AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
OCTOBER 11, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5 TO THE
FORM 10
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HALBERD
CORPORATION
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(Exact name of Registrant as specified in its charter)
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Colorado
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8731
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87-3538414
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(State or Other Jurisdiction of
Incorporation or Organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer ID
No., if applicable)
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P.O. Box 25
Jackson Center, Pennsylvania 16133
(814) 786--8849
(Address and telephone number of Registrant’s principal executive
offices)
William A. Hartman (814) 786-8849
1362 Springfield Church Rd, Jackson Center, Pennsylvania
16133
(Name, address (including zip code) and telephone number (including
area code) of contact person and agent for service in the
United States)
Securities to Be Registered Pursuant to Section 12(b) of the Act:
None
Securities to Be Registered Pursuant to Section 12(g) of the
Act:
Title of Class to Be So Registered: Common Stock
Indicate by check mark whether the Registrant is a large
accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definition 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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☐
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Accelerated Filer
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☐
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Non-Accelerated Filer
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☒
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Emerging Growth Company
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☐
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Smaller Reporting Company
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☒
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If an emerging growth company, indicate by check mark if the
Registrant 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. ☐
TABLE OF CONTENTS
ITEM 1 BUSINESS
Halberd Corporation (“Halberd,” “HALB” or the “Company”) was
originally incorporated in Nevada January 26, 2009 and, after going
through multiple prior reorganizations was re-incorporated in
Colorado in May 2020. By way of background, HALB changed its name
to Tykhe Corporation on April 22, 2014. It then redomiciled to
Colorado and changed its name to Alaric Corporation on January 25,
2017. Finally, on March 22, 2020, it changed its name to HALB
Transition Corporation, before engaging in a reorganization whereby
the name of the public company again became Halberd Corporation
with a subsidiary named Alaric Corporation.
Halberd believes its extracorporeal technological approach is both
unique and adaptable to many disease states. Accordingly, Halberd’s
team of professionals has employed its skills, resources and focus
to concentrate on developing treatments against some of the world’s
more persistent diseases, including Alzheimer’s Disease,
Amyotrophic Lateral Sclerosis (ALS), PTSD, epilepsy and other
neurodegenerative diseases, sepsis, meningitis and pandemics.
Except for select trade secrets, Halberd’s technology is
incorporated into three issued U.S. Patents covering extracorporeal
treatment of disease, and 20 related provisional patent
applications.
Halberd is subject to FDA regulation with regard to its products,
services and medical devices it currently envisions developing. See
the Risk Factors that follow and provide a more detailed overview.
(See especially “Risks Related to Development, Clinical Testing and
Regulation of Our Products and Product Candidates.” In summary, the
bio-medical industry is expensive, has long lead times, requires
highly educated and technical medical expertise and is subject to
both the vagaries of the market place and essentially perpetual
government oversight (and changes). Those challenges often have a
domestic and international component and require successful,
frequent and large fund-raising needs: Compliance and regulatory
issues are pretty much a constant part of our business plan. In
that context, our long-term success depends upon the successful
development of new products, services and funding campaigns, both
from private sources (such as private and/or public offerings) and
governmental contracts and grants.
By way of example, the following analysis is our “educated” best
guess of the pathway we expect to encounter in getting approval of
our outside the body (“extracorporeal”) technology:
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Noting that we have not yet met with the FDA staff or discussed our
extracorporeal technology, it’s too early to actually know what
will be required secure FDA approval of HALB’s extracorporeal
technology,
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Our objective is to develop a proposal to FDA that would outline a
process that would address the safety and efficacy of the
technology with supporting clinical testing.
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That testing could be animal and human or some combination.
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Whether the testing is in vitro or in vivo in character, we seek to
establish the validity of the therapeutic approach of
extracorporeal technology.
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The proposal necessarily will involve considerable detail, for
example, how the tests to be monitored, by whom (specifically
committees from local hospitals), how paid, what confidence levels,
what works, animal may live after testing but the animal may be in
distress.
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The FDA staff could concur, reject or result in a counter-proposal,
in other words expand the trials in order to get needed FDA
support.
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In our case, we have engaged in pre-clinical testing and in the
early stages of putting together our proposal to obtain FDA
authorization to commercialize our technology.
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We expect rigorous trials.
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Even so, we believe there is a lot of precedent (a predicate that
could shorten the trials, thereby reducing time and costs), in this
case, dialysis, blood work, vaccines, heat and/or radiation to
destroy bacteria, etc.
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In this case, extracorporeal technology seeks a way to identify
pathological proteins (toxins) that result in disease. Our job is
to identify and develop antibodies directed against those proteins.
After all, the premise of the technology is that the testing will
establish the safety and efficacy of the therapeutic
approach—presumably improving the condition of the patient--and we
are returning to the body all but the culprit protein/toxin!
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Once we are this far along in the process, we would collect these
“toxins” and eliminate by binding to nanoparticle filtration
devices metal and ultimately remove them from the body.
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Our current status is to develop pre-clinical data supporting the
proposal we are in the early stages of developing.
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We will, of course, engage experts to develop and adjust our
strategy as events may dictate.
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We expect that every step in this process will have a compliance,
regulatory component—and those steps will evolve in response to
governmental regulations over time.
Halberd has applied for and received a Commercial and Government
Entity (“CAGE”) code to enable Halberd to be eligible to apply for
government contracts. Halberd has submitted two white papers—the
terminology FDA uses in its funding application process to our
proxy in Washington, the Phoenix Group, to use in applying for two
Other Transactions (“OT”) Authority contracts. While our contract
submissions have been accepted, to date the proposals have not been
funded. The funding of our contract(s) is dependent upon adequate
funding by Congress, within the “Other Transaction Authority” of
the National Defense Authorization Act, made permanent and codified
by 10 U.S.C 2371b Prototype as the funding source. The relevant
Designated Offices include the following agencies within the
Department of Defense: Office of the Under Secretary of Defense for
Acquisition and Sustainment; Defense Health Agency (“DHA”) and the
Defense Advanced Research Projects Agency (“DARPA”).
Halberd is in the process of planning animal tests on its patented
extracorporeal process to remove inflammatory cytokines and other
causal materials from cerebrospinal fluid associated with traumatic
brain injuries as well as blood for blood-borne diseases. These
tests will be conducted by qualified universities. Halberd is also
currently working with mdi consulting, a company with expertise and
prior experience in guiding companies like Halberd through the FDA
process in order to minimize cost and timing associated with the
FDA certification process.
Halberd has not eliminated any of the diseases listed, but rather
has demonstrated in the laboratory elimination of the elements
related to the cause of the diseases. For instance, we have
demonstrated the removal of 11 specific elements (proteins,
cytokines, and amino acids) from synthetic cerebrospinal fluid
(CSF) in a simulated extracorporeal treatment of CSF. These
elements have been linked to a variety of neurodegenerative
diseases such as Alzheimer’s Disease, epilepsy, Amyotrophic Lateral
Sclerosis (ALS), PTSD and suicide ideation.
Halberd also demonstrated in the laboratory, the elimination of 12
strains of E.coli from water, some of which have demonstrated
antibiotic resistance. E.coli is responsible for meningitis, and
blood sepsis.
Halberd created designed antibodies against SARS-COV2 which are
being tested against existing commercially available monoclonal
antibodies (mAb) against SARS-COV2 (Covid-19). Laboratory testing
has shown Halberd’s antibody to be the only mAb to show a
neutralizing affinity for all four Covid-19 mutations to date. The
balance of Halberd’s designed antibodies are not antibodies against
specific diseases, but rather against the elements (building
blocks) which relate to or enable diseases, such as,
neurodegenerative diseases (listed above), E.coli associated
bacterial diseases, cancer, etc.
These antibodies are designed to have affinity and binding to a
specific target antigen, whether it be in CSF or blood, and will
bind only to that target antigen. This allows for the specific
elimination through laser irradiation, or tuned radio frequency
(RF) exposure of the antibody-nanoparticle-antibody moiety
resulting in microheating of the nanoparticle thereby killing the
target antigen.
Halberd is also exploring the methodology of elimination of target
antigens from bodily fluids through a process referred to as
chemical bonding filtration. This process requires an antibody
designed to have a strong binding affinity for the target antigen
and be able to be chemically bonded to the surfaces of a filter
medium, such as medical plastic beads. When the bodily fluid is
flowed through the filter media, the target antigen is attracted
to, and retained by, the antibody. The effluent consists of a
pre-determined reduced amount of the target antigen. This reduction
can be precisely controlled up to and including virtual 100%
elimination, based on concentration, duration and flow rates of the
fluid through the filter media. This has been demonstrated in the
laboratory through selective reduction of one cytokine (target) vs.
an unchanged concentration of another cytokine.
“Elimination” was determined through assays of the amount of the
targeted antigen before and after exposure to tuned laser
irradiation. The target was considered eliminated if greater than
75% of the antigen was eliminated. Since the target antigens are
also essential elements to healthy homeostasis, the objective is
not the total elimination of these elements from the bodily fluid,
but to be able to precisely eliminate the excess amounts of each
target element.
We have outlined in more detail below the risks inherent to our
business model. (See “Risk Factors.”) This paragraph and the
two following are intended to give the reader an overview of those
risks. Those include funding constraints for the foreseeable
future. Because our technology is new, we are fighting an
uphill battle to get acceptance of technology that we consider
innovative. Our success is largely dependent on ambitious growth
and networking relatively near term. Because we have to be
considered a small fish in a big pond, healthcare reform can be
destabilizing. Both acquisition and retention of IP is
essential to our success. So is commercialization of products
and services we contemplate developing. We have no prior
substantive experience in these disciplines but expect to engage
personnel as we raise needed funding to support.
The Company’s trading symbol is HALB, currently a Pink Sheet/OTC
Markets-traded security. Only HALB’s common stock ($0.0001 par
value) is traded at this time. The total shares authorized as of
March 31, 2022 is 800,000,000 shares. HALB’s shares outstanding as
of March 31, 2022 are 513,650,338 shares. The Company has 83
shareholders of record (common stock). There are no outstanding
promissory, convertible notes or debt arrangements. There are
484,350,000 net warrants at varying exercise prices and 10,000,000
net outstanding preferred shares (with voting rights) outstanding
as described in the footnotes to Item 4 below. Neither the Company
nor any affiliate, director or officer is the subject of an any
criminal or civil action (the so-called “bad boy” provisions), nor
is any pending or threated.
The Company’s research and development activities, along with most
of the Company’s operations, have substantially been funded by,
Epidemiologic Solutions Corporation, some of which payments were
transmitted by Securities Counselors, Inc. on behalf of
Epidemiologic Solutions Corporation (“ESC”), as a charitable
organization recently approved by the Internal Revenue Service and
qualified under Internal Revenue Code section 501(c)(3). ESC has
provided the Company a $2,000,000 funding commitment to finance the
Company’s research and development endeavors. As of July 31, 2021,
$709,465 had been paid on this commitment, beginning with the first
payment of $21,782 on, or about, August 31, 2020, as presented as
Contributed Capital within the Statement of Stockholders Equity
(Deficit). The charitable organization is committed to monthly
payments of $50,000 pursuant to its sponsored research agreement
with Arizona State University. It has also funded additional
collateral payments for supplies and for the Company’s operating
expenses. The Company’s relationship to ESC is that of a
donor-donee, consistent with the provisions of Internal Revenue
Code Section 501(c)(3).
Halberd’s technology is based on the philosophy that the best way
to treat any disease is to eliminate the pathophysiologic basis (or
cause) of the disease. This is done through extracorporeal
treatment of the applicable bodily fluid – blood or cerebral spinal
fluid (CSF).
Through Halberd’s extracorporeal treatment, we believe no disease
can escape elimination, including diseases previously considered
“incurable”. This approach seeks to remove the basis of the
disease, instead of adding things to the body and, in our opinion
has the potential to revolutionize medicine. For example, this
approach could eventually eliminate the need for medications and
drugs as we know them today. In that context, management believes
that every pharmaceutical company has to ask themselves two
questions: 1) What happens to us if we do
partner with Halberd? and 2) What happens to us if we
don’t partner with Halberd…and the
competition does?
Halberd has demonstrated the extracorporeal elimination from CSF,
in vitro, of ten key proteins/cytokines associated with
the principal neurodegenerative diseases which affect nearly 40
million people in the US alone. This elimination was accomplished
by exposing the treated CSF (conjoined antibodies and metallic
nanoparticles) to a tuned laser, for 20 minutes or less, or
exposure to radio frequency energy. It also accomplished this by
chemically binding antibodies against the target antigen to the
surfaces of a filtering cartridge (similar to dialysis). Halberd
also accomplished the successful elimination of E. coli in
buffer solution through this same process.
Halberd faces numerous challenges going forward, including proof of
safety and efficacy to FDA standards. Halberd is researching
the exact requirements and processes for obtaining FDA
certification and, as such, has retained a consulting firm (mdi
Consultants) to guide our research and testing efforts to comply
with FDA requirements to avoid wasted time and effort.
Our next phase of development will be to eliminate a subset of the
target neuro-degenerative disease antigens from blood serum,
followed immediately by animal testing in conjunction with a major
university.
Our grants and contracts support we have received to date has
only come from Epidemiologic Solutions Corporation (ESC, described
elsewhere in this Form 10) approximately $1,200,000 to date and a
$150,000 SBA loan.
Halberd, relative to its competitors in this space, has limited
funds, whether for research, animal testing or clinical
trials. As a result, animal testing at a reasonable price and
special efficiency is essential. Mississippi State has recognized
animal expertise so the Company’s “optimal strategy” requires
judicious use of animal tests (thereby saving cost) and working as
diligently as possible.
To that end, Halberd is seeking an experienced partner in the
development, FDA approval and commercialization of biomedical
products. If Halberd cannot secure a viable relationship with such
a partner, Halberd plans to secure the services of CRO’s and/or
CMO’s. hiring the talent necessary to achieve
commercialization.
Halberd is working hard to find potential partners in the
pharmaceutical industry, whether individuals or
organizations. More specifically, since our initial filing
with the SEC in May, the Company has engaged the services of mdi
Consultants, Inc. (“mdi”), an FDA process consulting firm. See
Exhibit 10.6. mdi has represented companies with over 4,000
products that have gone through the FDA protocols. mdi
specializes in assisting companies who need to navigate the FDA’s
demanding, complex requirements and protocols to obtain
authorization to market medical devices and services. As part of
its outreach to the industry, Halberd issues press releases
frequently to keep pharmaceutical companies aware of our research
efforts. As a further example, we know that the HALB
extracorporeal treatments would increase the efficacy of recently
developed “monoclonal anti-bodies” cocktails. Such outreach
resulted in Halberd getting an endorsement from the NFL Retired
Players Association regarding the use of Halberd’s extracorporeal
treatments relating to CTE and traumatic brain injuries. Halberd
expects to work with mdi to obtain FDA Emergency Use Authorization
of Halberd’s technology for select conditions and afflictions.
Halberd has in fact on March 16, 2022 engaged the services of the
Phoenix Group, Inc. (“Phoenix”), an experienced government contract
organization skilled in securing contracts for deserving companies
seeking contracts with the Department of Defense (“DoD”) as a
consultant. A $20,000 retainer has been paid and the associated
engagement agreement is now an exhibit to this Form 10 filing. The
Phoenix representative has met with DoD and various agencies within
the DoD. Phoenix has advised us we were determined by the
Department of Defense to be compliant with the requirements of The
National Defense Authorization Act – 116 Congress; 10 U.S.C. 2371b
Prototype is Sec 819 to carry out Prototype Projects.
Halberd, through Phoenix, has also taken preliminary actions
in that shepherding process, including the issuance of a DUNS
number (117910200) and COMMERCIAL AND GOVERNMENT ENTITY (CAGE) CODE
(97PF7), the first step in seeking approval of its formal
whitepaper submission for a $75,000,000 contract under the National
Defense Authorization Act (made permanent and codified by 10 U.S.C
2371b).
Previous diseases classified as “uncurable” are labeled such due to
the fact that no drug or treatment exists to alleviate the symptoms
or root cause of a given disease. Halberd’s patented
extracorporeal treatment is designed to eliminate the root cause of
the disease. By creating “designer antibodies” with a strong
affinity to the targeted disease antigen (and, in turn, conjugate
them to metallic nanoparticles), these conjugates (to date) have
acted like a magnet to the target disease antigen. This combination
of antibody-metallic nanoparticle-antigen can then be irradiated
with laser emissive energy, causing the metallic nanoparticles to
generate localized heating-- which kills the target antigen. (It
has been well known for over a century that elevated temperatures
kill germs, whether viral, bacterial and disease antigens).
Halberd’s methodology is highly selective and only targets the
desired elements for elimination and subsequent removal from blood
or cerebro-spinal fluid. Our experience suggests that no disease
can develop a resistance to this treatment since the elimination
method is flash sterilization via elevated temperature of the
disease antigen molecule.
This methodology can also be applied through bonding of the
“designer antibody” to a surface over which the select bodily fluid
is flowed. The antibody again acts like a magnet attracting
and retaining the target antigens--and only the target antigens--to
the bonding surface. This can be accomplished through a
process similar to dialysis, albeit with different filter
cartridges for different diseases. After treatment, the
cartridges are disposed of through normal biohazard waste disposal
means. As with the laser eradication described above, no
disease can develop a resistance to this elimination method since
it a removal process, without the use of drugs. To date, Halberd
has bonded antibodies with affinity to a specific cytokine to
medical plastic beads. These beads were inserted into a gas
chromatography column through which synthetic cerebrospinal fluid
(CSF) was flowed. The CSF had known amounts of two different
specific cytokines – Interleukin 2 (IL-2) and Interleukin 4 (IL-4).
The effluent was assayed and it was determined that only the
targeted cytokine was removed, without decreasing the amount of the
collateral cytokine. Halberd has not progressed development of this
technology beyond this proof-of-concept stage at this time.
Halberd is also developing a treatment methodology which does not
even require conjoining of metallic nanoparticles to the body or
laser heating of the anti-body complex. –with high affinity for
disposable collection. Halberd in fact is developing a simpler
methodology than the process described above. That would eliminate
the need for metallic nanoparticles and laser heating, a process
that we are confident would be less costly and with reduced both
complexity and training required.
See Exhibit 10.4 and our list of patents issued over time as well
as a 3-page listing of Patent Office foundational patents list
(Exhibit 10.7) summarizing Halberd’s underlying technology. The
first patent was issued in 2014 and the most recent patent was
issued in 2021. All patents expire by their terms 20 years from the
date of issuance. That means the HALB protections will roll
off/expire between 2034 and 2041. The patents are owned by MARV
Enterprises, LLC (“MARV”). MARV, in turn, is owned by Dr. Mitchell
S. Felder, Halberd’s Chief Technology Officer. The patents are
licensed to Halberd. As a consequence, Halberd is responsible for
the protection of these patents. The pre-issued patents embody
Halberd’s structural base for our business (augmented by Halberd
which has had international protection of its patents under the
Patent Cooperation Treaty (“PCT”) in approximately 150 countries).
Halberd has executed an exclusive License Agreement with Dr.
Felder/MARV under which MARV is paid a royalty of 5% of the net
profits associated with Halberd’s commercialization of the
protected patents.
Diseases classified as “uncurable” are labeled such due to the fact
that no drug or treatment exists to alleviate the symptoms or root
cause of a given disease. Halberd’s patented extracorporeal
treatment is designed to eliminate the root cause of the
disease. By creating “designer antibodies” with a strong
affinity to the targeted disease antigen (and, in turn, conjugate
them to metallic nanoparticles), these conjugates (to date) have
acted like a magnet to the target disease antigen. This combination
of antibody-metallic nanoparticle and antigen can then be
irradiated with laser emissive energy, causing the metallic
nanoparticles to generate localized heating-- which kills the
target antigen. Halberd’s methodology is highly selective and
only targets the desired elements for elimination and subsequent
removal from blood or cerebro-spinal fluid. Our experience suggests
that no disease can develop a resistance to this treatment since
the elimination method is flash sterilization via elevated
temperature of the disease antigen molecule. We are confident it
would be simpler, less costly and with reduced complexity and
training required.
This methodology can also be applied through bonding of the
“designer antibody” to a surface over which the select bodily fluid
is flowed. The antibody again acts like a magnet attracting and
retaining the target antigens, and only the target antigens, to the
bonding surface. This can be accomplished through a process
similar to dialysis, but with different filter cartridges for
different diseases. After treatment, the cartridges are
disposed of through normal biohazard waste disposal means. As
with the laser eradication described above, no disease can develop
a resistance to this elimination method since it a removal process,
without the use of drugs.
