HESTIA INSIGHT INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Unless otherwise indicated, references to the "Company," "us" or "we" refer to
Special Note Regarding Forward-looking Statements
All statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Form 10-K, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of a number of factors, including those set forth under the risk factors and business sections in this Form 10-K.
Overview
The Company is focused primarily on the healthcare and biotech sectors through
the Company's two wholly owned operating subsidiaries,
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Our Markets and Services
The Company's wholly owned operating subsidiary, Hestia Vending, operates within
the healthy food, beverage and wellness products industry and the smart vending
machine industry. On
The Company is positioned to make strategic acquisitions of and enter joint ventures with emerging growth companies with unique sciences and technologies. The Company also provides sales and marketing guidance and services and capital markets advisory services to its clients.
Sales and Marketing
We seek to develop new business through relationships driven by our senior management, which have extensive contacts throughout the healthcare system. Our senior management is seeking opportunities for joint ventures, strategic relationships and acquisitions in the healthcare and biotech sectors.
Business Model
The Company intends to pursue the acquisition and development of healthcare related technologies in the healthcare and biotech sectors through acquisition, licensing or joint ventures. We will also consider a third avenue of investing in certain technologies. The Company entered the healthcare sector to explore emerging healthcare technologies, especially growth companies that own and develop unique sciences and technologies.
Competitive Advantages
The Company focuses on small and micro-cap companies in the healthcare and biotech sectors with limited access to growth capital. We provide specialized consulting services to assist companies with their operations in the public markets. Our management team is experienced in risk management and exit planning. The Company's competitive advantages include a global business network of healthcare, investment and financial professionals who are integrated into the technology licensing and commercialization departments of universities and institutions. Through our offered services and access to investment, we intend to accelerate the development and commercialization of the healthcare businesses that we engage with.
Strategic Relationships
Immudyne Nutritional. On
We are in negotiation in our areas of focus with respect to potential acquisitions and strategic partnerships. There is no guarantee that we will be able to successfully sign a definitive agreement, close or implement such business arrangement.
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Going Concern
We have a limited operating history and our continued growth is dependent upon
the continuation of providing medical consulting services to our clients,
generating revenue, and obtaining additional financing to fund future
obligations, and pay liabilities arising from normal business operations. We had
accumulated deficits of
Our ability to continue as a going concern is dependent upon our ability to carry out our business plan, achieve profitable operations, obtain additional working capital funds from our significant shareholders, and or through debt and equity financings. However, there can be no assurance that any additional financings will be available to us on satisfactory terms and conditions, if any.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in
We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements.
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or products have been sold, the purchase price is fixed or determinable and collectability is reasonably assured.
We provide medical related consulting services to our clients. We are paid fees for our services by our clients under written consulting agreements. Each contract calls for a fixed payment in a fixed period of time. We recognize revenue by providing medical related consulting services under written service contracts with our customers. Revenue related to our service offerings is recognized as the services are performed and amounts are earned, using the straight-line method over the term of the related services agreement. Prepayments, if any, received from customers prior to the services being performed are recorded as advance from customers. In these cases, when the services are performed, the amount recorded as advance from customers is recognized as revenue.
Income Taxes
We are governed by the income tax laws of
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized.
Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is changed to equity. Deferred tax assets and liabilities are offset when they related to income taxes levied by the same taxation authority and we intend to settle its current tax assets and liabilities on a net basis.
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Stock-based Compensation
Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of Accounting Standards Codification ("ASC") 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award. The Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the "measurement date." The expense is recognized over the period of services or the vesting period, whichever is applicable. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.
Recent Accounting Pronouncements
In
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our consolidated financial condition, results of operations, cash flows or disclosures.
RESULTS OF OPERATIONS
Comparison of Results of Operations for the Year Ended
Revenue
During the year ended
Cost of Revenue
Cost of revenue includes the direct cost of internal labor and related benefits, travel expenses related to consulting services, direct subcontractor costs, other related direct consulting costs.
