Notes to Unaudited Financial Statements
March 31, 2017
Note 1 - Basis of Presentation
The accompanying unaudited interim financial statements of Hemcare Health Services Inc. (formerly NSU Resources, Inc.) (collectively referred to herein as “Hemcare Health Services”, “Hemcare”, or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements for the period ended December 31, 2016 and notes thereto contained in the Company’s Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2016 as reported in the form 10-K have been omitted.
Note 2 - Going Concern
The Company had an accumulated deficit of $3,328,669 and a working capital deficit of $229,007 as of March 31, 2017 and had no revenues. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Continuation of the Company’s existence depends upon its ability to obtain additional capital. Management’s plans in regards to this matter include raising additional equity financing and borrowing funds under a private credit facility and/or other credit sources. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 3 - Significant Accounting Policies
Use of Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Prior Period Conformity
The Company has reclassified balances in the prior period financial statements for conformity with the current period for comparison purposes.
Income Taxes
The Company accounts for income taxes under the asset and liability method, where deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
At March 31, 2017, there were no uncertain tax positions that require accrual.
Intangible Asset
During the three months ended March 31, 2017, the Company entered into an agreement whereby a third party would build a web portal as part of executing our business plan. Through March 31, 2017, we had incurred $40,000 of costs to build the portal which are included in accounts payable as of March 31. The portal has yet to be launched and as such there has been no amortization recorded or impairment as of March 31, 2017.
HEMCARE HEALTH SERVICES INC.
Notes to Unaudited Financial Statements
March 31, 2017
Note 3 - Significant Accounting Policies (continued)
Net Income (Loss) Per Share
Basic loss per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. There were no potentially dilutive instruments outstanding at March 31, 2017. Because of the net loss incurred during the three months ended March 31, 2016, the impacts of dilutive instruments would have been anti-dilutive for the period presented and have been excluded from loss per share calculations.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.
Note 4 - Related Party Transactions
No salaries were paid to directors or executives during the periods ended March 31, 2017 or 2016.
On January 31, 2017, the Company entered into a mutual release agreement with a related party with which there was an outstanding convertible note of $2,634 and outstanding accrued interest of $1,923. The agreement forgave the outstanding payables and they were written to $0 against additional paid in capital on the date of the agreement.
During the three months ended March 31, 2017, a related party paid $468 of expenses and $2,625 of outstanding payables on behalf of the company. The advances are due on demand and are included in current liabilities as a result. There was $42,692 and $39,599 due to related parties as of March 31, 2017 and December 31, 2016.
Note 5 – Stockholders’ Equity
Series A Convertible Preferred Stock
There were 0 shares of series A convertible preferred stock issued and outstanding as of March 31, 2017 and December 31, 2016. Additionally, the Company had accrued dividends payable on series A convertible preferred stock totaling $25,448 at March 31, 2017 and December 31, 2016.
Common Stock
On March 2, 2015, the Company effected a 1:50 reverse stock split. The effects of the reverse split are shown retroactively in these financial statements.
The authorized common stock of the Company consists of 275,000,000 shares and carries a par value of $0.001. During the year ended December 31, 2014, the Company bought back 380,000 post-split shares of common stock into treasury from a former officer for $100. The shares are being carried as treasury shares as reflected on the balance sheet.
During the year ended December 31, 2016, the Company issued 131,170,000 common shares for the conversion of 131,170 shares of Series A Preferred Stock. There was no gain or loss on this conversion
During the three months ended March 31, 2017, the Company entered into agreements with various individuals and entities to cancel a total of 71,140,000 shares of its common stock. Additionally, the Company issued 12,500,000 common shares in exchange for $250,000 of outstanding note principal.
There were 214,692,211 and 273,332,211 issued; 214,312,211 and 272,952,211 outstanding at March 31, 2017 and December 31, 2016, respectively.
HEMCARE HEALTH SERVICES INC.
Notes to Unaudited Financial Statements
March 31, 2017
Note 6 – Notes Payable
During the year ended December 31, 2015, the Company entered into a note payable with an unrelated party as a settlement for payment of consulting services provided valued at $350,000. The note carries interest of 9% compounded annually and is due on November 19, 2016. During the year ended December 31, 2016, the Company issued 50,000 shares of series A convertible preferred stock as repayment of $31,500 of accrued interest and $18,500 of outstanding principal. During the three months ended March 31, 2017, the Company issued 12,500,000 shares of common stock in exchange for $250,000 of principal and extended the maturity date to January 26, 2018. There was $81,500 and $331,500 of principal and $14,018 and $10,299 of accrued interest due as of March 31, 2017 and December 31, 2016. Accrued interest payable is included in “accounts payable and accrued liabilities” on the balance sheet.
During the three months ended March 31, 2017, the Company entered into an agreement with a noteholder to forgive a $600 outstanding note payable. The Company wrote the balance to $0 against other income on the statements of operations.
Note 7 – Convertible Notes Payable
During the three months ended March 31, 2017, the Company entered into an agreement with a convertible noteholder to extinguishment the outstanding principal of the convertible note of $24,383 and interest of $1,923 for a total $26,306. There was $0 and $23,784 net of discounts outstanding at March 31, 2017 and December 31, 2016.
Note 8 – Commitments and Contingencies
During the year ended December 31, 2015 the Company issued a total of 100,000 shares of series A convertible preferred stock in exchange for a prepayment of royalties and 40 complete Ultroid systems. Additionally, as discussed in Note 7, the Company entered into two separate convertible notes payable with an unrelated party. These transactions were not approved by unanimous board consent through the Company’s normal approval procedures. As such, the Company may challenge the validity of these agreements after additional review of the relevant details.
Note 9 - Subsequent Events
The Company has reviewed all events having occurred subsequent to the balance sheet and determined there are no additional items to disclose.