The Company performs research and development on its extracorporeal
technological method of treating many disease states, including
Alzheimer’s Disease, PTSD, Parkinson’s Disease, epilepsy and other
neurodegenerative diseases, sepsis, meningitis and pandemics. The
Company currently does not have any employees dedicated to research
and development but outsources these activities to Arizona State
University (“ASU”) pursuant to an Industry Sponsored Research
Agreement, which the Company and ASU entered into on September 1,
2020. The Research Agreement, which terminates on November
30, 2022, calls for monthly payments of $50,000, not to exceed
$1,371,782, As indicated above, the Company’s research and
development activities have primarily been funded by Epidemiologic
Solutions Corporation.
Arizona State University (“ASU”) is a leader in molecular sciences,
the discipline underlying our extracorporeal treatment. After doing
a thorough review of what was most needed in the way of educational
and pharmaceutical connections, ASU became highly recommended over
and above their leadership in molecular science. Upon
engagement in August 2020, patent counsel was engaged, and ASU made
a selection to commence work from among multiple research projects,
specifically targeting Covid-19 antigens. See “Business” for
an expanded fuller discussion of this relationship. The
associated contract is attached as Exhibit.10.1 as originally filed
on May 11.
Halberd is diligently working hard to find potential partners
in the pharmaceutical industry, whether individuals or
organizations. In that context, since our initial filing with SEC,
the Company has as of May 10, 2022 engaged the services of mdi
Consultants, Inc (“mdi”), an FDA process consulting firm. mdi has
represented companies with over 4,000 products that have gone
through the FDA protocols. mdi specializes in assisting companies
which need to navigate the FDA’s complex requirements and protocols
to obtain authorization to market medical devices and services. As
part of its outreach to the industry, Halberd issues press releases
frequently to keep pharmaceutical companies aware of our research
efforts. Such outreach has resulted in Halberd getting an
endorsement from the NFL Retired Players Association regarding the
use of Halberd’s extracorporeal treatment relating to CTE and
traumatic brain injuries: Halberd expects to work with mdi to
obtain FDA Emergency Use Authorization of Halberd’s technology for
select conditions and afflictions. Our objective, ultimately, is
for our extracorporeal treatment to become “accepted practice” or
“normal care. To get to that objective, we actively seek out
joint ventures, partnerships, contract relationships and
consultants or advisors which could bring revenue to the
Company.
The support we have received to date has only come from
Epidemiologic Solutions Corporation (“ESC”), approximately
$1,200,000 in total, and a $150,000 SBA loan. Management meanwhile
continues active pursuit of grants, contracts, partnerships and
related sources of third-party funding to complement the monthly
charitable payments. The cornerstone of our effort is Arizona State
University (“ASU”), a leader in molecular sciences, the discipline
underlying Halberd’s extracorporeal treatment. After doing a
thorough review of what was most needed in the way of educational
and pharmaceutical connections, ASU became the winner…over and
above ASU’s leadership in molecular science. Upon ASU’s engagement
in August 2020, patent counsel was engaged and Halberd directed ASU
to commence work from among multiple research projects, the
research targeting antigens. Our agreement with ASU was not to
exceed $1,371,782, and it ends on November 30, 2022, however, we’re
in negotiations to extend the agreement.
ASU is a leader in molecular sciences, the discipline underlying
our extracorporeal treatment. After doing a thorough review of what
was most needed in the way of educational and pharmaceutical
connections. Upon engagement in August 2020, patent counsel was
engaged, and ASU made a selection to commence work from among
multiple research projects, specifically targeting Covid-19
antigens. We intend to finance the agreement through continued
support from Epidemiological Solution Corporation as well as
potential capital raises through the sale of our securities.
Halberd’s broad technical capabilities are embodied in its key
personnel listed below, the first group being officers and
directors and the second group being consultants (who are paid for
services, for example mdi Consultants and Phoenix Group) or
advisors.
William A. Hartman is our Chairman of the Board of
Directors, President and Chief Executive Officer. From March 2008
until May 2020, Mr. Hartman was President and CEO of Premier
Biomedical, Inc. From October 2006 to March 2008, Mr. Hartman was
the Chief Operating Officer of Nanologix, Inc. From July 1991 to
July 2000, Mr. Hartman was a Director at TRW Automotive. From 1984
to 1991, Mr. Hartman was Chief Engineer at TRW Automotive and from
1979 to 1984, he was Division Quality Compliance Manager at Ford
Motor Company. At TRW Automotive, Mr. Hartman was one of the auto
industry pioneers of the concept of grouping related components
into systems and modules and shipping just-in-time to the vehicle
assembly plants. He founded and headed a separate business group
within TRW Automotive with plants in the U.S., Mexico and Europe
with combined annual sales of $1.3 Billion. Academic credentials
include a BSME degree from Youngstown State University and a MSIA
degree (Industrial Administration/Management) from the University
of Michigan.
Mitchell S. Felder, MD, is our
Chief Technology Officer, Member of the Scientific Advisory Board
and a prolific inventor. He is a Board Certified Neurologist,
former Chairman of the Board of Premier Biomedical, former CEO,
President, Chairman and founder of Infectech and Nanologix. Dr.
Felder acquired a B.A. Degree from the University of Pennsylvania
in 1975 and a M.D. Degree from the University of Rome, Faculty of
Medicine in 1983. Dr. Felder did his residency at Saint Vincent
Hospital in New York, New York, where he was chosen to be Chief
Resident in Neurology. He has been Board Certified by both the
American Academy of Clinical Neurology and the American Board of
Psychiatry and Neurology. Dr. Felder is a Clinical Assistant
Professor in the Department of Neurology at the Texas Tech
University Health Sciences Center. Dr. Felder has authored or
co-authored six publications, three studies and has currently 18
issued patents. Dr. Felder was the Acting Chief of the Department
of Neurology, Sharon Regional Health System from 1989 until 2001.
Dr. Felder served as the Acting Chief of the Department of
Neurology at the William Beaumont Army Medical Center in 2011.
Patricio F. Reyes (Advisor), MD, FAAN, is our
Chief Medical Officer. He is board certified and a neuropathologist
who is Chief Medical Officer and Board Member of the Retired
National Football League Players Association. He is a board member,
and former Chair of the Education Committee and 2009 Distinguished
Educator of the Association of Ringside Physicians. He is a Fellow
of the American Academy of Neurology and was former Professor of
Neurology and Neuropathology at Thomas Jefferson Medical School in
Philadelphia, Pennsylvania and Professor of Neurology, Pathology
and Psychiatry at Creighton University School of Medicine in Omaha,
Nebraska.
Dr. Reyes is a co-founder, Chief Medical Officer and Chair of the
Scientific Advisory Board of Yuma Therapeutics, Inc., a Harvard
Medical School affiliated Biotechnology Company that develops new
diagnostic markers and treatment for Alzheimer’s disease and
traumatic brain injury. Dr. Reyes is a pioneer in the fields of
Aging, Alzheimer’s disease and other neurodegenerative diseases. He
established the first Dementia and Alzheimer’s disease clinic and
Rapid Brain Autopsy System in the country while he was in Texas and
subsequently in Pennsylvania and Nebraska. He was one of the
principal investigators who worked on multiple clinical trials that
led to the first US FDA approved drug for Alzheimer’s disease and
the only skin patch treatment for the same disorder. He and his
co-workers were one of the first to describe the olfactory deficits
and their anatomical and neuropathological changes in Alzheimer’s
disease.
Dr. Reyes obtained his medical degree from the University of the
Philippines and started his residency in Internal Medicine and
Neurology at the Philippine General Hospital. He pursued his
training in Adult and Child Neurology at the University of Kentucky
Medical Center, and Neuropathology at the University of Miami
School of Medicine. His first academic position was to head the
Neurology Division of Audie Murphy VA Hospital and as an assistant
professor of Neurology and Pathology at the University of Texas
Health Science Center in San Antonio.
John S. Borza, PE, MBA, VMA, is our Chief
Operating Officer and a member of our Board of Directors. Prior to
May 2020, Mr. Borza was Executive Vice President and a member of
Premier Biomedical’s Board of Directors. Mr. Borza is currently the
President and Chief Executive Officer of Value Innovation, LLC, a
consulting firm focused on value engineering and creative problem
solving, where he has served since August 2009. Prior to Value
Innovation, Mr. Borza was a Specialist with TRW Automotive from
September 2007 to September 2009, and a Director at TRW Automotive
from May 1999 to September 2007. Earlier in his career, Mr. Borza
worked in R&D for 12 years on a variety of products and
technologies, in various capacities ranging from Engineer to Chief
Engineer, before moving into launch and production support roles.
Mr. Borza is a Registered Professional Engineer (Michigan), an
Altshuller Institute certified TRIZ Practitioner, and a SAVE
International certified Value Management Associate. He is active in
the local chapter of SAVE International. Mr. Borza holds a BS
degree in Electrical Engineering and an MBA from the University of
Michigan.
Heidi H. Carl is our Controller. From
May 2009 to May 2020, Ms. Carl was the Chief Financial Officer and
Board Member of Premier Biomedical, Inc. From June 2007 to May
2009, Ms. Carl was the Product Development Specialist at General
Motors Corporation. From May 2006 to May 2007, she was the
Associate Marketing Manager at General Motors Corporation. From May
2003 to May 2006, Ms. Carl was a Marketing Specialist at General
Motors Corporation and, from May 1999 to May 2003, she was the
District Area Parts Manager over 40 dealerships in three states in
the southeast at General Motors Corporation. Academic credentials
include a BSBA Degree from Madonna University and an ASBA Degree
from Oakland Community College.
Abdon Luiz Goncalves Nanhay, MD (Advisor):
Dr. Nanhay is a Brazilian physician with over 25 years of
experience in general health care and biological sciences. Dr.
Nanhay’s experience includes emergency medicine, pediatrics,
primary care and mental epidemiology, health management and
coordination of clinical research. Dr. Nanhay also worked for
medical and educational institutions including the World Health
Organization (WHO), UERJ - State University of Rio de Janeiro,
State Secretary of Education and Health Secretariat of São João de
Meriti City and in the Brazilian Navy. Dr. Nanhay is a technical
and biological sciences consultant in South and Central American
medicine (including the Amazon rain forest) as well as regulatory
requirements in the Southern Hemisphere. Dr. Nanhay is a
technical and biological sciences consultant in South and Central
American medicine (including the Amazon rain forest) as well as
regulatory requirements in the Southern Hemisphere. Currently, he
is a Senior Fellow at the New Westminster College of
the Caucasus University in Tbilisi, Georgia and elected Member of
the British Royal Society of Biology, London, UK, in 2020. He is
also an International Volunteer of the Royal College of General
Practitioners of Canada.
Edson Luís de Brito, MIBMM (Advisor): Mr. de
Brito is CEO and Chief Business Development Officer of Cellybri
Advanced Therapies in Brazil. Mr. Brito graduated with a Chemistry
degree from Faculdade São Bernardo and went on to study
Pharmacology and Biochemistry at the Universidade Bandeirante de
São Paulo, Brazil. He is a registered member of the Conselho
Regional de Farmacia de São Paulo. Mr. Brito obtained a Master’s
degree in International Business Management and Marketing from the
Instituto Paulista de Ensino e Pesquisa (IPEP) in São Paulo.
Edson Luís de Brito: Mr. Brito is a technical consultant skilled in
international pharmacology business, CEO and owner of a
pharmaceutical distribution company and is familiar with the
international pharmaceutical industry (Central and South America as
well as Korea). Mr. Brito graduated with a
Chemistry degree from Faculdade São Bernardo and went on to study
Pharmacology and Biochemistry at the Universidade Bandeirante de
São Paulo, Brazil. He is a registered member of the Conselho
Regional de Farmacia de São Paulo. Mr. Brito obtained a
Master’s degree in International Business Management and Markerting
from the Instituto Paulista de Ensino e Pesquisa (IPEP) in São
Paulo.Mr. Brito has held various positions in sales and business
development for a number of prominent pharma and biochemical
companies in Brazil, and currently holds the position of Chief
Business Development Officer and CEO of Cellybri Advanced Therapies
in Brazil. Prior to his current position, Mr. Brito was
Executive Consultant for Central and South America for the
Korea Health Industry Development Institute – KHIDI of Seoul, South
Korea. Prior to that, he held the position of Director of
Business Development for Auramedi Farmaceutica, in Brazil.
Mr. Brito has held various positions in sales and business
development for a number of prominent pharma and biochemical
companies in Brazil, and currently holds the position of Chief
Business Development Officer and CEO of Cellybri Advanced Therapies
in Brazil. Prior to his current position, Mr. Brito was Executive
Consultant for Central and South America for the Korea Health
Industry Development Institute – KHIDI of Seoul, South Korea. Prior
to that, he held the position of Director of Business Development
for Auramedi Farmaceutica, in Brazil.
David Wilson, M Ed: Mr.
Wilson (Advisor) is a Clinically Certified Forensics Counselor.
Wilson was Chief Administrative Officer and an instructor in the
Department of Psychiatry at the University of Mississippi Medical
Center. He has been responsible for the coordination of research
and research grants, securing funding for research in school
violence, addiction behavior and special projects. He has served as
Director of three Mental Health Centers in Arkansas and assisted
The Southern Research Group in Jackson on assigned projects. He
maintains a private practice mainly in the area of forensics while
still engaging in patient treatment. Mr. Wilson is a business and
technical consultant to the Company and a member of Halberd’s
Advisory Board. His extensive network of professional contacts
contributes to his value to the Company. Mr. Wilson was Chief
Administrative Officer in the Department of Psychiatry at the
University of Mississippi Medical Center. Mr. Wilson
has served as Director of three Mental Health Centers in Arkansas
and assisted The Southern Research Group in Jackson on assigned
projects.
Ned Kronfol, MD, (Advisor) is certified by
the American Board of Internal Medicine and retired in 2019 as
Adjunct Clinical Professor from the William Carey University
College of Osteopathic Medicine. Among many other notable
accomplishments, Dr. Kronfol served as Medical Director- Renal Care
Group/Fresenius Kidney Cat Lake Village, AR from 1987-2017.
Carl Eller (Advisor):
Mr. Eller is a retired, six-time Pro Bowl Player and NFL
Pro Football Hall of Famer as well as President of the NFL Retired
Players Association, was drafted in 1964 as the league’s
6th pick overall by the
Minnesota Vikings, he became a major factor as a defensive end with
the unit known as the “Purple People Eaters.” Eller became a
six-time Pro Bowl player who appeared in four Super Bowls and is
currently focused on helping former players transition into
retirement. He is also a champion for raising awareness of
Chronic Traumatic Encephalopathy (CTE) and PTSD, which is
recognized as a growing problem in many professional, college, and
even high school sports. Mr. Eller is a licensed drug and alcohol
counselor, and founded a group of substance-abuse clinics in the
Twin Cities called Triumph Life Centers. He obtained a college
degree in Human Services from Metropolitan State University in
1994. He is currently focused on helping former players transition
into retirement and suicides in the military.
ITEM 1A RISK FACTORS
Risks Related to Our Business
We are substantially dependent on revenue from our
products and services, grants/contract awards.
Our revenue depends upon continued sales of our products as well as
the financial rights we have in our therapeutic products and
services existing or under development, and grants/contracts from
the government or philanthropic organizations. A significant
portion of our future revenue will be concentrated on sales of our
products/technology. Any of the following negative developments
relating to any of our products may adversely affect our revenue
and results of operations or could cause a decline in our stock
price:
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the introduction or greater
acceptance of competing products, including new originator
therapies, generics, prodrugs and biosimilars of existing products
and products approved under abbreviated regulatory pathways; |
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safety or efficacy issues; |
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limitations and additional
pressures on product pricing or price increases, including those
resulting from governmental or regulatory requirements; increased
competition, including from generic or biosimilar versions of our
products; or changes in, or implementation of, reimbursement
policies and practices of payors and other third-parties; |
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adverse legal, administrative,
regulatory or legislative developments; |
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our ability to maintain a positive
reputation among patients, healthcare providers and others, which
may be impacted by our pricing and reimbursement decisions; or |
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the inability or reluctance of
patients to receive a diagnosis, prescription or administration of
our products or a decision to prescribe and administer competitive
products. |
Some of our products and services are in the early stages of
commercial launch in the U.S. In addition to risks associated with
new product launches and the other factors described in these Risk
Factors, our ability to successfully commercialize our prospective
products and services may be adversely affected due to:
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the lack of readiness of healthcare
providers to initiate treatment as well as our ability to
successfully identify eligible patients based on the information
included in the respective products and services label(s); |
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concern regarding any accelerated
approval of our products or services and associated data; |
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our ability to obtain and maintain
reimbursement for our prospective products or services; |
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the lack of market acceptance of
our products or services; |
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the effectiveness of our commercial
strategy for marketing our products or services; |
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delays in the manufacturing,
distribution and supply of our products and services; |
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the approval of other new products
for the same or similar indications; and |
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our ability to maintain a positive
reputation among patients, healthcare providers and others in the
disease community we seek to serve--which may be impacted by our
pricing and reimbursement decisions. |
Our long-term success depends upon the successful
development of new products and additional indications for our
existing products.
Our long-term success will depend upon the successful development
of new products and/or services from our research and development
activities or our licensees or acquisitions from third-parties,
including our commercialization agreements as well as additional
indications for our existing products.
Product development is very expensive and involves a high degree of
uncertainty and risk and may not be successful. Only a small number
of research and development programs result in the
commercialization of a product.
It is difficult to predict the success and the time and cost of
product development of novel approaches for the treatment of
diseases. The development of novel approaches for the treatment of
diseases, including development efforts in new modalities such as
those based on the antisense oligonucleotide platform and gene
therapy, may present additional challenges and risks, including
obtaining approval from regulatory authorities that have limited
experience with the development of such therapies.
Clinical trial data are subject to differing interpretations and,
even if we view data as sufficient to support the safety,
effectiveness and/or approval of an investigational therapy,
regulatory authorities may disagree and may require additional
data, limit the scope of the approval or deny approval altogether.
Furthermore, the approval of a product candidate by one regulatory
agency does not mean that other regulatory agencies will also
approve such product candidate.
Success in preclinical work or early-stage clinical trials does not
ensure that later stage or larger scale clinical trials will be
successful. Clinical trials may indicate that our product
candidates lack efficacy, have harmful side effects, result in
unexpected adverse events or raise other concerns that may
significantly reduce the likelihood of regulatory approval. This
may result in terminated programs, significant restrictions on use
and safety warnings in an approved label, adverse placement within
the treatment paradigm or significant reduction in the commercial
potential of the product candidate.
Even if we could successfully develop new products or indications,
we may make a strategic decision to discontinue development of a
product candidate or indication if, for example, we believe
commercialization will be difficult relative to the standard of
care or we prefer to pursue other opportunities in our
pipeline.
Sales of new products or services or products or services with
additional indications may not meet investor expectations.
If we fail to compete effectively, our business and
market position would suffer.
The biopharmaceutical industry and the markets in which we operate
are intensely competitive. We compete in the marketing and sale of
our products, the development of new products and processes, the
acquisition of rights to new products with commercial potential and
the hiring and retention of personnel. We compete with
biotechnology and pharmaceutical companies that have a greater
number of products and services in the market than in our pipeline,
and many have substantially greater financial, marketing, research
and development and other resources and other technological or
competitive advantages than do we.
Our products continue to face increasing competition from the
introduction of new originator therapies, generics, prodrugs and
biosimilars of existing products and products approved under
abbreviated regulatory pathways. Some of these products are likely
to be sold at substantially lower prices than our branded products.
The introduction of such products as well as other lower-priced
competing products has reduced, and may in the future,
significantly reduce both the price that we are able to charge for
our products and the volume of products we sell, which will
negatively impact our revenue. In addition, in some markets, when a
generic or biosimilar version of one of our products is
commercialized, it may be automatically substituted for our product
and significantly reduce our revenue in a short period of time.
Our ability to compete, maintain and grow our business may also be
adversely affected due to a number of factors, including:
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the introduction of other products,
including products that may be more efficacious, safer, less
expensive or more convenient alternatives to our products,
including our own products and products of our collaborators; |
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the off-label use by physicians of
therapies indicated for other conditions to treat patients; |
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patient dynamics, including the
size of the patient population and our ability to identify, attract
and maintain new and current patients to our therapies; |
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the reluctance of physicians to
prescribe, and patients to use, our products without additional
data on the efficacy and safety of such products; |
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damage to physician and patient
confidence in any of our products, generic or biosimilars of our
products or any other product from the same class as one of our
products, or to our sales and reputation as a result of label
changes, pricing and reimbursement decisions or adverse experiences
or events that may occur with patients treated with our products or
generic or biosimilars of our products; |
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inability to obtain appropriate
pricing and reimbursement for our products compared to our
competitors in key international markets; or |
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our ability to obtain and maintain
patent, data or market exclusivity for our products. See as well
our overview as to competition discussion in “business.” |
Our business may be adversely affected if we do not
successfully execute or realize the anticipated benefits of our
strategic and growth initiatives.