For the years ended
Operating Expenses For the years endedNovember 30, 2022 andNovember 30, 2021 , operating expenses consisted of the following: For the Year For the Year Ended Ended November 30, November 30, 2022 2021 Selling expense$ 11,929 $ 367 Professional fees 269,900 217,813 Other general and administrative 81,439 29,037$ 363,268 $ 247,217 18 ? Our selling expense mainly includes our marketing and sales staff's salaries and related benefits, and travel and entertainment costs incurred by our sales department. Selling expense totalled$11,929 for the year endedNovember 30, 2022 , and$367 for the year endedNovember 30, 2021 . This is an increase of$11,562 . Selling expense as a percentage of revenue for the year endedNovember 30, 2022 was 79.5%. ? Professional fees primarily consisted of accounting fees, legal service fees, consulting fees, investor relations service charges and other fees incurred for service related to becoming and being a public company. For the years endedNovember 30, 2022 , andNovember 30, 2021 , professional fees amounted to$269,900 and$217,813 , respectively, an increase of$52,087 or 23%. There was an increase of$63,996 in expenses paid to independent contractors inthe United States , an increase of approximately$453 in fees and services associated with public company reporting, an increase of approximately$28 ,455in service fees provided by professionals inChina . These increases are offset by a decrease in legal services of$500 , a decrease in audit fees of approximately$9,800 and a decrease of$2,188 incurred for services performed by our financial consultants and others. We expect professional fees to increase as we incur significant costs associated with our public company reporting requirements, and costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by theSecurities and Exchange Commission . ? Other general and administrative expenses mainly consisted of employee compensation, officer compensation, travel and entertainment, office supplies, rent, bank service charges and other miscellaneous items. Other general and administrative expenses totalled$81,439 for the year endedNovember 30, 2022 , as compared to$29,037 for the period year endedNovember 30 , 202, an increase of$52,402 or 180%. This increase was primarily attributable to an increase in payroll and payroll taxes of$34,574 , an increase in travel and meals of$11,423 , an increase in depreciation expense of$6,367 and an increase in other general and administrative expenses of$9,065 . There was also a decrease in officer's compensation of$9,000 .
Income (Loss) from Operations
As a result of the foregoing, for the year ended
Other Income
Other income includes interest income from bank deposits and loans receivable of
The Company had realized gains on equity investments of
The Company had unrealized losses on equity investments of
Other expense
The Company incurred interest expense of
Income Taxes
We did not have any income taxes expense for the years ended
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Net Income (Loss)
Net income/(loss) for the years ended
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current
and future operations, satisfy its obligations and otherwise operate on an
ongoing basis. At
We currently have no agreements and arrangements with any person to obtain funds through bank loans, lines of credit or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.
Cash flows from Operating Activities
Operating activities used
Cash flows from Investing Activities
For the year ended
Cash flows from Financing Activities
For the year ended
Our capital requirements for the next twelve months primarily relate to cash to pay salaries, consulting fees and fees related to third parties' professional services. All funds received have been expended in the furtherance of growing the business. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
? An increase in working capital requirements to finance our current business; ? Addition of administrative and sales personnel as the business grows; and ? The cost of being a public company.
We will need to raise additional funds, particularly if we are unable to
generate positive cash flow as a result of our operations. We estimate that
based on current plans and assumptions, that our available cash will be
insufficient to satisfy our cash requirements under our present operating
expectations. Other than working capital and advance received from related
parties and funds received pursuant to securities purchase agreements, we
presently have no other significant alternative source of working capital. We
have used these funds to fund our operating expenses, pay our obligations and
grow our company. We will need to raise significant additional capital to fund
our operations and to provide working capital for our ongoing operations and
obligations. Therefore, our future operation is dependent on our ability to
secure additional financing. Financing transactions may include the issuance of
equity or debt securities, obtaining credit facilities, or other financing
mechanisms. However, the trading price of our common stock and a downturn in the
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Going Concern
The Company's financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and settlement of liabilities and
commitments in the normal course of business. The Company incurred a net loss of
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Since inception, our principal sources of operating funds have been proceeds from equity financing including the sale of our Common Stock to initial investors known to management and principal shareholders of the Company. We do not expect that our current cash on hand will fund our existing operations. We will need to raise additional capital in order execute our business plan and growth goals for at least the next twelve-month period thereafter. If the Company is unable to raise sufficient additional funds, it will have to execute a slower than planned growth path, reduce overhead and scale back its business plan until sufficient additional capital is raised to support further operational expansion and growth. There can be no assurance that such a plan will be successful.
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