or paid, and do not anticipate declaring or paying, any cash dividends on any of our capital stock. We do not anticipate paying any dividends in the foreseeable future, and we currently intend to retain all available funds and any future earnings for use in the operation of our business and to finance the growth and development of our business. Future determinations as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our operating results, financial condition, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Our loan agreements limit our ability to pay dividends or make other distributions or payments on account of our common stock, in each case subject to certain exceptions.





11


  Table of Contents

Off-Balance Sheet Arrangements

The Company has not undertaken any off-balance sheet transactions or arrangements.

Recent Accounting Pronouncements

Recent accounting pronouncements which may affect the Company are described in Note 2 - Summary of Significant Accounting Policies, subsection "New Accounting Requirements and Disclosures" in the annual financial statements below.

Limitations on Liability and Indemnification Matters

We intend to amend our Bylaws to contain provisions that limit the liability of our current and former directors for monetary damages to the fullest extent permitted by Idaho law. Any limitation of liability pursuant to Idaho law does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

Our amended Bylaws will further authorize us to indemnify our directors, officers, employees, and other agents to the fullest extent permitted by Idaho law. We intend our amended bylaws also to provide that, on satisfaction of certain conditions, we will advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee, or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Idaho law. We expect to enter into agreements to indemnify our directors, executive officers, and other employees as determined by the board of directors. With certain exceptions, these agreements will provide for indemnification for related expenses including attorneys' fees, judgments, fines, and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these amended bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.

The intended limitation of liability and indemnification provisions in our amended Bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for directors, executive officers, or persons controlling us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

© Edgar Online, source Glimpses