The successful execution of our strategic and growth initiatives
may depend upon internal development projects, commercial
initiatives and external opportunities, which may include the
acquisition and in-licensing of products, technologies and
companies or the entry into strategic alliances and
collaborations.
While we believe we have a number of promising products and
services in our pipeline, failure or delay of internal development
projects to advance or difficulties in executing on our commercial
initiatives could impact our current and future growth, resulting
in additional reliance on external development opportunities for
growth.
Supporting the further development of our existing products and
potential new products in our pipeline will require significant
capital expenditures and management resources, including
investments in research and development, sales and marketing,
manufacturing capabilities and other areas of our business. We have
made, and may continue to make, significant operating and capital
expenditures for potential new products prior to regulatory
approval with no assurance that such investment will be recouped,
which may adversely affect our financial condition, business and
operations.
The availability of high quality, fairly valued external product
development is limited and the opportunity for their acquisition is
highly competitive. As such, we are not certain that we will be
able to identify suitable candidates for acquisition or if we will
be able to reach agreement.
We may fail to initiate or complete transactions for many reasons,
including failure to obtain regulatory or other approvals as well
as disputes or litigation. Furthermore, we may not be able to
achieve the full strategic and financial benefits expected to
result from transactions, or the benefits may be delayed or not
occur at all. We may also face additional costs or liabilities in
completed transactions that were not contemplated prior to
completion.
Any failure in the execution of a transaction, in the integration
of an acquired asset or business or in achieving expected synergies
could result in slower growth, higher than expected costs, the
recording of asset impairment charges and other actions which could
adversely affect our business, financial condition and results of
operations.
Sales of our products depend, to a significant extent,
on adequate coverage, pricing and reimbursement from third-party
payors, which are subject to increasing and intense pressure from
political, social, competitive and other sources. Our inability to
obtain and maintain adequate coverage, or a reduction in pricing or
reimbursement, could have an adverse effect on our business,
reputation, revenue and results of operations.
Sales of our products and services depend, to a significant extent,
on adequate coverage, pricing and reimbursement from third-party
payors. When a new pharmaceutical product is approved, the
availability of government and private reimbursement for that
product may be uncertain, as is the pricing and amount for which
that product will be reimbursed.
Pricing and reimbursement for our products may be adversely
affected by a number of factors, including:
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changes in, and implementation of,
federal, state or foreign government regulations or private
third-party payors’ reimbursement policies; |
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pressure by employers on private
health insurance plans to reduce costs; |
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consolidation and increasing
assertiveness of payors seeking price discounts or rebates in
connection with the placement of our products on their formularies
and, in some cases, the imposition of restrictions on access or
coverage of particular drugs or pricing determined based on
perceived value; |
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our ability to receive
reimbursement for our products; and |
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our value-based contracting program
pursuant to which we aim to tie the pricing of our products to
their clinical values by either aligning price to patient outcomes
or adjusting price for patients who discontinue therapy for any
reason, including efficacy or tolerability concerns. |
Our ability to set the price for our products varies significantly
from country to country and, as a result, so can the price of our
products. Certain countries set prices by reference to the prices
in other countries where our products are marketed. Our inability
to obtain and maintain adequate prices in a particular country may
not only limit the revenue from our products within that country
but may also adversely affect our ability to secure acceptable
prices in existing and potential new markets, which may limit
market growth. This may create the opportunity for trade or
otherwise influence our decision to sell or not to sell a product
or service, thus adversely affecting our geographic expansion plans
and revenue.
Drug prices are under significant scrutiny in the markets in which
our products are prescribed. We expect drug pricing and other
health care costs to continue to be subject to intense political
and societal pressures on a global basis. Competition from current
and future competitors may negatively impact our ability to
maintain pricing and our market share. New products marketed by our
competitors could cause our revenue to decrease due to potential
price reductions and lower sales volumes. Additionally, the
introduction of generic or biosimilar versions of our products,
follow-on products, prodrugs or products approved under abbreviated
regulatory pathways may significantly reduce the price that we are
able to charge for our products and the volume of products we
sell.
Many payors continue to adopt benefit plan changes that shift a
greater portion of prescription costs to patients, including more
limited benefit plan designs, higher patient co-pay or co-insurance
obligations and limitations on patients’ use of commercial
manufacturer co-pay payment assistance programs (including through
co-pay accumulator adjustment or maximization programs).
Significant consolidation in the health insurance industry has
resulted in a few large insurers and pharmacy benefit managers
exerting greater pressure in pricing and usage negotiations with
drug manufacturers, significantly increasing discounts and rebates
required of manufacturers and limiting patient access and usage.
Further consolidation among insurers, pharmacy benefit managers and
other payors would increase the negotiating leverage such entities
have over us and other drug manufacturers. Additional discounts,
rebates, coverage or plan changes, restrictions or exclusions as
described above could have a material adverse effect on sales of
our affected products.
Our failure to obtain or maintain adequate coverage, pricing or
reimbursement for our products could have an adverse effect on our
business, reputation, revenue and results of operations.
We depend on relationships with collaborators, joint
venture partners and other third-parties for revenue, and for the
development, regulatory approval, commercialization and marketing
of certain of our products and product candidates, which are
outside of our full control.
We rely on a number of collaborators, joint ventures and other
third-party relationships for revenue and the development,
regulatory approval, commercialization and marketing of certain of
our products and product candidates. We also outsource certain
aspects of our regulatory affairs and clinical development relating
to our products and product candidates to third-parties. Reliance
on third-parties subjects us to a number of risks, including:
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we may be unable to control the
resources our collaborators, joint venture partners or
third-parties devote to our programs, products or product
candidates; |
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disputes may arise under an
agreement, including with respect to the achievement and payment of
milestones, payment of development or commercial costs, ownership
of rights to technology developed, and the underlying agreement may
fail to provide us with significant protection or may fail to be
effectively enforced if the collaborators, joint ventures partners
or third-parties fail to perform; |
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the interests of our collaborators,
joint venture partners or third-parties may not always be aligned
with our interests, and such parties may not pursue regulatory
approvals or market a product in the same manner or to the same
extent that we would, which could adversely affect our revenue, or
may adopt tax strategies that could have an adverse effect on our
business, results of operations or financial condition; |
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third-party relationships require
the parties to cooperate, and failure to do so effectively could
adversely affect product sales or the clinical development or
regulatory approvals of product candidates under joint control,
could result in termination of the research, development or
commercialization of product candidates or could result in
litigation or arbitration; |
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any failure on the part of our
collaborators, joint venture partners or third-parties to comply
with applicable laws, including tax laws, regulatory requirements
and/or applicable contractual obligations or to fulfill any
responsibilities they may have to protect and enforce any
intellectual property rights underlying our products could have an
adverse effect on our revenue as well as involve us in possible
legal proceedings; and |
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any improper conduct or actions on
the part of our collaborators, joint venture partners or
third-parties could subject us to civil or criminal investigations
and monetary and injunctive penalties, impact the accuracy and
timing of our financial reporting and/or adversely impact our
ability to conduct business, our operating results and our
reputation. |
Given these risks, there is considerable uncertainty regarding the
success of our current and future collaborative efforts. If these
efforts fail, our product development or commercialization of new
products could be delayed, revenue from products could decline
and/or we may not realize the anticipated benefits of these
arrangements.
Our results of operations may be adversely affected by
current and potential future healthcare reforms.
In the U.S., federal and state legislatures, health agencies and
third-party payors continue to focus on containing the cost of
health care. Legislative and regulatory proposals, enactments to
reform health care insurance programs and increasing pressure from
social sources could significantly influence the manner in which
our products are prescribed and purchased. For example, provisions
of the Patient Protection and Affordable Care Act (“PPACA”) have
resulted in changes in the way health care is paid for by both
governmental and private insurers, including increased rebates owed
by manufacturers under the Medicaid Drug Rebate Program, annual
fees and taxes on manufacturers of certain branded prescription
drugs, the requirement that manufacturers participate in a discount
program for certain outpatient drugs under Medicare Part D and the
expansion of the number of hospitals eligible for discounts under
Section 340B of the Public Health Service Act. These changes have
had and are expected to continue to have a significant impact on
our business.
We may face uncertainties as a result of efforts to repeal,
substantially modify or invalidate some or all of the provisions of
the PPACA. There is no assurance that the PPACA, as currently
enacted or as amended in the future, will not adversely affect our
business and financial results, and we cannot predict how future
federal or state legislative or administrative changes relating to
healthcare reform will affect our business.
There is increasing public attention on the costs of prescription
drugs and we expect drug pricing and other health care costs to
continue to be subject to intense political and societal pressures
on a global basis. For example, two committees of the U.S. House of
Representatives are investigating the approval and price of
Aduhelm. In addition, there have been, and are expected to continue
to be, legislative proposals to address prescription drug pricing.
Some of these proposals could have significant effects on our
business, including an executive order issued in September 2020 to
test a “most favored nation” model for Part B and Part D drugs that
tie reimbursement rates to international drug pricing metrics.
These actions and the uncertainty about the future of the PPACA and
healthcare laws may put downward pressure on pharmaceutical pricing
and increase our regulatory burdens and operating costs.
There is also significant economic pressure on state budgets,
including as a result of the COVID-19 pandemic, that may result in
states increasingly seeking to achieve budget savings through
mechanisms that limit coverage or payment for our drugs. In recent
years, some states have considered legislation and ballot
initiatives that would control the prices of drugs, including laws
to allow importation of pharmaceutical products from lower cost
jurisdictions outside the U.S. and laws intended to impose price
controls on state drug purchases. State Medicaid programs are
increasingly requesting manufacturers to pay supplemental rebates
and requiring prior authorization by the state program for use of
any drug for which supplemental rebates are not being paid.
Government efforts to reduce Medicaid expense may lead to increased
use of managed care organizations by Medicaid programs. This may
result in managed care organizations influencing prescription
decisions for a larger segment of the population and a
corresponding limitation on prices and reimbursement for our
products.
In the E.U. and some other international markets, the government
provides health care at low cost to consumers and regulates
pharmaceutical prices, patient eligibility or reimbursement levels
to control costs for the government-sponsored health care system.
Many countries have announced or implemented measures and may in
the future implement new or additional measures, to reduce health
care costs to limit the overall level of government expenditures.
These measures vary by country and may include, among other things,
patient access restrictions, suspensions on price increases,
prospective and possible retroactive price reductions and other
recoupments and increased mandatory discounts or rebates,
recoveries of past price increases and greater importation of drugs
from lower-cost countries. These measures could negatively impact
our revenue and results of operations in the future.
Our success in commercializing biosimilars is subject
to risks and uncertainties inherent in the development, manufacture
and commercialization of biosimilars. If we are unsuccessful in
such activities, our business may be adversely
affected.
The development, manufacture and commercialization of biosimilar
products require specialized expertise and are very costly and
subject to complex regulation. Our success in commercializing
biosimilars is subject to a number of risks, including:
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Reliance on Third-Parties.
We are dependent, in part, on the efforts of collaboration partners
and other third-parties over whom we have limited or no control in
the development and manufacturing of biosimilar products. If these
third-parties fail to perform successfully, our biosimilar product
development or commercialization of biosimilar products could be
delayed, revenue from biosimilar products could decline and/or we
may not realize the anticipated benefits of these
arrangements; |
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Regulatory Compliance.
Biosimilar products may face regulatory hurdles or delays due to
the evolving and uncertain regulatory and commercial pathway of
biosimilar products in certain jurisdictions; |
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Intellectual Property and
Regulatory Challenges. Biosimilar products may face extensive
patent clearances, patent infringement litigation, injunctions or
regulatory challenges, which could prevent the commercial launch of
a product or delay it for many years or result in imposition of
monetary damages, penalties or other civil sanctions and damage our
reputation; |
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Failure to Gain Market and
Patient Acceptance. Market success of biosimilar products will
be adversely affected if patients, physicians and/or payors do not
accept biosimilar products as safe and efficacious products
offering a more competitive price or other benefit over existing
therapies; |
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Ability to Provide Adequate
Supply. Manufacturing biosimilars is complex. If we encounter
any manufacturing or supply chain difficulties, we may be unable to
meet higher than anticipated demand. We are dependent on a
third-party for the manufacture of our biosimilar products and such
third-party may not perform its obligations in a timely and
cost-effective manner or in compliance with applicable regulations
and may be unable or unwilling to increase production capacity
commensurate with demand for our existing or future biosimilar
products; and |
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Competitive Challenges.
Biosimilar products face significant competition, including from
innovator products and biosimilar products offered by other
companies. Local tendering processes may restrict biosimilar
products from being marketed and sold in some jurisdictions. The
number of competitors in a jurisdiction, the timing of approval and
the ability to market biosimilar products successfully in a timely
and cost-effective manner are additional factors that may impact
our success. |
Risks Related to Intellectual Property
If we are unable to obtain and maintain adequate
protection for our data, intellectual property and other
proprietary rights, our business may be harmed.
Our success, including our long-term viability and growth, depends,
in part, on our ability to obtain and defend patent and other
intellectual property rights, including certain regulatory forms of
exclusivity, that are important to the commercialization of our
products and product candidates. Patent protection and/or
regulatory exclusivity in the U.S. and other important markets
remains uncertain and depends, in part, upon decisions of the
patent offices, courts, administrative bodies and lawmakers in
these countries. We may fail to obtain or preserve patent and other
intellectual property rights, including certain regulatory forms of
exclusivity, or the protection we obtain may not be of sufficient
breadth and degree to protect our commercial interests in all
countries where we conduct business, which could result in
financial, business or reputational harm to us or could cause a
decline or volatility in our stock price. In addition, settlements
of such proceedings often result in reducing the period of patent
and other protections, resulting in a reduction in revenue from
affected products.
In many markets, including the U.S., manufacturers may be allowed
to rely on the safety and efficacy data of the innovator’s product
and do not need to conduct clinical trials before marketing a
competing version of a product after there is no longer patent or
regulatory exclusivity. In such cases, manufacturers often charge
significantly lower prices and a major portion of the company’s
revenue may be reduced in a short period of time. In addition,
manufacturers of generics and biosimilars may choose to launch or
attempt to launch their products before the expiration of our
patent or other intellectual property protections.
Furthermore, our products may be determined to infringe patents or
other intellectual property rights held by third-parties. Legal
proceedings, administrative challenges or other types of
proceedings are and may in the future be necessary to determine the
validity, scope or non-infringement of certain patent rights
claimed by third-parties to be pertinent to the manufacture, use or
sale of our products. Such proceedings are unpredictable and are
often protracted and expensive. Negative outcomes of such
proceedings could hinder or prevent us from manufacturing and
marketing our products, require us to seek a license for the
infringed product or technology or result in the assessment of
significant monetary damages against us that may exceed amounts, if
any, accrued in our financial statements. A failure to obtain
necessary licenses for an infringed product or technology could
prevent us from manufacturing or selling our products. Furthermore,
payments under any licenses that we are able to obtain would reduce
our profits from the covered products and services. Any of these
circumstances could result in financial, business or reputational
harm to us or could cause a decline or volatility in our stock
price.
Our lack of adequate accounting personnel is a material
weakness in our financial reporting.
A company is deemed to have a material weakness in financial
reporting when one or more of its internal controls over financial
reporting are ineffective. Because we lack accounting personnel
with training and experience in U. S. GAAP, financial reporting and
the design and evaluation of internal controls over financial
reporting, we have a material weakness which could result in a
material misstatement in our financial statements. Any misstatement
in our financial statements could cause us to have to restate our
financial statements, which would be expensive, time consuming and
adversely impact our ability to realize our business plan.
Risks Related to Development, Clinical Testing and
Regulation of Our Products and Product Candidates
Successful preclinical work or early-stage clinical
trials does not ensure success in later stage trials, regulatory
approval or commercial viability of a product.
Positive results in a clinical trial may not be replicated in
subsequent or confirmatory trials. Additionally, success in
preclinical work or early-stage clinical trials does not ensure
that later stage or larger scale clinical trials will be successful
or that regulatory approval will be obtained. Even if later stage
clinical trials are successful, regulatory authorities may delay or
decline approval of our product candidates. Regulatory authorities
may disagree with our view of the data, require additional studies
or disagree with our trial design or endpoints. Regulatory
authorities may also fail to approve the facilities or processes
used to manufacture a product candidate, our dosing or delivery
methods or companion devices. Regulatory authorities may grant
marketing approval that is more restricted than anticipated,
including limiting indications to narrow patient populations and
the imposition of safety monitoring, educational requirements,
requiring confirmatory trials and risk evaluation and mitigation
strategies. The occurrence of any of these events could result in
significant costs and expense, have an adverse effect on our
business, financial condition and results of operations and/or
cause our stock price to decline or experience periods of
volatility.
Clinical trials and the development of
biopharmaceutical products is a lengthy and complex process. If we
fail to adequately manage our clinical activities, our clinical
trials or potential regulatory approvals may be delayed or
denied.
Conducting clinical trials is a complex, time-consuming and
expensive process. Our ability to complete clinical trials in a
timely fashion depends on a number of key factors, including
protocol design, regulatory and institutional review board
approval, patient enrollment rates and compliance with current Good
Clinical Practices. If we or our third-party clinical trial
providers or third-party CROs do not successfully carry out these
clinical activities, our clinical trials or the potential
regulatory approval of a product candidate may be delayed or
denied.
We anticipate opening clinical trial sites and enrolling patients
in a number of countries where our experience is limited. In most
cases, we will use the services of third-parties to carry out our
clinical trial related activities and rely on such parties to
accurately report their results. Our reliance on third-parties for
these activities may impact our ability to control the timing,
conduct, expense and quality of our clinical trials. In the event a
given CRO were to have responsibility for a substantial portion of
our activities and clinical trials, many of our trials may be
adversely affected if such CRO does not adequately perform. If we
needed to replace our CRO(s), delays of the affected trials may
result or otherwise adversely affect our efforts to obtain
regulatory approvals and commercialization of our products and
services candidates.
Adverse safety events or restrictions on use and safety
warnings for our products can negatively affect our business,
product sales and stock price.
Adverse safety events involving our marketed products, generic or
biosimilar versions of our marketed products or products from the
same class as one of our products may have a negative impact on our
business. Discovery of safety issues with our products could create
product liability and could cause additional regulatory scrutiny
and requirements for additional labeling or safety monitoring,
withdrawal of products from the market and/or the imposition of
fines or criminal penalties. Adverse safety events may also damage
physician, patient and/or investor confidence in our products and
our reputation. Any of these could result in adverse impacts on our
results of operations.
Regulatory authorities are making greater amounts of stand-alone
safety information directly available to the public through
periodic safety update reports, patient registries and other
reporting requirements. The reporting of adverse safety events
involving our products or products similar to ours and public
rumors about such events may increase claims against us and may
also cause our product sales to decline or our stock price to
experience periods of volatility. Restrictions on use or safety
warnings that may be required to be included in the label of our
products may significantly reduce expected revenue for those
products and require significant expense and management time.
The illegal distribution and sale by third-parties of
counterfeit or unfit versions of our products or stolen products
could have a negative impact on our reputation and
business.
Third-parties might illegally distribute and sell counterfeit or
unfit versions of our products and services, especially if such
parties did not meet our rigorous manufacturing, distribution and
testing standards. A patient who receives a counterfeit or unfit
drug may be at risk for a number of dangerous health consequences.
Our reputation and business could suffer harm as a result of
counterfeit or unfit drugs sold under our brand name. Inventory
that is stolen from warehouses, plants or while in-transit, and
that is subsequently improperly stored and sold through
unauthorized channels, could adversely impact patient safety, our
reputation and our business.
The increasing use of social media platforms presents
new risks and challenges.
Social media is increasingly being used to communicate about our
products and the diseases our therapies are designed to treat.
Social media practices in the biopharmaceutical industry continue
to evolve and regulations relating to such use are not always clear
and creates uncertainty and risk of noncompliance with regulations
applicable to our business. For example, patients may use social
media channels to comment on the effectiveness of a product or to
report an alleged adverse event. When such disclosures occur, there
is a risk that we fail to monitor and comply with applicable
adverse event reporting obligations or we may not be able to defend
the company or the public’s legitimate interests in the face of the
political and market pressures generated by social media due to
restrictions on what we may say about our products. There is also a
risk of inappropriate disclosure of sensitive information or
negative or inaccurate posts or comments about us on social media.
