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





Overview

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





Results of Operations

Comparison of the fiscal year ended December 31, 2022 to the fiscal ended December 31, 2021





Revenue

During the year ended December 31, 2022 the Company received $51,892,679 in revenue principally from staffing and business consulting services and we incurred $52,699,339 in expense directly related to this revenue compared to $51,898,202 in revenue and $49,734,441 during the year ended December 31, 2021





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Expenses

Operating expenses for the fiscal year ended December 31, 2022 were $5,935,412 compared to $ 6,151,782 for the same period of the prior year.





Working Capital

The Company's net loss for the years ended December 31, 2022 and Deember 31, 2021 were $4,212,053 and $17,896,673, respectively. decrease in net loss for fiscal year 2022, as compared to fiscal year 2022, is due primarily to an increase in revenue and decrease in general and administrative expenses.

During the fiscal years ended December 31, 2022 and 2022, our principal sources of liquidity included cash received from convertible notes payable, notes payable, and sales of preferred stock. We intend to use new capital in the form of new equity or debt to further advance business objectives.

Net cash produced by operating activities totaled $356,570 compared to a use of $3,216,501 for the years ending December 31, 2022 and 2021, respectively. The change between 2022 and 2021 is primarily due to lower net losses, increases in accounts payables, increases in accrued expenses, offset by revaluation of derivative liabilities.

Net cash provided by financing activities totaled $160,312 and $3,072,240 for the years ending December 31, 2022 and 2021, respectively. The change between 2022 and 2021 is primarily attributed to an decrease in proceeds from notes payable in 2022, as compared to 2021. The cash however increased to $836,495 at December 31, 2022 from $319,613 at December 31, 2021.

As reflected in our accompanying financial statements, other than the cash received from the issuance of notes payable and convertible notes during the fiscal year ended December 31, 2022, we have negative working capital, and an accumulated deficit of $35,034,310 and $30,908,777 for the years ending December 31, 2022 and 2021, respectively. Notwithstanding our belief that we will be able to continue to raise capital through the issuance of equity and, to a reduced level if at all, convertible notes, the Company believes that it will be able to raise the requisite amount of equity capital at terms and condition acceptable to the Company, of which there can be no assurance, these factors indicate that we may be unable to continue in existence in the absence of receiving additional funding.

In addition to our operating expenses which average approximately $494,000 per month, management's plans for the next twelve months include approximately $4 million of cash expenditures for development and expansion of our health insurance and employee benefits business operations. While there can be no assurance, the Company believes that it will be able to generate sufficient capital from operations, equity and/or debt financing to fully-implement its business plan of offering principally to smaller and mid-sized employers a full spectrum of employee benefit and insurance services enabling employers to offer a variety of plans providing their employees with multiple levels of benefits including major medical health insurance, as well as providing financial and business consulting services.





Dividend Policy

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





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Off-Balance Sheet Arrangements

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

Recent Accounting Pronouncements

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

Limitations on Liability and Indemnification Matters

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

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

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

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

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