DLT Resolution Inc. - Quarter Report: 2017 March (Form 10-Q)

UNITED STATES

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-148546

5940 S. Rainbow Blvd. Las Vegas, NV 98118

(Address of principal executive offices, including zip code.)

(702) 796-6363

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company. See the definitions of “large accelerated filed,” “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has 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. o

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act. Yes o No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of May 22, 2017 the issuer had 214,692,211 shares of common stock issued and 214,312,211 shares of common stock outstanding.

FORWARD-LOOKING STATEMENTS

This Form 10-Q for the quarterly period ended March 31, 2017 contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this document include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve assumptions, risks and uncertainties regarding, among others, the success of our business plan, availability of funds, government regulations, operating costs, our ability to achieve significant revenues, our business model and products and other factors. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties set forth in reports and other documents we have filed with or furnished to the SEC. These factors or any of them may cause our actual results to differ materially from any forward-looking statement made in this document. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. The forward-looking statements in this document are made as of the date of this document and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.

TABLE OF CONTENTS

FORM 10-Q

QUARTER ENDED MARCH 31, 2017

Item 1: Financial Statements

See accompanying notes to unaudited financial statements.

See accompanying notes to unaudited financial statements.

See accompanying notes to unaudited financial statements.

HEMCARE HEALTH SERVICES INC.

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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation. Shareholders’ Equity

Plan of Operations

The Company was organized January 17, 2007 (Date of Inception) under the laws of the State of Nevada, as DBL Senior Care, Inc. and subsequently changed its name to HemCare Health Services Inc. on March 2, 2015.

Under previous management, the initial business of the Company was to provide personal care services to elderly, physically disabled or other home-bound individuals suffering infirmity. During the year ended December 31, 2009, the board of directors changed the Company’s focus toward the manufacture and sale of fire retardant products. The Company then changed its focus to the licensing of certain technologies related to rare earth minerals then to having the exclusive rights to the use of Optimum Performance (a proprietary formulation of a highly potent all-in-one daily feed supplement for the Horse industry. The Company while still keeping within the health and wellness industries, narrowed its focus to hemorrhoid medical procedures and entered into a license agreement to open hemorrhoid treatment centers and promote the Ultroid Hemorrhoid System globally during the year ended December 31, 2015 which was ceased in late 2016 due to numerous issues and concerns with the Licensor’s business, technology and principals. With the business focus potentially shifting the board asked for the former chief executive officer’s resignation and Mr. John Wilkes returned to his former role as chief executive. Under Mr. Wilkes leadership, the company has been developing a new business strategy and objective still within the health care space but now focusing on the information Exchange sector.

To this end management working together with significant shareholders, have been developing strategies and alliances to fulfil this objective. At the close of the fiscal year management began to develop a platform and portal for the Information Exchange with aim to completion and market launch in the 2nd quarter of 2017.

HemCare Health Services is developing a Centralized System for Patients, Lawyers & Insurers to Retrieve and Access Medical Records. The centralized system and portal is a cloud-based PIPEDA & HIPAA compliant network of Providers and Record Requestors. Utilizing a secure platform, providers will be able to securely exchange records electronically with third-party requestors. Health care providers with proper authorization can also share records with each other.

Addressing a $7 Billion a year problem

In national terms, across the U.S., hospitals spend more than $7 billion annually on customer intake. More than $7 billion, before any sort of medical procedure is done; before a patient even steps out of a waiting room, representing an incredible amount of time and money spent on intake administration.

Despite the adoption of electronic health records (EHR) and health information exchanges (HIE), providers are still mailing and faxing paper records because they have no PIPEDA or HIPAA compliant method to exchange records electronically with these third-party requestors. A recent study found that the current method of exchanging patient health information cost a single clinician practice $17,160 per year.

The Company aims to remove these substantial burdens both on an administrative and financial basis. People or firms simply use our secure online request form, pay a small service fee and the Company retrieves, digitizes and stores the records. At this point the requesting client can access the record globally 24 hours a day - 7 days a week to view it or transfer it securely. In fact clients can upload any new records to consolidate and keep all of their records securely in one place.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance. Our assets and business have not yet generated substantial or recurring revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services.

We will require additional financing to cover costs that we expect to incur over the next twelve months. We believe that debt financing will not be an alternative for funding our operations as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or other securities. However, we cannot provide any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our plan of operations. In the absence of such financing, we will not be able to continue and our business plan will fail.