We may also encounter criticism on social media regarding our
company, management, product candidates or products. The immediacy
of social media precludes us from having real-time control over
postings made regarding us via social media, whether matters of
fact or opinion. Our reputation could be damaged by negative
publicity or if adverse information concerning us is posted on
social media platforms or similar mediums, which we may not be able
to reverse. If any of these events were to occur or we otherwise
fail to comply with applicable regulations, we could incur
liability, face restrictive regulatory actions or incur other harm
to our business.
Risks Related to Our Operations
A breakdown or breach of our technology systems could
subject us to liability or interrupt the operation of our
business.
We are increasingly dependent upon technology systems and data to
operate our business. Breakdowns, invasions, corruptions,
destructions and/or breaches of our technology systems, including
our cloud technologies, and/or unauthorized access to our data and
information could subject us to liability, negatively impact our
business operations, and/or require replacement of technology
and/or ransom payments. Our technology systems, including our cloud
technologies, continue to increase in multitude and complexity,
increasing our vulnerability when breakdowns, malicious intrusions
and random attacks occur. Data privacy or security breaches also
pose a risk that sensitive data, including intellectual property,
trade secrets or personal information belonging to us, patients,
customers or other business partners, may be exposed to
unauthorized persons or to the public.
Cyber-attacks are increasing in their frequency, sophistication and
intensity, and are becoming increasingly difficult to detect, when
they impact vendors, customers or companies, including vendors,
suppliers and other companies in our supply chain. They are often
carried out by motivated, well-resourced, skilled and persistent
actors, including nation states, organized crime groups,
“hacktivists” and employees or contractors acting with careless or
malicious intent. Cyber-attacks include deployment of harmful
malware and key loggers, ransomware, a denial-of-service attack, a
malicious website, the use of social engineering and other means to
affect the confidentiality, integrity and availability of our
technology systems and data. Cyber-attacks also include
manufacturing, hardware or software supply chain attacks, which
could cause a delay in the manufacturing of products or products
produced for contract manufacturing or lead to a data privacy or
security breach. Our key business partners face similar risks and
any security breach of their systems could adversely affect our
security posture. In addition, our increased use of cloud
technologies heightens these and other operational risks, and any
failure by cloud or other technology service providers to
adequately safeguard their systems and prevent cyber-attacks could
disrupt our operations and result in misappropriation, corruption
or loss of confidential or propriety information.
While we continue to build and improve our systems and
infrastructure, including our business continuity plans, there can
be no assurance that our efforts will prevent breakdowns or
breaches in our systems that could adversely affect our business
and operations and/or result in the loss of critical or sensitive
information, which could result in financial, legal, operational or
reputational harm to us, loss of competitive advantage or loss of
consumer confidence. Our liability insurance may not be sufficient
in type or amount to cover us against claims related to security
breaches, cyber-attacks and other related breaches.
Regulators are imposing new data privacy and security requirements,
including new and greater monetary fines for privacy violations.
For example, the E.U.’s General Data Protection Regulation
established regulations regarding the handling of personal data and
provides an enforcement authority and imposes large penalties for
noncompliance. New U.S. data privacy and security laws, such as the
California Consumer Privacy Act (“CCPA”), and others that may be
passed, similarly introduce requirements with respect to personal
information, and non-compliance with the CCPA may result in
liability through private actions (subject to statutorily defined
damages in the event of certain data breaches) and enforcement.
Failure to comply with these current and future laws, policies,
industry standards or legal obligations or any security incident
resulting in the unauthorized access to, or acquisition, release or
transfer of personal information may result in governmental
enforcement actions, litigation, fines and penalties or adverse
publicity and could cause our customers to lose trust in us, which
could have a material adverse effect on our business and results of
operations.
Management and other personnel changes may disrupt our
operations and, as a result, we may have difficulty retaining
personnel or attracting and retaining qualified replacements on a
timely basis for the management and other personnel who may leave
the Company.
Changes in management, other personnel and our overall retention
rate may disrupt our business, and any such disruption could
adversely affect our operations, programs, growth, financial
condition or results of operations. New members of management may
have different perspectives on programs and opportunities for our
business, which may cause us to focus on new opportunities or
reduce or change emphasis on our existing programs.
Our success is dependent upon our ability to attract and retain
qualified management and key personnel in a highly competitive
environment. Qualified individuals are in high demand, and we may
incur significant costs to attract or retain them. We may face
difficulty in attracting and retaining talent for a number of
reasons, including management changes, the underperformance or
discontinuation of one or more marketed or late-stage programs,
recruitment by competitors or changes in the overall labor market.
In addition, changes in our organizational structure or in our
flexible working arrangements could impact employees’ productivity
and morale as well as our ability to attract, retain and motivate
employees. We cannot ensure that we will be able to hire or retain
the personnel necessary for our operations or that the loss of any
personnel will not have a material impact on our financial
condition and results of operations.
If we fail to comply with the extensive legal and
regulatory requirements affecting the health care industry, we
could face increased costs, penalties and a loss of
business.
Our activities, and the activities of our collaborators,
distributors and other third-party providers, are subject to
extensive government regulation and oversight in the U.S. and in
foreign jurisdictions, and are subject to change and evolving
interpretations, which could require us to incur substantial costs
associated with compliance or to alter one or more of our business
practices. The FDA and comparable foreign agencies directly
regulate many of our most critical business activities, including
the conduct of preclinical and clinical studies, product
manufacturing, advertising and promotion, product distribution,
adverse event reporting, product risk management and our compliance
with good practice quality guidelines and regulations. Our
interactions with physicians and other health care providers that
prescribe or purchase our products are also subject to government
regulation designed to prevent fraud and abuse in the sale and use
of products and place significant restrictions on the marketing
practices of health care companies. Health care companies are
facing heightened scrutiny of their relationships with health care
providers and have been the target of lawsuits and investigations
alleging violations of government regulation, including claims
asserting submission of incorrect pricing information,
impermissible off-label promotion of pharmaceutical products,
payments intended to influence the referral of health care
business, submission of false claims for government reimbursement,
antitrust violations or violations related to environmental
matters. There is also enhanced scrutiny of company-sponsored
patient assistance programs, including insurance premium and co-pay
assistance programs and donations to third-party charities that
provide such assistance. If we, or our vendors or donation
recipients, are found to fail to comply with relevant laws,
regulations or government guidance in the operation of these
programs, we could be subject to significant fines or penalties.
Risks relating to compliance with laws and regulations may be
heightened as we continue to expand our global operations and enter
new therapeutic areas with different patient populations, which may
have different product distribution methods, marketing programs or
patient assistance programs from those we currently utilize or
support.
Conditions and regulations governing the health care industry are
subject to change, with possible retroactive effect, including:
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new laws, regulations or judicial
decisions, or new interpretations of existing laws, regulations or
judicial decisions, related to health care availability, pricing or
marketing practices, compliance with employment practices, method
of delivery, payment for health care products and services,
compliance with health information and data privacy and security
laws and regulations, tracking and reporting payments and other
transfers of value made to physicians and teaching hospitals,
extensive anti-bribery and anti-corruption prohibitions, product
serialization and labeling requirements and used product take-back
requirements; |
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changes in the FDA and foreign
regulatory approval processes or perspectives that may delay or
prevent the approval of new products and result in lost market
opportunity; |
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government shutdowns or relocations
may result in delays to the review and approval process, slowing
the time necessary for new drug candidates to be reviewed and/or
approved, which may adversely affect our business; |
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requirements that provide for
increased transparency of clinical trial results and quality data,
such as the EMA’s clinical transparency policy, which could impact
our ability to protect trade secrets and competitively-sensitive
information contained in approval applications or could be
misinterpreted leading to reputational damage, misperception or
legal action, which could harm our business; and |
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changes in FDA and foreign
regulations that may require additional safety monitoring, labeling
changes, restrictions on product distribution or use or other
measures after the introduction of our products to market, which
could increase our costs of doing business, adversely affect the
future permitted uses of approved products or otherwise adversely
affect the market for our products. |
Violations of governmental regulation may be punishable by criminal
and civil sanctions, including fines and civil monetary penalties
and exclusion from participation in government programs, including
Medicare and Medicaid, as well as against executives overseeing our
business. We could also be required to repay amounts we received
from government payors or pay additional rebates and interest if we
are found to have miscalculated the pricing information we
submitted to the government. In addition, legal proceedings and
investigations are inherently unpredictable, and large judgments or
settlements sometimes occur. While we believe that we have
appropriate compliance controls, policies and procedures in place
to comply with the laws or regulations of the jurisdictions in
which we operate, there is a risk that acts committed by our
employees, agents, distributors, collaborators or third-party
providers might violate such laws or regulations. Whether or not we
have complied with the law, an investigation or litigation related
to alleged unlawful conduct could increase our expense, damage our
reputation, divert management time and attention and adversely
affect our business.
Our sales and operations are subject to the risks of
doing business internationally.
We expect to expand our presence in international markets,
subjecting us to many risks that could adversely affect our
business and revenue. There is no guarantee that our efforts and
strategies to expand sales in international markets will succeed.
Emerging market countries may be especially vulnerable to periods
of global and local political, legal, regulatory and financial
instability and may have a higher incidence of corruption and
fraudulent business practices. Certain countries may require local
clinical trial data as part of the drug registration process in
addition to global clinical trials, which can add to overall drug
development and registration timelines. We may also be required to
increase our reliance on third-party agents and unfamiliar
operations and arrangements previously utilized by companies we
collaborate with or acquire in emerging markets.
Our sales and operations are subject to the risks of doing business
internationally, including:
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the impact of public health
epidemics, such as the COVID-19 pandemic, on the global economy and
the delivery of healthcare treatments; |
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less favorable intellectual
property or other applicable laws; |
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the inability to obtain necessary
foreign regulatory approvals of products in a timely manner; |
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limitations and additional
pressures on our ability to obtain and maintain product pricing or
receive price increases, including those resulting from
governmental or regulatory requirements; |
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additional complexity in
manufacturing internationally; |
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the inability to successfully
complete subsequent or confirmatory clinical trials in countries
where our experience is limited; |
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longer payment and reimbursement
cycles and uncertainties regarding the collectability of accounts
receivable; |
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fluctuations in foreign currency
exchange rates that may adversely impact our revenue, net income
and value of certain of our investments; |
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the imposition of governmental
controls; |
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diverse data privacy and protection
requirements; |
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increasingly complex standards for
complying with foreign laws and regulations that may differ
substantially from country to country and may conflict with
corresponding U.S. laws and regulations; |
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the far-reaching anti-bribery and
anti-corruption legislation in the United Kingdom (U.K.), including
the U.K. Bribery Act 2010, and elsewhere and escalation of
investigations and prosecutions pursuant to such laws; |
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compliance with complex import and
export control laws; |
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changes in tax laws; and |
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the imposition of tariffs or
embargoes and other trade restrictions. |
In addition, our international operations are subject to regulation
under U.S. law. For example, the U.S. Foreign Corrupt Practices Act
(“FCPA”) prohibits U.S. companies and their representatives from
paying, offering to pay, promising to pay or authorizing the
payment of anything of value to any foreign government official,
government staff member, political party or political candidate for
the purpose of obtaining or retaining business or to otherwise
obtain favorable treatment or influence a person working in an
official capacity. In many countries, the health care professionals
we regularly interact with may meet the FCPA’s definition of a
foreign government official. Failure to comply with domestic or
foreign laws could result in various adverse consequences,
including possible delay in approval or refusal to approve a
product, recalls, seizures or withdrawal of an approved product
from the market, disruption in the supply or availability of our
products or suspension of export or import privileges, the
imposition of civil or criminal sanctions, the prosecution of
executives overseeing our international operations and damage to
our reputation. Any significant impairment of our ability to sell
products outside of the U.S. could adversely impact our business
and financial results. In addition, while we believe that we have
appropriate compliance controls, policies and procedures in place
to comply with the FCPA, there is a risk that acts committed by our
employees, agents, distributors, collaborators or third-party
providers might violate the FCPA and we might be held responsible.
If our employees, agents, distributors, collaborators or
third-party providers are found to have engaged in such practices,
we could suffer severe penalties and may be subject to other
liabilities, which could negatively affect our business, operating
results and financial condition.
Manufacturing issues could substantially increase our
costs, limit supply of our products and/or reduce our
revenue…especially if we were to build a large-scale manufacturing
facility with no assurance that such investment would be
recouped.
The process of manufacturing our products is complex, highly
regulated and subject to numerous risks, including:
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Risks of Reliance on
Third-Parties and Single Source Providers. We rely on
third-party suppliers and manufacturers for many aspects of our
manufacturing process for our products and product candidates. In
some cases, due to the unique manner in which our products are
manufactured, we rely on single source providers of raw materials
and manufacturing supplies. These third-parties are independent
entities subject to their own unique operational and financial
risks that are outside of our control. These third-parties may not
perform their obligations in a timely and cost-effective manner or
in compliance with applicable regulations, and they may be unable
or unwilling to increase production capacity commensurate with
demand for our existing or future products. Finding alternative
providers could take a significant amount of time and involve
significant expense due to the specialized nature of the services
and the need to obtain regulatory approval of any significant
changes to our suppliers or manufacturing methods. We cannot be
certain that we could reach agreement with alternative providers or
that the FDA or other regulatory authorities would approve our use
of such alternatives. Furthermore, factors such as the COVID-19
pandemic, weather events, labor or raw material shortages and other
supply chain disruptions could result in difficulties and delays in
manufacturing our products, which could have an adverse impact on
our results in operations or result in product shortages. |
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Global Bulk Supply Risks.
We rely on our manufacturing facilities for the production of drug
substance for our large molecule products and product candidates.
Our global bulk supply of these products and product candidates
depends on the uninterrupted and efficient operation of these
facilities, which could be adversely affected by equipment
failures, labor or raw material shortages, public health epidemics,
natural disasters, power failures, cyber-attacks and many other
factors. |
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Risks Relating to Compliance
with current GMP (“cGMP”). We and our third-party providers
are generally required to maintain compliance with cGMP and other
stringent requirements and are subject to inspections by the FDA
and other regulatory authorities to confirm compliance. Any delay,
interruption or other issues that arise in the manufacture,
fill-finish, packaging or storage of our products as a result of a
failure of our facilities or operations or those of third-parties
to receive regulatory approval or pass any regulatory agency
inspection could significantly impair our ability to develop and
commercialize our products. Significant noncompliance could also
result in the imposition of monetary penalties or other civil or
criminal sanctions and damage our reputation. |
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Risk of Product Loss. The
manufacturing process for our products is extremely susceptible to
product loss due to contamination, oxidation, equipment failure or
improper installation or operation of equipment or vendor or
operator error. Even minor deviations from normal manufacturing
processes could result in reduced production yields, product
defects and other supply disruptions. If microbial, viral or other
contaminations are discovered in our products or manufacturing
facilities, we may need to close our manufacturing facilities for
an extended period of time to investigate and remediate the
contaminant. |
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Risk Relating to Government
Actions. We and/or our third-party providers may be required
by the U.S. federal government to manufacture medical supplies
needed to treat COVID-19 patients under the Defense Production Act
or other acts or orders of government entities, which may result in
delays in the manufacturing and supply of our products. |
Any adverse developments affecting our manufacturing operations or
the operations of our third-party suppliers and manufacturers may
result in shipment delays, inventory shortages, lot failures,
product withdrawals or recalls or other interruptions in the
commercial supply of our products. We may also have to take
inventory write-offs and incur other charges and expense for
products that fail to meet specifications, undertake costly
remediation efforts or seek more costly manufacturing alternatives.
Such developments could increase our manufacturing costs, cause us
to lose revenue or market share as patients and physicians turn to
competing therapeutics, diminish our profitability or damage our
reputation.
In addition, although we have business continuity plans to reduce
the potential for manufacturing disruptions or delays and reduce
the severity of a disruptive event, there is no guarantee that
these plans will be adequate, which could adversely affect our
business and operations.
The ongoing COVID-19 pandemic may, directly or
indirectly, adversely affect our business, results of operations
and financial condition.
Our business has and could continue to be adversely affected,
directly or indirectly, by the ongoing COVID-19 pandemic. National,
state and local governments have implemented and may continue to
implement safety precautions. These measures may disrupt normal
business operations and may have significant negative impacts on
businesses and financial markets worldwide. We continue to monitor
our operations and applicable government recommendations, and we
have made modifications to our normal operations because of the
COVID-19 pandemic, including limiting travel and working from
home.
Changes in flexible working arrangements could impact employee
retention, employees’ productivity and morale, strain our
technology resources and introduce operational risks. Additionally,
the risk of cyber-attacks or other privacy or data security
incidents may be heightened as a result of our moving increasingly
towards a remote working environment, which may be less secure and
more susceptible to hacking attacks.
The COVID-19 pandemic could affect the health and availability of
our workforce as well as those of the third-parties we rely on.
Furthermore, delays and disruptions experienced by our
collaborators, joint venture partners or other third-parties due to
the COVID-19 pandemic could adversely impact the ability of such
parties to fulfill their obligations, which could affect product
sales or the clinical development or regulatory approvals of
product candidates under joint control.
Our ability to initiate new clinical trials may be adversely
affected, directly or indirectly, by the COVID-19 pandemic.
Restrictions on travel and/or transport of clinical materials as
well as diversion of hospital staff and resources to COVID-19
infected patients could disrupt trial operations and recruitment,
possibly resulting in a slowdown in enrollment and/or deviations
from or disruptions in key clinical trial activities, such as
clinical trial site monitoring. These challenges may lead to
difficulties in meeting protocol-specified procedures. We may need
to make certain adjustments to the operation of clinical trials in
an effort to minimize risks to trial data integrity during the
COVID-19 pandemic. In addition, the impact of the COVID-19 pandemic
on the operations of the FDA and other health authorities may delay
potential approvals of our product candidates.
In response to the COVID-19 pandemic, legislation has been enacted
aimed at providing emergency assistance and health care for
individuals, families and businesses and broadly supporting the
U.S. economy. Additional state and federal healthcare reform
measures may be adopted in the future, any of which could limit the
amounts that federal and state governments will pay for healthcare
products and services, which could result in reduced demand for our
products or additional pricing pressures and have a financial
impact on our business that we cannot predict.
While it is not possible at this time to estimate the entirety of
the impact that the COVID-19 pandemic will have on our business,
operations, employees, customers, suppliers or collaboration
partners, continued spread of COVID-19, measures taken by
governments, actions taken to protect employees and the broad
impact of the pandemic on all business activities may materially
and adversely affect our business, supply chain and distribution
systems, results of operations and financial condition.
Risks Related to Holding Our Common
Stock
Our operating results are subject to significant
fluctuations.
Our quarterly revenue, expense and net income (loss) have
fluctuated in the past and are likely to fluctuate significantly in
the future due to the risks described in these Risk
Factors as well as the timing of charges and expense that we
may take. We have recorded, or may be required to record, charges
that include:
|
·
|
the cost of restructurings or other
initiatives to streamline our operations and reallocate
resources; |
|
·
|
impairments with respect to
investments, fixed assets and long-lived assets, including
in-process research and development (IPR&D) and other
intangible assets; |
|
·
|
inventory write-downs for failed
quality specifications, recurring charges for excess or obsolete
inventory and charges for inventory write-downs relating to product
suspensions, expirations or recalls; |
|
·
|
changes in the fair value of
contingent consideration or our equity investments; |
|
·
|
bad debt expense and increased bad
debt reserves; |
|
·
|
outcomes of litigation and other
legal or administrative proceedings, regulatory matters and tax
matters; |
|
·
|
payments in connection with
acquisitions, divestitures and other business development
activities and under license and collaboration agreements; |
|
·
|
failure to meet certain contractual
commitments; and |
|
·
|
the impact of public health
epidemics, such as the COVID-19 pandemic, on employees, the global
economy and the delivery of healthcare treatments. Our revenue and
certain assets and liabilities are also subject to foreign currency
exchange rate fluctuations due to the global nature of our
operations. Our efforts to mitigate the impact of fluctuating
currency exchange rates may not be successful. As a result,
currency fluctuations among our reporting currency, the U.S.
dollar, and other currencies in which we do business will affect
our operating results, often in unpredictable ways. Our net income
may also fluctuate due to the impact of charges we may be required
to take with respect to foreign currency hedge transactions. In
particular, we may incur higher than expected charges from early
termination of a hedge relationship. |
Our operating results during any one period do not necessarily
suggest the anticipated results of future periods.
There can be no assurance that we will repurchase
shares or that we will repurchase shares at favorable
prices.
From time to time our Board of Directors may authorize share
repurchase programs. The amount and timing of share repurchases are
subject to capital availability and our determination that share
repurchases are in the best interest of our shareholders and are in
compliance with all respective laws and our applicable agreements.
Our ability to repurchase shares will depend upon, among other
factors, our cash balances and potential future capital
requirements for strategic transactions, our results of operations,
our financial condition and other factors beyond our control that
we may deem relevant. A reduction in repurchases under, or the
completion of, our share repurchase programs could have a negative
effect on our stock price. We can provide no assurance that we will
repurchase shares at favorable prices, if at all.
We may not be able to access the capital and credit
markets on terms that are favorable to us.
We may seek access to the capital and credit markets to supplement
our existing funds and cash generated from operations for working
capital, capital expenditure and debt service requirements and
other business initiatives. The capital and credit markets are
experiencing, and have in the past experienced, extreme volatility
and disruption, which leads to uncertainty and liquidity issues for
both borrowers and investors. In the event of adverse market
conditions, we may be unable to obtain capital or credit market
financing on favorable terms. Changes in credit ratings issued by
nationally recognized credit rating agencies could also adversely
affect our cost of financing and the market price of our
securities.
Our indebtedness could adversely affect our business
and limit our ability to plan for or respond to changes in our
business.
Our indebtedness, together with our significant contingent
liabilities, including milestone and royalty payment obligations,
could have important consequences to our business; for example,
such obligations could:
|
·
|
increase our vulnerability to
general adverse economic and industry conditions; |
|
·
|
limit our ability to access capital
markets and incur additional debt in the future; |
|
·
|
require us to dedicate a
substantial portion of our cash flow from operations to payments on
our indebtedness, thereby reducing the availability of our cash
flow for other purposes, including business development, research
and development and mergers and acquisitions; and |
|
·
|
limit our flexibility in planning
for, or reacting to, changes in our business and the industry in
which we operate, thereby placing us at a disadvantage compared to
our competitors that have less debt. |
General Risk Factors
Our effective tax rate fluctuates, and we may incur
obligations in tax jurisdictions in excess of accrued
amounts.
As a biopharmaceutical company, we may be subject to taxation in
multiple states. Countries and other jurisdictions. As a result,
our effective tax rate is derived from a combination of applicable
tax rates, including withholding taxes, in the various places that
we operate. In preparing our financial statements, we estimate the
amount of tax that will become payable in each of such places. Our
effective tax rate may be different than experienced in the past or
our current expectations due to many factors, including changes in
the mix of our profitability from country to country, the results
of examinations and audits of our tax filings (including those
related to the impact of the Tax Cuts and Jobs Act of 2017),
adjustments to the value of our uncertain tax positions,
interpretations by tax authorities or other bodies with
jurisdiction, the result of tax cases, changes in accounting for
income taxes and changes in tax laws and regulations either
prospectively or retrospectively.
Our inability to secure or sustain acceptable arrangements with tax
authorities and future changes in the tax laws, among other things,
may result in tax obligations in excess of amounts accrued in our
financial statements.
The enactment of some or all of the recommendations set forth or
that may be forthcoming in the Organization for Economic
Cooperation and Development’s project on “Base Erosion and Profit
Shifting” (“BEPS”) by tax authorities and economic blocs in the
countries in which we operate, could unfavorably impact our
effective tax rate. These initiatives focus on common international
principles for the entitlement to taxation of global corporate
profits and minimum global tax rates.
Our business involves environmental risks, which
include the cost of compliance and the risk of contamination or
injury.
Our business and the business of several of our strategic partners
involve the controlled use of hazardous materials, chemicals,
biologics and radioactive compounds. Although we believe that our
safety procedures for handling and disposing of such materials
comply with state, federal and foreign standards, there will always
be the risk of accidental contamination or injury. If we were to
become liable for an accident, or if we were to suffer an extended
facility shutdown, we could incur significant costs, damages and
penalties that could harm our business. Manufacturing of our
products and product candidates also requires permits from
government agencies for water supply and wastewater discharge. If
we do not obtain appropriate permits, including permits for
sufficient quantities of water and wastewater, we could incur
significant costs and limits on our manufacturing volumes that
could harm our business.
ITEM 1B UNRESOLVED STAFF COMMENTS:
None
ITEM 2 FINANCIAL
INFORMATION
This Form 10 contains forward-looking statements. Our actual
results could differ materially from those set forth as a result of
general economic conditions and changes in the assumptions used in
making such forward-looking statements. The following discussion
and analysis of our financial condition and results of operations
should be read together with the audited consolidated financial
statements and accompanying notes and the other financial
information appearing elsewhere in this report. The analysis set
forth below is provided pursuant to applicable Securities and
Exchange Commission regulations and is not intended to serve as a
basis for projections of future events.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Form 10 contains forward-looking statements that
may be affected by matters outside our control that could cause
materially different results
There are statements in this Registration Statement that are not
historical facts. These “forward-looking statements” can be
identified by use of terminology such as “believe,” “hope,” “may,”
“anticipate,” “should,” “intend,” “plan,” “will,” “expect,”
“estimate,” “project,” “positioned,” “strategy” and similar
expressions. You should be aware that these forward-looking
statements are subject to risks and uncertainties that are beyond
our control. For a discussion of these risks, you should read this
entire Registration Statement carefully, especially the risks
discussed under the section entitled “Risk Factors” above. Although
management believes that the assumptions underlying the
forward-looking statements included in this Registration Statement
are reasonable, they do not guarantee our future performance, and
actual results could differ from those contemplated by these
forward-looking statements. The assumptions used for purposes of
the forward-looking statements specified in the following
information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative,
industry, and other circumstances. As a result, the identification
and interpretation of data and other information and their use in
developing and selecting assumptions from and among reasonable
alternatives require the exercise of judgment. To the extent that
the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion
is expressed on the achievability of those forward-looking
statements. In light of these risks and uncertainties, there can be
no assurance that the results and events contemplated by the
forward-looking statements contained in this Registration Statement
will in fact transpire. You are cautioned to not place undue
reliance on these forward-looking statements, which speak only as
of their dates. We do not undertake any obligation to update or
revise any forward-looking statements.
ITEM 3 PROPERTIES
The Company owns no property as of the date of filing this Form 10.
More specifically, our corporate headquarters is located in a in a
residential building in Jackson Center, Pennsylvania. We believe
that our existing facilities are suitable and adequate to meet our
anticipated needs for at least the next year of operations.
ITEM 4: SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 15, 2022, the number and
percentage of the outstanding shares of common stock, which,
according to the information available to us, were beneficially
owned by:
|
(i)
|
each person who is currently a director,
|
|
|
|
|
(ii)
|
each executive officer,
|
|
|
|
|
(iii)
|
all current directors and executive officers as a group, and
|
|
|
|
|
(iv)
|
each person who is known by us to own beneficially more than 5% of
our outstanding common stock.
|
Except as otherwise indicated, the persons named in the tables
below have sole voting and dispositive power with respect to all
shares beneficially owned, subject to community property laws where
applicable.
|
Common Stock
Name (2)(4)(5)(6)
|
|
Position
|
|
Number of
Shares of
Common Stock
|
|
|
Percent of
Class (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
William A. Hartman (3)
|
|
Director + Officer
|
|
|
0
|
|
|
|
00.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Borza
|
|
Director + Officer
|
|
|
0
|
|
|
|
00.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heidi Carl
|
|
Director and
Controller
|
|
|
0
|
|
|
|
00.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common owned by directors and officers
|
|
|
|
|
|
|
|
|
00.00
|
%
|
|
(1)
|
Based upon 513,650,338 shares outstanding as of May 1, 2022.
|
|
(2)
|
Addresses of enumerated directors and or officers c/o the Company,
P.O. 25, Jackson Center, Pennsylvania 16133.
|
|
(3)
|
The Company originally authorized 15,000,000 Preferred A Shares to
its prior CEO. 10,000,000 Preferred Series A were issued to Mr.
Hartman and remain outstanding. Later, Mr. Hartman
transferred to Dr. Feldman 5MM of such Preferred Series A to Dr.
Feldman such that each of Mr. Hartmann and Dr. Felder
continue to own 5MM Preferred Series A shares. While
such securities grant no equity interest to the holder,
each grants to the holder a number of
votes equal to the product of .000001 times the number of
shares of common outstanding. Accordingly, based on the 513,650,338
outstanding common on March 31,2022, each of Mr. Hartmann and Dr.
Felder holding 5MM shares of preferred stock each owns, Mr.
Hartman and Dr. Feldman has 2,568,251,690 votes on any matters put
before shareholders (an aggregate 90.9% of the total votes
qualified to be cast).
|
|
(4)
|
The Company has an “advisory board”/”board of consultants,” an
informal panel of scientists and other professionals whose opinion
management values. Currently, Dr. Mitchell Felder, Dr.
Patricio Reyes. Dr. Abon Luis Goncalves Nanhay, Mr. Edson Luiz
de Brito, Mr. David Wilson, Dr. Ned Kronfol and Carl Eller are the
panel’s consulting members. (See above for associated
biographies.)
|
|
(5)
|
In 2020, the Company issued an aggregate 450,000,000 warrants
exercisable at an exercise price of $0.00001 (the then current
price). The warrants were issued in conjunction with
recruiting of personnel to serve as associates and/or officers
and/or directors of the reconstituted HALB. Specifically, Mr.
Hartman and Dr. Felder were each issued 150MM warrants and Mr.
Borza and Ms. Carl were each issued 75,000,000 warrants. The
only warrant holder to exercise his warrant was Dr. Felder, paying
$10,000 cash to exercise 1MM shares at $0.0001 and leaving him with
149MM unexercised warrants.
|
|
(6)
|
Our transfer agent advises the Company that there are no
shareholders holding 5% or more of the Company’s common stock.
|
ITEM 5: DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth the names, ages, and positions with
us for each of three (3) directors and two (2) officers as of
August 1, 2022.
|
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
|
|
William A. Hartman
|
|
80
|
|
Chairman, President, Principal Executive and Financial Officer
|
|
|
|
|
|
|
|
John Borza
|
|
77
|
|
Chief Operating Officer & Director
|
Audit Committee
Halberd does not presently have an Audit Committee and the entire
Board acts in such capacity for the immediate future due to the
limited size of the Board. The Company intends to increase the size
of its Board in the future, at which time it may appoint an Audit
Committee.
In lieu of an Audit Committee, the Board is empowered to make such
examinations as are necessary to monitor the corporate financial
reporting and the external audits of the Company, to provide the
Board of Directors (the “Board”) the results of its examinations
and recommendations derived there from, to outline to the Board
improvements made, or to be made, in internal control, to nominate
independent auditors, and to provide to the Board such additional
information and materials as it may deem necessary to make the
Board aware of significant financial matters that require Board
attention.
Compensation Committee
The Compensation Committee will be authorized to review and make
recommendations to the Board regarding all forms of compensation to
be provided to the executive officers and directors of the Company,
including stock compensation and bonus compensation to all
employees.
Nominating Committee
Halberd does not have a Nominating Committee and the Board acts in
such capacity for the foreseeable future.
Code of Conduct and Ethics
To date, we have not adopted a Code of Ethics applicable to our
principal executive officer and financial officer. The Company does
not believe that a formal written code of ethics is necessary at
this time. We expect that the Company will adopt a Code of Ethics
during the next year of operations.
Conflicts of Interest
General: Many of our officers and directors participate in
businesses and employment outside of Halberd Corporation. As such
there exist potential conflicts of interest including, among other
things, time, efforts, and corporation opportunity, involved in
participation with such other business entities. While our officers
and directors of our business are engaged in business activities
outside of our business, they are experienced professionals and
have demonstrated devotion to our business to dedicate as much time
as they believe necessary to carry out their duties.
Corporate Opportunities
Presently no requirement contained in our Articles of
Incorporation, Bylaws, or minutes which requires officers and
directors of our business to disclose to us business opportunities
which come to their attention. Our officers and directors do,
however, have a fiduciary duty of loyalty to us to disclose to us
any business opportunities which come to their attention, in their
capacity as an officer and/or director or otherwise. Excluded from
this duty would be opportunities which the person learns about
through his involvement as an officer and director of another
company. We have no intention of merging with or acquiring an
affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
ITEM 6: EXECUTIVE
COMPENSATION
There are transactions recorded for officer compensation for the
year ended July 31, 2021, compensation of $5,000 for Mr. Hartman
and compensation of $2,500 for Mr. Borza.
During the two years ended July 31, 2021 and 2020, no salaries were
paid to any officers or directors.
Similarly, no executive compensation was paid during the same two
year periods.
Employment Agreement
We do not have any employment agreements with our officers.
Stock Option Plan and/or Equity Awards
The Company does not have a Stock Option Plan and/or Equity Awards
in place and no options or equity awards have been granted.
Officers & Directors received stock warrants as signing
bonuses.
Employee Pension, Profit Sharing or other Retirement
Plans
Similarly, the Company does not have a defined benefit, pension
plan, profit sharing or other retirement plan, although we may
adopt one or more of such plans in the future.
Director’s Compensation
At present, HALB does not pay our directors for attending meetings
of our Board of Directors. We expect to adopt a director
compensation policy once the Company has raised funds in an
IPO.
Employee Benefit Plans
We have no employee benefit plans or stock option plans.
ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Our Management’s Discussion and Analysis contains not only
statements that are historical facts, but also statements that are
forward-looking (within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934). Forward-looking statements are, by their very nature,
uncertain and risky. These risks and uncertainties include
international, national and local general economic and market
conditions; demographic changes; our ability to sustain, manage, or
forecast growth; our ability to successfully make and integrate
acquisitions; existing government regulations and changes in, or
the failure to comply with, government regulations; adverse
publicity; competition; fluctuations and difficulty in forecasting
operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain
qualified personnel; the ability to protect technology; and other
risks that might be detailed from time to time in our filings with
the Securities and Exchange Commission.
Although the forward-looking statements in this Report reflect the
good faith judgment of our management, such statements can only be
based on facts and factors currently known by them. Consequently,
and because forward-looking statements are inherently subject to
risks and uncertainties, the actual results and outcomes may differ
materially from the results and outcomes discussed in the
forward-looking statements. You are urged to carefully review and
consider the various disclosures made by us in this report and in
our other reports as we attempt to advise interested parties of the
risks and factors that may affect our business, financial
condition, and results of operations and prospects.
Overview and Outlook
Halberd Corporation (“Halberd”, “We”, “Us”, “the Company”) was
formed in the State of Nevada on January 26, 2009. It changed its
name to Tykhe Corporation on April 22, 2014, and then redomiciled
to Colorado and changed its name to Alaric Corporation on
January 25, 2017. On March 22, 2020, it changed its name to
HALB Transition Corporation, before completing a reorganization
whereby the name of the public company again became Halberd
Corporation, and Alaric Corporation then became its wholly-owned
subsidiary. The merger was accounted for as a reverse purchase
acquisition in accordance with the Financial Accounting Standards
Board’s (FASB) Accounting Standards Codification (ASC) 805-50,
whereby the financial statements of the Target company (Halberd
Corporation) were treated as the acquiring company, and the equity
section of the balance sheet and earnings per share of Halberd
Corporation were retroactively restated to reflect the effect of
the 1:1 exchange ratio of the equity of Alaric Corporation
exchanged for the equity of Halberd Corporation. There were no
assets or liabilities of either entity prior to the business
combination, therefore there was no Goodwill or gain or loss on the
business combination.
We are a research-based company that intends to discover and
develop medical treatments for humans, specifically targeting the
treatment of Alzheimer’s Disease (AD), Traumatic Brain Injury
(TBI), Cancer, Epilepsy, Suicide Ideation, and Drug & Alcohol
Dependency.
We have generated very limited revenue to date from our sale of
topical CBD pain relief products and a nutraceutical dietary
supplement, and intend to focus our future efforts more on our
research activities.
Going Concern Uncertainty
As of December 31, 2021, the Company has incurred recurring losses
from operations resulting in an accumulated deficit of $4,820,050,
negative working capital of $336,639, and as of July 31, 2021, the
Company’s cash on hand may not be sufficient to sustain operations.
These factors raise substantial doubt about the Company’s ability
to continue as a going concern. In order to continue as a going
concern, we must effectively secure grants, contracts, joint
ventures, angel investors, or funding from any of a number of
sources as a supplement to the funding currently receiving from an
Internal Revenue Code Section 501(c)(3) charity so that we can
continue to fund our operations until such time as we can develop
and market any treatments/products resulting from our research. If
we are not able to do this, we may not be able to continue as an
operating company. The accompanying consolidated financial
statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
The consolidated financial statements do not include any
adjustments that might result from the outcome of any uncertainty
as to the Company’s ability to continue as a going concern. These
financial statements also do not include any adjustments relating
to the recoverability and classification of recorded asset amounts,
or amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
Overview of 2021 results
During the period ended July 31, 2021, because we did not generate
any revenues, we had negative operating cash flows. Our cash on
hand as of July 31, 2021 was $40,321, which was predominantly
derived from donations from Epidemiologic Solutions Corporation, a
public charity qualified pursuant to Section 501(c)(3) of the
Internal Revenue Code. Our monthly cash flow burn rate has
increased from approximately $3,547 in fiscal year 2020 to
approximately $65,441.58 in fiscal year 2021. Although we have
moderate short term cash needs, as our operating expenses increase,
we will face strong medium to long term cash needs. We anticipate
that these needs will be satisfied through support from charities,
grants, contracts or other non-dilutive sources.
Capital contributions consisted of the following at July 31, 2021
and 2020, respectively:
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Securities Counselors, Inc.1
|
|
$ |
233,033 |
|
|
$ |
7,000 |
|
|
Epidemiologic Solutions Corp.2
|
|
|
421,782 |
|
|
|
- |
|
|
Ronnie J. Godeaux3
|
|
|
10,000 |
|
|
|
37,650 |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital contributions
|
|
$ |
664,815 |
|
|
$ |
44,650 |
|
1 Capital contributions
contributed on behalf of Epidemiologic Solutions Corporation
2 Epidemiologic Solutions
Corporation is the Company’s principal funding source
3 Mr. Godeaux is the
principal of Epidemiologic Solutions Corp.
Application of Critical Accounting Policies
Our discussion and analysis of our financial condition and results
of operations are based upon our financial statements, which have
been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these
financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosures of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates,
including those related to impairment of property, plant and
equipment, intangible assets, deferred tax assets and fair value
computation using the Black Scholes option pricing model. We base
our estimates on historical experience and on various other
assumptions, such as the trading value of our common stock and
estimated future undiscounted cash flows, that we believe to be
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions. We believe that our estimates, including
those for the above-described items, are reasonable.
Critical Accounting Policies
The establishment and consistent application of accounting policies
is a vital component of accurately and fairly presenting our
financial statements in accordance with generally accepted
accounting principles in the United States (GAAP), as well as
ensuring compliance with applicable laws and regulations governing
financial reporting. While there are rarely alternative methods or
rules from which to select in establishing accounting and financial
reporting policies, proper application often involves significant
judgment regarding a given set of facts and circumstances and a
complex series of decisions.
Basis of Accounting
Our financial statements are prepared using the accrual method of
accounting as generally accepted in the United States of America
(U.S. GAAP) and the rules of the Securities and Exchange Commission
(SEC).
Basis of Presentation
The accompanying financial statements include the accounts of the
following entities, all of which are under common control and
ownership as of the date of this report:
|
Name of Entity
|
|
Form of Entity
|
|
Jurisdiction
|
|
Relationship
|
|
|
|
|
|
|
|
|
|
Halberd Corporation
|
|
Corporation
|
|
Colorado
|
|
Parent
|
|
Alaric Corporation (1)(2)
|
|
Corporation
|
|
Colorado
|
|
Subsidiary
|
|
Halberd UK, Ltd. (1)(2)
|
|
Corporation
|
|
England and Wales, United Kingdom
|
|
Subsidiary
|
(1) Wholly-owned subsidiary
of Halberd Corporation
(2) No activity to date
All significant inter-company transactions have been eliminated in
the preparation of these financial statements.
These statements reflect all adjustments, which in the opinion of
management, are necessary for fair presentation of the information
contained therein. Except as otherwise disclosed, all such
adjustments are of a normal recurring nature. It is suggested that
these unaudited financial statements be read in conjunction with
the financial statements of the Company for the year ended July 31,
2020 and notes thereto included in the Company's annual report.
The Company has adopted a fiscal year end of July 31st.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 — Revenue
from Contracts with Customers. Under Topic 606, revenue is
recognized when control of the promised goods or services is
transferred to our customers, in an amount that reflects the
consideration we expect to be entitled to in exchange for those
goods or services.
We determine revenue recognition through the following steps:
|
|
●
|
identification of the contract, or contracts, with a customer;
|
|
|
●
|
identification of the performance obligations in the contract;
|
|
|
●
|
determination of the transaction price;
|
|
|
●
|
allocation of the transaction price to the performance obligations
in the contract; and
|
|
|
●
|
recognition of revenue when, or as, we satisfy a performance
obligation.
|
The Company’s revenues currently consist of the sale of CBD
products, including patches, roll-on applications, sprays and
ointments. These products are primarily sold direct-to-consumers
online, and occasionally directly to local pharmacies.
Sales are recorded when the earnings process is complete or
substantially complete, and the revenue is measurable and
collectability is reasonably assured, which is typically when
products are shipped. Provisions for discounts and rebates to
customers, estimated returns and allowances, and other adjustments
are provided for in the same period the related sales are recorded.
The Company defers any revenue from sales in which payment has been
received, but the earnings process has not been completed.
Cost of Merchandise Sales and Occupancy Costs
Cost of merchandise sales and occupancy costs includes the
following types of expenses: purchase price of inventory sold,
including inbound freight charges; shipping and handling costs;
inventory shrinkage costs and valuation adjustments; payroll and
benefits costs; store occupancy costs, including rent, common area
maintenance, property taxes, utilities, insurance, and depreciation
of leasehold improvements and capitalized lease assets. Also
included in cost of merchandise sales and occupancy costs is
certain consideration received from vendors for vendor rebates,
allowances and discounts.
Advertising and Promotion
All costs associated with advertising and promoting products are
expensed as incurred. These expenses approximated $56,144 and $-0-
for the years ended July 31, 2021 and 2020, respectively, as
presented in general and administrative expenses within the
consolidated statements of operations.
Research and Development
The Company performs research and development on its extracorporeal
technological method of treating many disease states, including
Alzheimer’s Disease, PTSD, Parkinson’s Disease, epilepsy and other
neurodegenerative diseases, sepsis, meningitis and pandemics. The
Company currently does not have any employees dedicated to research
and development, but outsources these activities to Arizona State
University (ASU) pursuant to an Industry Sponsored Research
Agreement, which the Company and ASU entered into on September 1,
2020 (Research Agreement). The Research Agreement, which terminates
on November 30, 2022, calls for monthly payments of $50,000, not to
exceed $1,371,782, The Company’s research and development
activities have primarily been funded by related parties
(Securities Counselors Group and Epidemiologic Solutions Corp.). In
accordance with ASC 730-10-25, these expenditures contracted to
another party are expensed as incurred. These expenses approximated
$773,177 and $20,000 for the years ended July 31, 2021 and 2020,
respectively.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in
accordance with the provisions of ASC 718 Stock Compensation (ASC
718) and Equity-Based Payments to Non-employees pursuant to ASC
2018-07 (ASC 2018-07). All transactions in which goods or services
are the consideration received for the issuance of equity
instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument
issued, whichever is more reliably measurable. The measurement date
of the fair value of the equity instrument issued is the earlier of
the date on which the counterparty's performance is complete or the
date at which a commitment for performance by the counterparty to
earn the equity instruments is reached because of sufficiently
large disincentives for nonperformance.
Uncertain Tax Positions
In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company
recognizes the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be capable of
withstanding examination by the taxing authorities based on the
technical merits of the position. These standards prescribe a
recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. These standards also provide
guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition.
Various taxing authorities periodically audit the Company’s income
tax returns. These audits include questions regarding the Company’s
tax filing positions, including the timing and amount of deductions
and the allocation of income to various tax jurisdictions. In
evaluating the exposures connected with these various tax filing
positions, including state and local taxes, the Company records
allowances for probable exposures. A number of years may elapse
before a particular matter, for which an allowance has been
established, is audited and fully resolved. The Company has not yet
undergone an examination by any taxing authorities.
The assessment of the Company’s tax position relies on the judgment
of management to estimate the exposures associated with the
Company’s various filing positions.
Results of Operations for the Fiscal Years Ended July 31,
2021 and 2020.
The following table summarizes selected items from the statement of
operations for the fiscal years ended July 31, 2021
and 2020.
|
|
|
Years Ended July 31,
|
|
|
Increase/
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Decrease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
5,238 |
|
|
$ |
- |
|
|
$ |
5,238 |
|
|
Cost of sales
|
|
|
4,295 |
|
|
|
- |
|
|
|
4,295 |
|
|
Gross Profit
|
|
|
943 |
|
|
|
- |
|
|
|
943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
98,817 |
|
|
|
20,761 |
|
|
|
78,056 |
|
|
Research and development
|
|
|
773,177 |
|
|
|
20,000 |
|
|
|
753,177 |
|
|
Professional fees
|
|
|
69,323 |
|
|
|
1,611,330 |
|
|
|
(1,542,007 |
) |
|
Total operating expenses:
|
|
|
941,317 |
|
|
|
1,652,091 |
|
|
|
(710,774 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(940,374 |
) |
|
|
(1,652,091 |
) |
|
|
(711,717 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(20,400 |
) |
|
|
- |
|
|
|
20,400 |
|
|
Total other income (expense)
|
|
|
(20,400 |
) |
|
|
- |
|
|
|
20,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(960,774 |
) |
|
$ |
(1,652,091 |
) |
|
$ |
(691,317 |
) |
Revenues
Revenues were $5,238 for the fiscal year ended July 31, 2021
compared to $-0- for the year ended July 31, 2020.
Cost of Sales
Cost of sales were $4,295, resulting in a gross profit of 18%, for
the fiscal year ended July 31, 2021 compared to $-0- for the year
ended July 31, 2020.
General and Administrative
General and administrative expenses were $98,817 for the fiscal
year ended July 31, 2021, compared to $20,761 for the fiscal year
ended July 31, 2020, an increase of $78,056, or 376%. The increase
was primarily due to the general activities of Halberd Corporation
arising out of its increased operating expenses, as we ramped up
our research operations.
Research and Development
Research and development expenses were $773,177 for the fiscal year
ended July 31, 2021 compared to $20,000 for the year ended July 31,
2020, an increase of $753,177, or 3,766%. The increased expenses
were due to the research and development costs incurred through our
partners, specifically the Arizona State University, incurred
during the year ended July 31, 2021 related to the development of
our patented, patent pending and trade secret technologies that
were minimally present in the comparative period, prior to the
commencement of our partnership with the Arizona State University
on September 1, 2020.
Professional Fees
Professional fees expense was $69,323 for the fiscal year ended
July 31, 2021, compared to $1,611,330 for the fiscal year ended
July 31, 2020, a decrease of $1,542,007, or 96%. The decrease was
primarily due to a reduction in stock-based compensation of
$1,583,218 related to warrants issued for services.
Other Income (Expense)
Other expense consisted entirely of $20,400 of interest expense
during the fiscal year ended July 31, 2021. There was no other
income (expense) during the fiscal year ended July 31, 2020.
Net Loss
Net loss for the for the fiscal year ended July 31, 2021 was
$960,774, or $0.00 per share, compared to $1,652,091, or $(0.01)
per share, for the fiscal year ended July 31, 2020, a decrease of
$691,317, or 42%. Net loss decreased, as set forth above, primarily
due to the non-cash, stock-based compensation, decrease in
professional fees.
Results of Operations for the Three and Nine Months Ended
April 30, 2022 and 2021.
The following table summarizes selected items from the statement of
operations for the three months ended April 30, 2022
and 2021.
|
|
|
Three Months Ended April 30,
|
|
|
Increase/
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Decrease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
1,217 |
|
|
$ |
1,144 |
|
|
$ |
73 |
|
|
Cost of sales
|
|
|
- |
|
|
|
2,068 |
|
|
|
(2,068 |
) |
|
Gross Profit
|
|
|
1,217 |
|
|
|
(924 |
) |
|
|
2,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
20,934 |
|
|
|
22,146 |
|
|
|
(1,212 |
) |
|
Research and development
|
|
|
203,408 |
|
|
|
199,664 |
|
|
|
3,744 |
|
|
Professional fees
|
|
|
72,509 |
|
|
|
5,500 |
|
|
|
67,009 |
|
|
Total operating expenses:
|
|
|
296,851 |
|
|
|
227,310 |
|
|
|
69,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(295,634 |
) |
|
|
(228,234 |
) |
|
|
(67,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(1,538 |
) |
|
|
(1,400 |
) |
|
|
138 |
|
|
Total other income (expense)
|
|
|
(1,538 |
) |
|
|
(1,400 |
) |
|
|
138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(297,172 |
) |
|
$ |
(229,634 |
) |
|
$ |
67,538 |
|
The following table summarizes selected items from the statement of
operations for the nine months ended April 30, 2022
and 2021.
|
|
|
Nine Months Ended April 30,
|
|
|
Increase/
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Decrease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
5,883 |
|
|
$ |
4,182 |
|
|
$ |
1,701 |
|
|
Cost of sales
|
|
|
214 |
|
|
|
2,068 |
|
|
|
(1,854 |
) |
|
Gross Profit
|
|
|
5,669 |
|
|
|
2,114 |
|
|
|
3,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
79,302 |
|
|
|
74,576 |
|
|
|
4,726 |
|
|
Research and development
|
|
|
710,788 |
|
|
|
471,446 |
|
|
|
239,342 |
|
|
Professional fees
|
|
|
575,541 |
|
|
|
52,948 |
|
|
|
522,593 |
|
|
Total operating expenses:
|
|
|
1,365,631 |
|
|
|
598,970 |
|
|
|
766,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1,359,962 |
) |
|
|
(596,856 |
) |
|
|
763,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(4,541 |
) |
|
|
(18,939 |
) |
|
|
(14,398 |
) |
|
Total other income (expense)
|
|
|
(4,541 |
) |
|
|
(18,939 |
) |
|
|
(14,398 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(1,364,503 |
) |
|
$ |
(615,795 |
) |
|
$ |
748,708 |
|
Revenues
We had revenues of $1,217 and $5,883 for the three and nine months
ended April 30, 2022, respectively, compared to $1,144 and $4,182
for the three and nine months ended April 30, 2021, respectively.
This was an increase of $73, or 6%, for the three months ended
April 30, 2022 compared to 2021, and $1,701, or 41%, for the nine
months ended April 30, 2022 compared to April 30, 2021.
Cost of Sales
Cost of sales were $-0- and $214 for the three and nine months
ended April 30, 2022, respectively, compared to $2,068 and $2,068
for the three and nine months ended April 30, 2021. Gross profits
were 100% and 96% for the three and nine months ended April 30,
2022, respectively, compared to negative 81% and 51% for the three
and nine months ended April 30, 2021.Cost of sales decreased
significantly during the three and nine months ended April 30,
2022, as the products we sold had previously been written off as
impaired, therefore there were no cost of sales related to some of
the products sold in those current periods.
General and Administrative
General and administrative expenses were $20,934 and $79,302 for
the three and nine months ended April 30, 2022, respectively,
compared to $22,146 and $74,576 for the three and nine months ended
April 30, 2021. The decreased and increased expenses of $1,212 and
$4,726 for the three and nine months ended April 30, 2022, compared
to April 30, 2021 was primarily due to the general activities
of Halberd Corporation arising out of its increased operating
expenses, as we ramped up our research operations. The slight
decrease during the three months ended April 30, 2022 was due to
diminished travel costs.
Research and Development
Research and development expenses were $203,408 and $710,788 for
the three and nine months ended April 30, 2022, respectively,
compared to $199,664 and $471,446 for the three and nine months
ended April 30, 2021. The increased expenses of $3,744 and $239,342
for the three and nine months ended April 30, 2022, compared to
April 30, 2021 were due to the research and development costs
incurred through our partners, specifically the Arizona State
University, incurred during the periods ended April 30, 2022
related to the development of our patented, patent pending and
trade secret technologies that were not present in the comparative
periods.
Professional Fees
Professional fees were $72,509 and $575,541 for the three and nine
months ended April 30, 2022, respectively, compared to $5,500 and
$52,948 for the three and nine months ended April 30, 2021. The
increase of $67,009, or 1,218%, and $522,593, or 987%, was
primarily due to increased stock-based compensation of $458,710
related to warrants issued for services during the nine months
ended April 30, 2022.
Other Income (Expense)
Other expense consisted entirely of interest expense. Interest
expenses were $1,538 and $4,541 for the three and nine months ended
April 30, 2022, respectively, compared to $1,400 and $18,939 for
the three and nine months ended April 30, 2021. The increase of
$138, or 10%, and decrease of $14,398, or 76%, for the three and
nine months ended April 30, 2022, was primarily due to brokers fees
incurred on obtaining the SBA loan during the comparative nine
months ended April 30, 2021 that were not incurred in the current
period.
Net Loss
Net loss was $297,172 and $1,364,503 for the three and nine months
ended April 30, 2022, respectively, compared to $229,634 and
$615,795 for the three and nine months ended April 30, 2021. The
net loss was $0.00 per share for all periods presented. Net loss
increased by $67,538 and $748,708, for the three and nine months
ended April 30, 2022, respectively. The net loss increased, as set
forth above, primarily due to the non-cash, stock-based
compensation, increase in professional fees.
Liquidity and Capital Resources
The following table summarizes our total current assets,
liabilities and working capital at July 31, 2021
and 2020.
|
|
|
July 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Current Assets
|
|
$ |
62,071 |
|
|
$ |
4,336 |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
$ |
398,710 |
|
|
$ |
297,112 |
|
|
|
|
|
|
|
|
|
|
|
|
Working Capital
|
|
$ |
(336,639 |
) |
|
$ |
(292,776 |
) |
As of July 31, 2021, we had negative working capital of
$336,639.
The following table summarizes our cash flows during the fiscal
years ended July 31, 2021 and 2020, respectively.
|
|
|
Fiscal Years Ended July 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Net cash used in operating activities
|
|
$ |
(785,299 |
) |
|
$ |
(42,564 |
) |
|
Net cash used in investing activities
|
|
|
(1,281 |
) |
|
|
- |
|
|
Net cash provided by financing activities
|
|
|
824,815 |
|
|
|
44,650 |
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
$ |
38,235 |
|
|
$ |
2,086 |
|
Our cash increased by $38,235 as of July 31, 2021 as compared to
July 31, 2020 because we were granted a loan from the SBA. Our
total current assets increased by $57,735 primarily for the same
reason.
Our current liabilities increased/decreased by $57,735 as of July
31, 2021 as compared to July 31, 2020 primarily due to the loan
from the SBA. Our total liabilities increased/decreased by the same
$57,735 for the same reasons.
In order to repay our obligations in full or in part when due, we
will be required to raise significant capital from various sources.
There is no assurance, however, that we will be successful in these
efforts.
Satisfaction of our cash obligations for the next 12
months
Our cash on hand as of July 31, 2021 was $40,321, which was derived
from charitable contributions from Epidemiologic Solutions
Corporation an organization qualified as a public charity pursuant
to Internal Revenue Code Section 501(C)(3). Our monthly cash flow
burn rate is approximately $65,442. Although we have moderate short
term cash needs, as our operating expenses increase, we will face
strong medium to long term cash needs. We anticipate that these
needs will be satisfied through charitable contributions from
Epidemiologic Solutions Corporation an organization qualified as a
public charity pursuant to Internal Revenue Code Section 501(C)(3).
We do not currently have sufficient funds to sustain our operations
for the next twelve months and we will need to raise additional
cash to fund our operations. In order to continue as a going
concern, we must effectively secure grants, contracts, joint
ventures, angel investors, or funding from any of a number of
sources as a supplement to the funding currently receiving from an
Internal Revenue Code Section 501(c)(3) charity so that we can
continue to fund our operations until such time as we can develop
and market any treatments/products resulting from our research. If
we are not able to do this, we may not be able to continue as an
operating company.
Inflation
In the opinion of management, inflation will have a material effect
on our operations in the immediate future. Management will continue
to monitor inflation and evaluate the possible future effects of
inflation on our business and operations.
Off-Balance Sheet Arrangements
Per SEC regulations, we are required to disclose our off-balance
sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, such as
changes in financial condition, revenues, expenses, results of
operations, liquidity, capital expenditures, or capital resources
that are material to investors. As of July 31, 2021 and 2020,
respectively, we have no off-balance sheet arrangements.
Competition
There are many better-established neuro degenerative firms that
have significantly greater financial and personnel resources than
we have. In view of our limited financial resources (at least
without a substantive funding raise) and constraints on our
personnel, we will continue to be at a significant competitive
disadvantage compared to our larger competitors.
Employees
The executive officers will not receive any compensation until, and
if, we raise or procure adequate capital (through operations,
financings or otherwise) to pay such compensation. We expect that
we will hire additional personnel as we expand our operations.
ITEM 7: CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
None
ITEM 8: LEGAL
PROCEEDINGS
Neither we nor any of our officers, director, or holders of five
percent or more of its common stock is a party to any pending civil
or criminal legal proceedings and, to the best of our knowledge, no
such proceedings by or against us or our officers, or directors or
holders of five percent or more of its common stock have been
threatened or is pending against us.
ITEM 9: MARKET PRICE OF AND
DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
The trading in the Company’s Common Stock began on March 23, 2020,
following the holding company reorganization in which the
predecessor issuer, then named Alaric Corporation, became a
wholly-owned subsidiary. The predecessor issuer commenced trading
on April 16, 2009, The Securities and Exchange Commission has
adopted Rule 15g-9 which establishes the definition of a “penny
stock,” for purposes relevant to the Company, as any equity
security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer
approve a person’s account for transactions in penny stocks and
(ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a
person’s account for transactions in penny stocks, the broker or
dealer must (i) obtain financial information and investment
experience and objectives of the person and (ii) make a reasonable
determination that the transactions in penny stocks are suitable
for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks. The broker or dealer must
also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form, (i) sets forth the
basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed,
written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading, and
about commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities
and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have
to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny
stocks.
Because of these regulations, broker-dealers may encounter
difficulties in their attempt to buy or sell shares of our common
stock, which may affect the ability of our shareholders to sell
their shares in the secondary market and have the effect of
reducing the level of trading activity in the secondary market.
These additional sales practice and disclosure requirements could
impede the sale of our common stock in the marketplace. In
addition, the liquidity for our common stock may be decreased, with
a corresponding decrease in the price of our common stock. Our
shares are likely to be subject to such penny stock rules for the
foreseeable future, although the Company is filing this Form 10 to
seek market “up-listing”—e.g. OTCQB or OTCQX).
The OTC Markets is a regulated quotation service that displays
real-time quotes, last-sale prices and volume information in
over-the-counter equity securities. The OTC Markets securities are
traded by a community of market makers that enter quotes and trade
reports. This market is limited in comparison to the national stock
exchanges and any prices quoted may not be a reliable indication of
the value of our common stock.
The following table sets forth the range of the high and low sales
prices of our common stock for each of the calendar quarters ended
July 31, 2021 thru July 31, 2022.
|
OTC Pink
|
|
High
|
|
|
Low
|
|
|
Fiscal Year Ended July
31, 2022
|
|
$ |
0.0183
|
|
|
$ |
0.0131
|
|
|
3rd Quarter 2022
|
|
$ |
0.0281 |
|
|
$ |
0.0150 |
|
|
2nd Quarter 2022
|
|
$ |
0.0387 |
|
|
$ |
0.0137 |
|
|
1st Quarter 2022
|
|
$ |
0.0460 |
|
|
$ |
0.0230 |
|
|
Fiscal Year Ended July 31, 2021
|
|
|
|
|
|
|
|
|
|
4th Quarter 2021
|
|
$ |
0.0519 |
|
|
$ |
0.0120 |
|
|
3rd Quarter 2021
|
|
$ |
0.1090 |
|
|
$ |
0.0260 |
|
|
2nd Quarter 2021
|
|
$ |
0.0700 |
|
|
$ |
0.0180 |
|
|
1st Quarter 2021
|
|
$ |
0.0930 |
|
|
$ |
0.0038 |
|
|
Fiscal Year Ended July 31, 2020
|
|
|
|
|
|
|
|
|
|
4th Quarter 2020
|
|
$ |
0.0133 |
|
|
$ |
0.0026 |
|
|
3rd Quarter 2020
|
|
$ |
0.0107 |
|
|
$ |
0.0004 |
|
|
2nd Quarter 2020
|
|
$ |
0.0017 |
|
|
$ |
0.0006 |
|
|
1st Quarter 2020
|
|
$ |
0.0012 |
|
|
$ |
0.0006 |
|
Dividend Policy
We have never paid nor declared any cash dividends on our common
stock to date, and do not anticipate paying such cash dividends in
the foreseeable future. Whether we declare and pay dividends is
determined by our Board of Directors at their discretion, subject
to certain limitations imposed under Colorado corporate law. The
timing, amount and form of dividends, if any, will depend on, among
other things, our results of operations, financial condition, cash
requirements and other factors deemed relevant by our Board of
Directors
Holders
There are approximately 83 active holders of the Company’s Common
Stock. This figure does not include holders of shares registered in
“street name” or persons, partnerships, associates, corporations,
or other entities identified in security position listings
maintained by depositories.
Dividends
We have not declared any cash dividends on our common stock since
our inception and do not anticipate paying any dividends in the
foreseeable future. We plan to retain future earnings, if any, for
use in our business. Any decisions as to future payments of
dividends will depend on our earnings and financial position and
such other facts, as the Board of Directors deems relevant.
Shares Available for Future Sale
Approximately 8.56 % of all outstanding shares of our common stock
are “restricted securities,” as that term is defined under Rule 144
promulgated under the Securities Act, because they were issued in a
private transaction not involving a public offering. Accordingly,
none of the outstanding shares of our common stock may be resold,
transferred, pledged as collateral or otherwise disposed of unless
such transaction is registered under the Securities Act or an
exemption from registration is available. In connection with any
transfer of shares of our common stock other than pursuant to an
effective registration statement under the Securities Act, the
Company may require the holder to provide to the Company an opinion
of counsel to the effect that such transfer does not require
registration of such transferred shares under the Securities
Act.
Rule 144 is not available for the resale of securities initially
issued by companies that are, or previously were, shell companies,
unless the following conditions are met:
|
●
|
the issuer of the securities that was formerly a shell Company has
ceased to be a shell Company;
|
|
|
|
|
●
|
the issuer of the securities is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act;
|
|
|
|
|
●
|
the issuer of the securities has filed all Exchange Act reports and
material required to be filed, as applicable, during the preceding
12 months (or such shorter period that the issuer was required to
file such reports and materials), other than Current Reports on
Form 8-K; and
|
|
|
|
|
●
|
at least one year has elapsed from the time that the issuer filed
current comprehensive disclosure with the SEC reflecting its status
as an entity that is not a shell Company.
|
Reports to Security Holders
The Company’s documents filed with the Securities and Exchange
Commission may be inspected at the Commission’s principal office in
Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the
Securities and Exchange Commission, 100 F Street N.E., Washington,
D.C. 20549. Call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The
Securities and Exchange Commission also maintains a web site at
http://www.sec.gov that contains reports, proxy statements and
information regarding registrants that file electronically with the
Commission. All of the Company’s filings may be located under the
CIK number 000- 1435617.
Transfer Agent
Issuer Direct Transfer, located at One Glenwood Avenue--Suite 1001,
Raleigh, North Carolina 27603, is the Company’s registrar and
transfer agent for the Company’s common stock.
ITEM 10: RECENT SALES OF
UNREGISTERED SECURITIES
While Dr. Mitchell Felder exercised warrants to purchase common
stock in the Company during the past 12 months, at no time did HALB
issue additional common stock (privately or public) during the same
period.
Promissory Notes
The Company has one promissory note, with the Small Business
Administration. See Financial Statements and associated
footnote.
ITEM 11:
DESCRIPTION OF REGISTRANT’S SECURITIES TO BE
REGISTERED
Capital Stock
Originally organized in Nevada in 2009, the Company was
re-organized in Colorado effective May 5, 2020. The Company’s
authorized capital stock consists of 800,000,000 shares of common
stock with a par value of $0.0001 par value common stock. There are
also authorized 25 million shares of preferred stock authorized of
which number 10,000,000 preferred shares are issued and
outstanding.
Shareholders are entitled to one vote per Share on all matters to
be voted upon by Shareholders and, upon issuance in consideration
of full payment, are non-assessable. In the event of liquidation,
dissolution or winding up of the Company, the Shareholders are
entitled to share ratably in all assets remaining after payment of
liabilities. Shares do not have cumulative voting rights with
respect to the election of directors and, accordingly, the holders
of more than 50% of the Shares could elect all the directors of the
Company. (See “Risk Factors – Control by the Principal
Stockholder.”)
Dividend Rights
Each Share is entitled to dividends if, as and when dividends are
declared by the Company’s Board of Directors. It is not the current
expectation of the Company to pay dividends.
Anti-Takeover Statute
Colorado has judicially adopted the Delaware anti-takeover
standards, indeed allowing extreme poison pills. See Virginia Law
Review (95), Barzuzi, Michael (2010), “The Stated State of
Anti-Takeover Law.”) As a consequence, shares in a publicly-held
Colorado corporation that are reacquired in a “control share
acquisition” are prohibited from so voting--unless the holders of a
majority of the corporation’s voting shares (exclusive of shares
held by officers of the corporation, inside directors or the
acquiring party) approve the granting of voting rights as to the
shares acquired in the control share acquisition or unless the
acquisition is approved by the corporation’s board of directors or
the corporation’s articles of incorporation or bylaws specifically
state that this section does not apply. A “control share
acquisition” is defined as an acquisition that immediately
thereafter entitles the acquiring party to vote in the election of
directors within each of the following ranges of voting power: (i)
one-fifth or more, but less than one-third of such voting power:
(ii) one-third or more, but less than a majority of such voting
power; and (iii) more than a majority of such voting power. Since
the Company’s articles of incorporation, as amended, specifically
state that Section 607.0902 does not apply to control share
acquisitions of Shares of the Company, the protections contemplated
under this provision will not be available to the Company.
Director’s Liability
As authorized by the CRS, each director or officer of the Company
will be indemnified by the Company against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the
defense or settlement of any threatened, pending or completed
action, suit or proceeding whether civil, criminal, administrative
or investigative in which he is involved by reason of the fact that
he is or was a director or officer of the Company; such
indemnification, of course, is conditioned upon such officer or
director having acted in good faith and in a manner that he
reasonably believed to be in the best interests of the Company and,
with respect to any criminal action or proceeding, if he had no
reasonable cause to believe that his conduct was unlawful. The
articles of incorporation, as amended, provides that no director of
the Company shall be personally liable to the Company or any of its
Shareholders for monetary damages for any breach of fiduciary duty
as a director, except with respect to: (i) any breach of the
director’s duty of loyalty to the Company or its Shareholders; (ii)
for acts or omissions that are not in good faith or involve
intentional misconduct or a knowing violation of the law; (iii)
violation of the CRS; or (iv) for any transaction from which the
director derived an improper personal benefit. In effect, such
articles authorize the Company to indemnify any person to the
fullest extent permitted by the CRS.
On the basis of federal and/or state statutes, (a) shareholders in
a corporation have the right, subject to the provisions of the
Federal Rules of Civil Procedure and jurisdictional requirements,
to bring class actions in federal court to enforce their rights
under federal securities laws; and (b) Shareholders who have
suffered losses in connection with the purchase or sale of their
shares may be able to recover such losses from a corporation’s
management where the losses result from a violation by the
management of SEC Rule 10b-5, promulgated under the Securities
Exchange Act of 1934, as amended. It should be noted, however, that
in endeavoring to recover damages in such actions, it would be
generally difficult to establish as a basis for liability that the
Company’s management has not met such a standard. This is due to
the broad discretion given the directors and officers of a
corporation to act in its best interest. The SEC has stated that,
to the extent any exculpatory or indemnification provision purports
to include indemnification for liabilities arising under the
Securities Act of 1933, as amended, it is the opinion of the SEC
that such indemnification is contrary to public policy and,
therefore, unenforceable. Shareholders who may, in the future,
believe that the Company’s management may have violated applicable
law regarding fiduciary duties should consult with their own
counsel as to their evaluation of the status of the law at such
time.
The Company expects to obtain Director and Officer Liability
coverage ($2,000,000 minimum) concurrent with the Offering being
declared effective by the Securities and Exchange Commission.
Preferred Stock
The Company’s articles of incorporation authorize the issuance of
preferred stock.10,000,000 net preferred shares (5,000,000 each)
have been issued to Bill Hartman and Dr. Mitchell Felder.
Transfer Agent
Issuer Direct is the stock transfer and registrar agent for HALB’s
shares.
Dividend Policy
Short-term or long-term operations prospects may not generate a
profit. Therefore, the Company is not likely to pay immediate
dividends and an investment in the Company is thus not suitable for
investors seeking current income for financial or tax planning
purposes. Future dividends will be paid at the sole discretion of
the Board of Directors of the Company.
ITEM 12: INDEMNIFICATION OF
DIRECTORS AND OFFICERS
As permitted under Colorado law (Section 7-109-102 through 110 of
the CRS), our articles provide to the fullest extent permitted by
Colorado Law wherein our directors or officers shall not be
personally liable to the Company or our stockholders for damages
for breach of such directors or officers fiduciary duty. The effect
of this provision of our articles is to eliminate our rights and
the rights of our stockholders (through stockholders’ derivative
suits on behalf of the Company) to recover damages against a
director or officer for breach of the fiduciary duty of care as a
director or officer (including breaches resulting from negligent or
grossly negligent behavior), except under certain situations
defined by statute. We believe that the indemnification provisions
in our articles are necessary to attract and retain qualified
persons as directors and officers.
Colorado corporate law provides that a corporation may indemnify a
director, officer, employee or agent made a party to an action by
reason of that fact that he was a director, officer employee or
agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by
him in connection with such action if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation and with respect to any criminal
action, had no reasonable cause to believe his conduct was
unlawful.
ITEM
13: FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Index to Financial
Statements
For the Fiscal Years Ended July 31, 2021 and
2020
Report of Independent Registered Public
Accounting Firm
To the shareholders and the board of directors of Halberd
Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Halberd Corporation as of July 31, 2021 and 2020, the related
statements of operations, stockholders' equity (deficit), and cash
flows for the years then ended, and the related notes (collectively
referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the
financial position of the Company as of July 31, 2021 and 2020, and
the results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted
in the United States.
Restatement of the Financial Statements
As discussed in Note 3 to the consolidated financial statements,
the accompanying financial statements for the years ended July 31,
2021 and 2020 have been restated to correct a misstatement.
Substantial Doubt about the Company’s Ability to Continue
as a Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company’s significant
operating losses raise substantial doubt about its ability to
continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audit. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis
for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the current-period
audit of the financial statements that were communicated or
required to be communicated to the audit committee and that (1)
relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging,
subjective, or complex judgments.
We determined that there are no critical audit matters.
/S/ BF Borgers CPA PC
We have served as the Company's auditor since 2021
Lakewood, CO
March 10, 2022 (Except for Note 3 for which the date is September
22, 2022)
|
HALBERD CORPORATION
|
|
CONSOLIDATED BALANCE SHEETS
(Restated)
|
|
|
|
|
|
|
|
|
|
|
July 31,
|
|
July 31,
|
|
|
|
|
2021
|
|
2020
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
40,321 |
|
$ |
2,086 |
|
|
Prepaid expense
|
|
|
21,750 |
|
|
2,250 |
|
|
Total current assets
|
|
|
62,071 |
|
|
4,336 |
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
1,281 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
63,352 |
|
$ |
4,336 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
177,010 |
|
$ |
7,947 |
|
|
Accrued expenses
|
|
|
5,300 |
|
|
- |
|
|
Convertible judgments payable
|
|
|
216,400 |
|
|
289,165 |
|
|
Total current liabilities
|
|
|
398,710 |
|
|
297,112 |
|
|
|
|
|
|
|
|
|
|
|
Long term liabilities:
|
|
|
|
|
|
|
|
|
Note payable, SBA loan
|
|
|
150,000 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
548,710 |
|
|
297,112 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 25,000,000 shares authorized,
10,000,000 shares issued and outstanding
|
|
|
1,000 |
|
|
1,000 |
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 800,000,000 shares authorized,
511,621,968 and 302,721,539 shares issued and outstanding at July
31, 2021 and October 31, 2020, respectively
|
|
|
51,162 |
|
|
30,272 |
|
|
Additional paid in capital
|
|
|
4,282,530 |
|
|
3,535,228 |
|
|
Accumulated deficit
|
|
|
(4,820,050 |
) |
|
(3,859,276 |
) |
|
Total stockholders' equity (deficit)
|
|
|
(485,358 |
) |
|
(292,776 |
) |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$ |
63,352 |
|
$ |
4,336 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
|
HALBERD CORPORATION
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended
|
|
|
|
|
July 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
5,238 |
|
|
$ |
- |
|
|
Cost of sales
|
|
|
4,295 |
|
|
|
- |
|
|
Gross profit
|
|
|
943 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
98,817 |
|
|
|
20,761 |
|
|
Research and development
|
|
|
773,177 |
|
|
|
20,000 |
|
|
Professional fees
|
|
|
69,323 |
|
|
|
1,611,330 |
|
|
Total operating expenses
|
|
|
941,317 |
|
|
|
1,652,091 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(940,374 |
) |
|
|
(1,652,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(20,400 |
) |
|
|
- |
|
|
Total other income (expense)
|
|
|
(20,400 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(960,774 |
) |
|
$ |
(1,652,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
|
|
|
|
|
|
|
|
|
|
outstanding - basic and fully diluted
|
|
|
393,192,510 |
|
|
|
302,721,539 |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and fully diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
The accompanying notes are an integral part of these financial
statements.
|
HALBERD CORPORATION
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT)
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2019
|
|
|
10,000,000 |
|
|
$ |
1,000 |
|
|
|
302,721,539 |
|
|
$ |
30,272 |
|
|
$ |
1,886,748 |
|
|
$ |
(2,207,185 |
) |
|
$ |
(289,165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants granted for services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,603,830 |
|
|
|
- |
|
|
|
1,603,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
44,650 |
|
|
|
- |
|
|
|
44,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended July 31, 2020
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,652,091 |
) |
|
|
(1,652,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2020
|
|
|
10,000,000 |
|
|
$ |
1,000 |
|
|
|
302,721,539 |
|
|
$ |
30,272 |
|
|
$ |
3,535,228 |
|
|
$ |
(3,859,276 |
) |
|
$ |
(292,776 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants granted for services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,612 |
|
|
|
- |
|
|
|
20,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for the exercise of warrants
|
|
|
- |
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
100 |
|
|
|
9,900 |
|
|
|
- |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for settlement of 3(a)(10) debts
|
|
|
- |
|
|
|
- |
|
|
|
207,900,429 |
|
|
|
20,790 |
|
|
|
51,975 |
|
|
|
- |
|
|
|
72,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
664,815 |
|
|
|
- |
|
|
|
664,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended July 31, 2021
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(960,774 |
) |
|
|
(960,774 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2021
|
|
|
10,000,000 |
|
|
$ |
1,000 |
|
|
|
511,621,968 |
|
|
$ |
51,162 |
|
|
$ |
4,282,530 |
|
|
$ |
(4,820,050 |
) |
|
$ |
(485,358 |
) |
The accompanying notes are an integral part of these financial
statements.
|
HALBERD CORPORATION
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended
|
|
|
|
|
July 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(960,774 |
) |
|
$ |
(1,652,091 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Common stock warrants issued for services
|
|
|
20,612 |
|
|
|
1,603,830 |
|
|
Decrease (increase) in assets:
|
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
(19,500 |
) |
|
|
(2,250 |
) |
|
Increase (decrease) in liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
169,063 |
|
|
|
7,947 |
|
|
Accrued expenses
|
|
|
5,300 |
|
|
|
- |
|
|
Net cash used in operating activities
|
|
|
(785,299 |
) |
|
|
(42,564 |
) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(1,281 |
) |
|
|
- |
|
|
Net used in investing activities
|
|
|
(1,281 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Proceeds received from exercise of warrants
|
|
|
10,000 |
|
|
|
- |
|
|
Proceeds received on capital contributions
|
|
|
664,815 |
|
|
|
44,650 |
|
|
Proceeds received from note payable, SBA loan
|
|
|
150,000 |
|
|
|
- |
|
|
Net cash provided by financing activities
|
|
|
824,815 |
|
|
|
44,650 |
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
|
|
|
38,235 |
|
|
|
2,086 |
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
2,086 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
|
$ |
40,321 |
|
|
$ |
2,086 |
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION:
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
15,100 |
|
|
$ |
- |
|
|
Income taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Fair value of common stock issued on settlement of 3(a)(10)
debts
|
|
$ |
8,424,338 |
|
|
$ |
- |
|
The accompanying notes are an integral part of these financial
statements.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
Note 1 – Basis of Presentation and Significant Accounting
Policies
Nature of Business
Halberd Corporation (“Halberd”, “We”, “Us”, “the Company”) was
formed in the State of Nevada on January 26, 2009. It changed its
name to Tykhe Corporation on April 22, 2014, and then redomiciled
to Colorado and changed its name to Alaric Corporation on
January 25, 2017. On March 22, 2020, it changed its name to
HALB Transition Corporation, before completing a reorganization
whereby the name of the public company again became Halberd
Corporation, and Alaric Corporation then became its wholly-owned
subsidiary. The merger was accounted for as a reverse purchase
acquisition in accordance withthe Financial Accounting Standards
Board’s (FASB) Accounting Standards Codification(ASC) 805-50,
whereby the financial statements of the Target company (Halberd
Corporation)were treated as the acquiring company, and the equity
section of the balance sheet and earnings per share of Halberd
Corporation were retroactively restated to reflect the effect of
the 1:1 exchange ratio of the equity of Alaric Corporation
exchanged for the equity of Halberd Corporation. There were no
assets or liabilities of either entity prior to the business
combination, therefore there was no Goodwill or gain or loss on the
business combination.
Halberd’s primary business is the pursuit of treatments for
neurodegenerative diseases, such as PTSD/ CTE (Post Traumatic
Stress Disorder/Chronic Traumatic Encephalopathy), Alzheimer’s
Disease, Parkinson’s Disease, etc.
Basis Of Accounting
Our financial statements are prepared using the accrual method of
accounting as generally accepted in the United States of America
(U.S. GAAP) and the rules of the Securities and Exchange Commission
(SEC).
Basis of Presentation
The accompanying financial statements include the accounts of the
following entities, all of which are under common control and
ownership as of the date of this report:
|
Name of Entity
|
|
Form of Entity
|
|
Jurisdiction
|
|
Relationship
|
|
|
|
|
|
|
|
|
|
Halberd Corporation
|
|
Corporation
|
|
Colorado
|
|
Parent
|
|
Alaric Corporation (1)(2)
|
|
Corporation
|
|
Colorado
|
|
Subsidiary
|
|
Halberd UK, Ltd. (1)(2)
|
|
Corporation
|
|
England and Wales, United Kingdom
|
|
Subsidiary
|
(1) Wholly-owned subsidiary
of Halberd Corporation
(2) No activity to date
All significant inter-company transactions have been eliminated in
the preparation of these financial statements.
These statements reflect all adjustments, which in the opinion of
management, are necessary for fair presentation of the information
contained therein. Except as otherwise disclosed, all such
adjustments are of a normal recurring nature. It is suggested that
these unaudited financial statements be read in conjunction with
the financial statements of the Company for the year ended July 31,
2020 and notes thereto included in the Company’s annual report.
The Company has adopted a fiscal year end of July 31st.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and the disclosure
of 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.
Segment Reporting
FASB ASC 280-10-50 requires annual and interim reporting for an
enterprise’s operating segments and related disclosures about its
products, services, geographic areas and major customers. An
operating segment is defined as a component of an enterprise that
engages in business activities from which it may earn revenues and
expenses, and about which separate financial information is
regularly evaluated by the chief operating decision maker in
deciding how to allocate resources. All of the Company’s stores are
considered operating segments, and will be aggregated into one
reportable segment given the similarities in economic
characteristics among the operations represented by the stores and
the common nature of the products, customers and methods of
distribution.
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial Accounting Standards Board
establishes a framework for measuring fair value in generally
accepted accounting principles and expands disclosures about fair
value measurements. This Statement reaffirms that fair value is the
relevant measurement attribute. The adoption of this standard did
not have a material effect on the Company’s financial statements as
reflected herein. The carrying amounts of cash, accounts payable
and accrued expenses reported on the balance sheet are estimated by
management to approximate fair value primarily due to the
short-term nature of the instruments. The Company had a convertible
note payable that required fair value measurement on a recurring
basis.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 — Revenue
from Contracts with Customers. Under Topic 606, revenue is
recognized when control of the promised goods or services is
transferred to our customers, in an amount that reflects the
consideration we expect to be entitled to in exchange for those
goods or services.
We determine revenue recognition through the following steps:
|
|
●
|
identification of the contract, or contracts, with a customer;
|
|
|
●
|
identification of the performance obligations in the contract;
|
|
|
●
|
determination of the transaction price;
|
|
|
●
|
allocation of the transaction price to the performance obligations
in the contract; and
|
|
|
●
|
recognition of revenue when, or as, we satisfy a performance
obligation.
|
The Company’s revenues currently consist of the sale of CBD
products, including patches, roll-on applications, sprays and
ointments. These products are primarily sold direct-to-consumers
online, and occasionally directly to local pharmacies.
Sales are recorded when the earnings process is complete or
substantially complete, and the revenue is measurable and
collectability is reasonably assured, which is typically when
products are shipped. Provisions for discounts and rebates to
customers, estimated returns and allowances, and other adjustments
are provided for in the same period the related sales are recorded.
The Company defers any revenue from sales in which payment has been
received, but the earnings process has not been completed.
Cost of Merchandise Sales and Occupancy Costs
Cost of merchandise sales and occupancy costs includes the
following types of expenses: purchase price of inventory sold,
including inbound freight charges; shipping and handling costs;
inventory shrinkage costs and valuation adjustments; payroll and
benefits costs; store occupancy costs, including rent, common area
maintenance, property taxes, utilities, insurance, and depreciation
of leasehold improvements and capitalized lease assets. Also
included in cost of merchandise sales and occupancy costs is
certain consideration received from vendors for vendor rebates,
allowances and discounts.
Advertising and Promotion
All costs associated with advertising and promoting products are
expensed as incurred. These expenses approximated $56,144 and $-0-
for the years ended July 31, 2021 and 2020, respectively, as
presented in general and administrative expenses within the
consolidated statements of operations.
Research and Development
The Company performs research and development on its extracorporeal
technological method of treating many disease states, including
Alzheimer’s Disease, PTSD, Parkinson’s Disease, epilepsy and other
neurodegenerative diseases, sepsis, meningitis and pandemics. The
Company currently does not have any employees dedicated to research
and development, but outsources these activities to Arizona State
University (ASU) pursuant to an Industry Sponsored Research
Agreement, which the Company and ASU entered into on September 1,
2020 (Research Agreement). The Research Agreement, which terminates
on November 30, 2022, calls for monthly payments of $50,000, not to
exceed $1,371,782, The Company’s research and development
activities have primarily been funded by Epidemiologic Solutions
Corp.). In accordance with ASC 730-10-25, these expenditures
contracted to another party are expensed as incurred. These
expenses approximated $773,177 and $20,000 for the years ended July
31, 2021 and 2020, respectively.
Income Taxes
The Company recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets
and liabilities using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to be
recovered. The Company provides a valuation allowance for deferred
tax assets for which it does not consider realization of such
assets to be more likely than not.
Basic and Diluted Loss per Share
The basic net loss per common share is computed by dividing the net
loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net
loss adjusted on an “as if converted” basis, by the weighted
average number of common shares outstanding plus potential dilutive
securities. For the periods presented, there were no outstanding
potential common stock equivalents and therefore basic and diluted
earnings per share result in the same figure.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in
accordance with the provisions of ASC 718 Stock Compensation (ASC
718) and Equity-Based Payments to Non-employees pursuant to ASC
2018-07 (ASC 2018-07). All transactions in which goods or services
are the consideration received for the issuance of equity
instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument
issued, whichever is more reliably measurable. The measurement date
of the fair value of the equity instrument issued is the earlier of
the date on which the counterparty’s performance is complete or the
date at which a commitment for performance by the counterparty to
earn the equity instruments is reached because of sufficiently
large disincentives for nonperformance.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
Uncertain Tax Positions
In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company
recognizes the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be capable of
withstanding examination by the taxing authorities based on the
technical merits of the position. These standards prescribe a
recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. These standards also provide
guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition.
Various taxing authorities periodically audit the Company’s income
tax returns. These audits include questions regarding the Company’s
tax filing positions, including the timing and amount of deductions
and the allocation of income to various tax jurisdictions. In
evaluating the exposures connected with these various tax filing
positions, including state and local taxes, the Company records
allowances for probable exposures. A number of years may elapse
before a particular matter, for which an allowance has been
established, is audited and fully resolved. The Company has not yet
undergone an examination by any taxing authorities.
The assessment of the Company’s tax position relies on the judgment
of management to estimate the exposures associated with the
Company’s various filing positions.
Adoption of New Accounting Standards and Recently Issued
Accounting Pronouncements
There are no recently issued accounting pronouncements that the
Company has yet to adopt that are expected to have a material
effect on its financial position, results of operations, or cash
flows.
Note 2 – Going Concern
As shown in the accompanying condensed consolidated financial
statements, the Company has incurred recurring losses from
operations resulting in an accumulated deficit of $4,820,050,
negative working capital of $336,639, and as of July 31, 2021, the
Company’s cash on hand may not be sufficient to sustain operations.
These factors raise substantial doubt about the Company’s ability
to continue as a going concern. Management is actively pursuing new
customers to increase revenues. In addition, the Company is
currently seeking additional sources of capital to fund short term
operations. Management believes these factors will contribute
toward achieving profitability. The accompanying consolidated
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern.
The consolidated financial statements do not include any
adjustments that might result from the outcome of any uncertainty
as to the Company’s ability to continue as a going concern. These
financial statements also do not include any adjustments relating
to the recoverability and classification of recorded asset amounts,
or amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
Note 3 – Explanation of our Restatements
The Company is filing this Amendment No. 4 on Form 10-12G/A to its
Annual Report for the years ended July 31, 2021 and 2020,
which was filed with the Securities and Exchange Commission (“SEC”)
on May 11, 2022 (the “Original Report”) in response to certain
issues set forth in our Current Report on Form 8-K filed with the
SEC on September 19, 2022 (the “Form 8-K”). The financial
statements contained in our Annual Report on Form 10-12G/A for the
years ended July 31, 2021 and 2020 require restatement in
order to correct the presentation of its Convertible Judgments
Payable and additional Accounts Payable as a correction of an
error. In accordance with Accounting Standards Codification 250 –
Accounting Changes and Error Corrections (“ASC 250”), the
Company has amended its financial statements to indicate that the
comparative periods have been restated. The changes in our
consolidated financial statements are summarized, below.
Restated Financial Statements for the Year Ended July 31,
2021:
|
HALBERD CORPORATION
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
As Originally
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
|
|
|
As Restated
|
|
|
|
|
July 31,
|
|
|
|
|
|
July 31,
|
|
|
|
|
2021
|
|
|
Adjusted
|
|
|
2021
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
40,321 |
|
|
$ |
- |
|
|
$ |
40,321 |
|
|
Prepaid expense
|
|
|
21,750 |
|
|
|
- |
|
|
|
21,750 |
|
|
Total current assets
|
|
|
62,071 |
|
|
|
- |
|
|
|
62,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
1,281 |
|
|
|
- |
|
|
|
1,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
63,352 |
|
|
$ |
- |
|
|
$ |
63,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
92,315 |
|
|
$ |
84,695 |
|
|
$ |
177,010 |
|
|
Accrued expenses
|
|
|
5,300 |
|
|
|
- |
|
|
|
5,300 |
|
|
Convertible judgments payable
|
|
|
15,591,498 |
|
|
|
(15,375,098 |
) |
|
|
216,400 |
|
|
Total current liabilities
|
|
|
15,689,113 |
|
|
|
(15,290,403 |
) |
|
|
398,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note payable, SBA loan
|
|
|
150,000 |
|
|
|
- |
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
15,839,113 |
|
|
|
(15,290,403 |
) |
|
|
548,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 25,000,000 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
authorized, 10,000,000 shares issued and outstanding
|
|
|
1,000 |
|
|
|
- |
|
|
|
1,000 |
|
|
Common stock, $0.0001 par value, 800,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
511,621,968 shares issued and outstanding at July 31, 2021
|
|
|
51,162 |
|
|
|
- |
|
|
|
51,162 |
|
|
Additional paid in capital
|
|
|
4,282,530 |
|
|
|
- |
|
|
|
4,282,530 |
|
|
Accumulated deficit
|
|
|
(20,110,453 |
) |
|
|
15,290,403 |
|
|
|
(4,820,050 |
) |
|
Total stockholders' equity (deficit)
|
|
|
(15,775,761 |
) |
|
|
15,290,403 |
|
|
|
(485,358 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$ |
63,352 |
|
|
$ |
- |
|
|
$ |
63,352 |
|
The accompanying notes are an integral part of these financial
statements.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
|
HALBERD CORPORATION
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
For the Year Ended July 31, 2021
|
|
|
|
As Originally
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjusted
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
5,238 |
|
|
$ |
- |
|
|
$ |
5,238 |
|
|
Cost of sales
|
|
|
4,295 |
|
|
|
- |
|
|
|
4,295 |
|
|
Gross profit
|
|
|
943 |
|
|
|
- |
|
|
|
943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
98,817 |
|
|
|
- |
|
|
|
98,817 |
|
|
Research and development
|
|
|
688,482 |
|
|
|
84,695 |
|
|
|
773,177 |
|
|
Professional fees
|
|
|
69,323 |
|
|
|
- |
|
|
|
69,323 |
|
|
Total operating expenses
|
|
|
856,622 |
|
|
|
84,695 |
|
|
|
941,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(855,679 |
) |
|
|
(84,695 |
) |
|
|
(940,374 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on mark-to-market fair value adjustment of settlements
payable
|
|
|
(12,060,463 |
) |
|
|
12,060,463 |
|
|
|
- |
|
|
Interest expense
|
|
|
(20,400 |
) |
|
|
- |
|
|
|
(20,400 |
) |
|
Total other income (expense)
|
|
|
(12,080,863 |
) |
|
|
12,060,463 |
|
|
|
(20,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(12,936,542 |
) |
|
$ |
11,975,768 |
|
|
$ |
(960,774 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
393,192,510 |
|
|
|
393,192,510 |
|
|
|
393,192,510 |
|
|
Weighted average common shares outstanding - fully diluted
|
|
|
393,192,510 |
|
|
|
393,192,510 |
|
|
|
393,192,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic
|
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
|
$ |
(0.00 |
) |
|
Net loss per common share - fully diluted
|
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
|
$ |
(0.00 |
) |
The accompanying notes are an integral part of these financial
statements.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
|
HALBERD CORPORATION
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the Year Ended July 31, 2021
|
|
|
|
As Originally
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjusted
|
|
|
As Restated
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(12,936,542 |
) |
|
$ |
11,975,768 |
|
|
$ |
(960,774 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on mark-to-market fair value adjustment of settlements
payable
|
|
|
12,060,463 |
|
|
|
(12,060,463 |
) |
|
|
- |
|
|
Common stock warrants issued for services
|
|
|
20,612 |
|
|
|
- |
|
|
|
20,612 |
|
|
Decrease (increase) in assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
(19,500 |
) |
|
|
- |
|
|
|
(19,500 |
) |
|
Increase (decrease) in liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
84,368 |
|
|
|
84,695 |
|
|
|
169,063 |
|
|
Accrued expenses
|
|
|
5,300 |
|
|
|
- |
|
|
|
5,300 |
|
|
Net cash used in operating activities
|
|
|
(785,299 |
) |
|
|
- |
|
|
|
(785,299 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(1,281 |
) |
|
|
- |
|
|
|
(1,281 |
) |
|
Net cash provided by investing activities
|
|
|
(1,281 |
) |
|
|
- |
|
|
|
(1,281 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds received from exercise of warrants
|
|
|
10,000 |
|
|
|
- |
|
|
|
10,000 |
|
|
Proceeds received on capital contributions
|
|
|
664,815 |
|
|
|
- |
|
|
|
664,815 |
|
|
Proceeds received from note payable, SBA loan
|
|
|
150,000 |
|
|
|
- |
|
|
|
150,000 |
|
|
Net cash provided by financing activities
|
|
|
824,815 |
|
|
|
- |
|
|
|
824,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
|
|
|
38,235 |
|
|
|
- |
|
|
|
38,235 |
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
2,086 |
|
|
|
- |
|
|
|
2,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
|
$ |
40,321 |
|
|
$ |
- |
|
|
$ |
40,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
15,100 |
|
|
$ |
- |
|
|
$ |
15,100 |
|
|
Income taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of common stock issued on settlement of 3(a)(10)
debts
|
|
$ |
8,424,338 |
|
|
$ |
- |
|
|
$ |
8,424,338 |
|
See accompanying notes to financial statements.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
Restated Financial Statements for the Year Ended July 31,
2020:
|
HALBERD CORPORATION
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
As Originally
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
|
|
|
As Restated
|
|
|
|
|
July 31,
|
|
|
|
|
|
July 31,
|
|
|
|
|
2020
|
|
|
Adjusted
|
|
|
2020
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
2,086 |
|
|
$ |
- |
|
|
$ |
2,086 |
|
|
Prepaid expense
|
|
|
2,250 |
|
|
|
- |
|
|
|
2,250 |
|
|
Total current assets
|
|
|
4,336 |
|
|
|
- |
|
|
|
4,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
4,336 |
|
|
$ |
- |
|
|
$ |
4,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
7,947 |
|
|
$ |
- |
|
|
$ |
7,947 |
|
|
Convertible judgments payable
|
|
|
3,603,800 |
|
|
|
(3,314,635 |
) |
|
|
289,165 |
|
|
Total current liabilities
|
|
|
3,611,747 |
|
|
|
(3,314,635 |
) |
|
|
297,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 25,000,000 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
authorized, 10,000,000 shares issued and outstanding
|
|
|
1,000 |
|
|
|
- |
|
|
|
1,000 |
|
|
Common stock, $0.0001 par value, 800,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
302,721,539 shares issued and outstanding at July 31, 2020
|
|
|
30,272 |
|
|
|
- |
|
|
|
30,272 |
|
|
Additional paid in capital
|
|
|
3,535,228 |
|
|
|
- |
|
|
|
3,535,228 |
|
|
Accumulated deficit
|
|
|
(7,173,911 |
) |
|
|
3,314,635 |
|
|
|
(3,859,276 |
) |
|
Total stockholders' equity (deficit)
|
|
|
(3,607,411 |
) |
|
|
3,314,635 |
|
|
|
(292,776 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$ |
4,336 |
|
|
$ |
- |
|
|
$ |
4,336 |
|
The accompanying notes are an integral part of these financial
statements.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
|
HALBERD CORPORATION
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
For the Year Ended July 31, 2020
|
|
|
|
As Originally
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjusted
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Cost of sales
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Gross profit
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
20,761 |
|
|
|
- |
|
|
|
20,761 |
|
|
Research and development
|
|
|
20,000 |
|
|
|
- |
|
|
|
20,000 |
|
|
Professional fees
|
|
|
1,611,330 |
|
|
|
- |
|
|
|
1,611,330 |
|
|
Total operating expenses
|
|
|
1,652,091 |
|
|
|
- |
|
|
|
1,652,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1,652,091 |
) |
|
|
- |
|
|
|
(1,652,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on mark-to-market fair value adjustment of settlements
payable
|
|
|
(2,883,040 |
) |
|
|
2,883,040 |
|
|
|
- |
|
|
Interest expense
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Total other income (expense)
|
|
|
(2,883,040 |
) |
|
|
2,883,040 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(4,535,131 |
) |
|
$ |
2,883,040 |
|
|
$ |
(1,652,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
302,721,539 |
|
|
|
302,721,539 |
|
|
|
302,721,539 |
|
|
Weighted average common shares outstanding - fully diluted
|
|
|
302,721,539 |
|
|
|
302,721,539 |
|
|
|
302,721,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic
|
|
$ |
(0.01 |
) |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
|
Net loss per common share - fully diluted
|
|
$ |
(0.01 |
) |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
See accompanying notes to financial statements.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
|
HALBERD CORPORATION
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the Year Ended July 31, 2020
|
|
|
|
As Originally
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjusted
|
|
|
As Restated
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(4,535,131 |
) |
|
$ |
2,883,040 |
|
|
$ |
(1,652,091 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on mark-to-market fair value adjustment of settlements
payable
|
|
|
2,883,040 |
|
|
|
(2,883,040 |
) |
|
|
- |
|
|
Common stock warrants issued for services
|
|
|
1,603,830 |
|
|
|
- |
|
|
|
1,603,830 |
|
|
Decrease (increase) in assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
(2,250 |
) |
|
|
- |
|
|
|
(2,250 |
) |
|
Increase (decrease) in liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
7,947 |
|
|
|
- |
|
|
|
7,947 |
|
|
Net cash used in operating activities
|
|
|
(42,564 |
) |
|
|
- |
|
|
|
(42,564 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds received on capital contributions
|
|
|
44,650 |
|
|
|
- |
|
|
|
44,650 |
|
|
Net cash provided by financing activities
|
|
|
44,650 |
|
|
|
- |
|
|
|
44,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
|
|
|
2,086 |
|
|
|
- |
|
|
|
2,086 |
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
|
$ |
2,086 |
|
|
$ |
- |
|
|
$ |
2,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Income taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of common stock issued on settlement of 3(a)(10)
debts
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
See accompanying notes to financial statements.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
Note 4 – Convertible Judgments Payable and Contingent
Liabilities
On May 7, 2014, the Company entered into a court ordered settlement
in Securities Counselors, Inc. v. Halberd Corporation,
Case No. 13 L 00000668 for a total of $279,447 that is to be
settled with the payment of 441,278,914 shares of common stock to
be issued in tranches pursuant to a Section 3(a)(10) exemption from
the Securities Act of 1933’s registration requirements. Through
July 31, 2021, there were a total of 162,588,671 shares issued in
partial extinguishment of this nonmonetary obligation. As of July
31, 2021, there was a balance outstanding of $176,485 on this
judgment that could be converted into approximately 278,690,243
shares of the Company’s common stock at a rate of approximately
$0.00063 per share.
On November 25, 2014, in Securities Counselors, Inc. v. Texas
Wyoming Drilling, Inc., Case No. 14 L 825, Halberd
Corporation, then named Tykhe Corporation, agreed to a settlement
in the amount of $2,822,209, whereby the Company agreed to issue
486,850,070 shares of its common stock at an issuance price of
$0.0057969 per-share in exchange for an interest in various
cannabis farming operations in accordance with the November 25,
2014 court order. This November 25, 2014 court order covered
several different public companies which participated in this
initiative, agreeing to issue shares in exchange for interests in
such cannabis farming operations. The Texas Wyoming court order
further provided that Securities Counselors Inc. was entitled to
19,438,077 shares of common stock in Halberd Corporation in
extinguishment of its accrued liability of $112,680.10 for
additional legal services rendered, which were in addition to the
legal services rendered immediately prior to, and covered by, the
Securities Counselors, Inc. v. Halberd Corporation Case
No. 13 L 00000668.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)
That November 25, 2014, Securities Counselors, Inc. v. Texas
Wyoming Drilling, Inc. order, however, was later modified in
May 2016, effectively extinguishing for Halberd, both the
obligation to issue shares as well as any entitlements with respect
thereto, except for the share entitlement for legal services. The
most relevant provisions relating to this matter of Securities
Counselors, Inc. v. Texas Wyoming Drilling, Inc. appear in
paragraph 6 stating as follows: “Halberd is hereby relieved of its
obligations in accordance with the Securities Counselors, Inc.
v. Texas Wyoming Drilling, Inc. 2014 Order, including any
obligation to issue the 486,850,070 shares … and …. to receive
shares in any of the other Issuers is hereby extinguished. The
19,438,077 shares, which Halberd was obligated to issue SCI shall
increase to 321,943,143, to reflect the corresponding decrease in
its share price.” Mathematically, the $112,680.10 divided by the
321,943,143 shares is $0.00035 per-share.
As of July 31, 2021, there was a balance outstanding of $39,915 on
this judgment that could be converted into approximately
114,042,714 shares of the Company’s common stock at a rate of
approximately $0.00035 per share. A total of 207,900,429 shares
were issued in satisfaction of approximately $72,765 of this
obligation over various dates from August 5, 2020 through July 29,
2021.
The Company has accounted for its judgment liability in accordance
with ASC 450 - Contingencies, whereby the judgments
presented above are carried at the amount of the court ordered
judgments, as the losses were both probable and reasonably
estimated at the time the judgments were ordered, therefore they
have been recognized as liabilities on the balance sheets in the
amounts of the court orders. The judgments are to be settled in
shares of the Company’s common stock at fixed prices per share,
which could result in the issuance of an aggregate 392,732,957
shares of the Company’s common stock.
Note 5 – Fair Value of Financial
Instruments
Under FASB ASC 820-10-5, fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date (an exit price). The standard outlines a valuation
framework and creates a fair value hierarchy in order to increase
the consistency and comparability of fair value measurements and
the related disclosures. Under GAAP, certain assets and liabilities
must be measured at fair value, and FASB ASC 820-10-50 details the
disclosures that are required for items measured at fair value.
The Company has certain financial instruments that must be measured
under the new fair value standard. The Company’s financial assets
and liabilities are measured using inputs from the three levels of
the fair value hierarchy. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active,
inputs other than quoted prices that are observable for the asset
or liability (e.g., interest rates, yield curves, etc.), and inputs
that are derived principally from or corroborated by observable
market data by correlation or other means (market corroborated
inputs).
Level 3 - Unobservable inputs that reflect our assumptions about
the assumptions that market participants would use in pricing the
asset or liability.
Halberd Corporation
Notes to Consolidated Financial Statements
(Restated)