Results of Operations

Revenues

Revenues during the three months ended March 31, 2017 and 2016 were $0. The timing of generating revenues from the execution of the Company’s current business plan is presently undeterminable.

Operating Expenses

Total operating expenses were $2,490 and 8,656 during the three months ended March 31, 2017 and 2016. The decrease in operating expenses relate to the timing of fees incurred for the audit of the Company’s financial statements for the years ended December 31, 2016 and 2015. Where audit fees were incurred for the audit of our financial statements for the year ended December 31, 2015 during the three months ended March 31, 2016, we did not incur audit fees for the our financial statements for the year ended December 31, 2016 until the second quarter of 2017.

Other Income (Loss)

The Company had net other income of $22,586 during the three months ended March 31, 2017 compared to net other expense of $18,139 during the three months ended March 31, 2016. The increase in net other income is the result of debt forgiveness totaling $26,306 during the three months ended March 31, 2017 that did not exist in the prior period and the amortization of debt discounts associated with convertible notes payable there were outstanding during the three months ended March 31, 2016 and not during the three months ended March 31, 2017.

Net Income (Loss)

The Company had net income of $20,096 during the three months ended March 31, 2017 compared to a net loss of $29,224 during the three months ended March 31, 2016. The increase in net income is the result of timing of professional fees, forgiveness of outstanding debts and the amortization of debt discounts as discussed previously.

Liquidity and Capital Resources

As of March 31, 2017 we had $0 of cash, total current assets of $0 and current liabilities of $229,007 creating a working capital deficit of $229,007. Current liabilities as of March 31, 2017 consisted of $7 of bank overdrafts, $79,360 of accounts payable and accrued liabilities, $42,692 of related party payables, $25,448 of dividends payable and notes payable of $81,500.

Cash Used in Operating Activities

Net cash used in operating activities was $0 during the three months ended March 31, 2017 compared to $8,753 used for the same period in 2016. The decrease in cash used in operating activities is from an increase in non-cash gains realized and a lesser change in working capital during the three months ended March 31, 2017 when compared to the three months ended March 31, 2016.

Cash from Financing Activities

We have funded our business to date primarily from loans from directors or other related parties. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our operations and our business will fail.

Going Concern

Through March 31, 2017, management has devoted most of its activities to developing a market for its products and services. We have yet to generate revenues from our planned business activities, have no cash on hand and have a working capital deficit of $229,007 which raises substantial doubt for the entity to be able to continue as a going concern.

Future Financing

We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned operations.

Off-Balance Sheet Arrangements

We have no 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 stockholders.

Lawsuits

To management’s knowledge there is no pending, or threatened lawsuit against the Company

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are not required to provide the information required by this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer (as our chief executive officer and chief financial officer), to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As of the end of the period covered by this report, and under the supervision and with the participation of management, including our Chief Executive Officer, who is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, conducted an evaluation of the effectiveness of the design and operation of these disclosure controls and procedures. Based on this evaluation and subject to the foregoing, our Chief Executive Officer concluded that these controls are not effective considering the level and nature of the Company’s operations and the number and types of transactions concluded by the Company.

Changes in Internal Control Over Financial Reporting

During the period covered by this report management of the Company was expanded to include more than one individual. As such, there were significant changes in our internal controls during the period. For example, for the time being and until the operations of the company make this impractical all financial transactions involving the Company, including all payments and all agreed upon incurrences of liabilities, require a signature from, or other approval from, the CEO or CFO of Hemcare Health Services. Notwithstanding these changes, as the company was previously a shell company owned and managed by one person, management has no reason to believe that the internal controls in place at that time were insufficient. Furthermore, management believes that until the operations of the Company progress to the point where tight control impedes smooth operations, it will be appropriate and sufficient (from the perspective of internal controls over financial reporting) if approval of the CEO and CFO is required for transactions that are or are reasonably likely to require disclosure in the financial statements.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not presently a party to any legal proceedings and, to our knowledge, no such proceedings are threatened or pending.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Description of Registrant’s Securities to be Registered

The authorized capital stock of our Company consists of 275,000,000 shares of common stock, par value $0.001 per share, of which there are currently 214,692,211 issued and 214,312,211 outstanding, and 5,000,000 shares of series A convertible preferred stock authorized of which there are 0 shares issued and outstanding.

All outstanding shares of common stock are of the same class and have equal rights and attributes. The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders of the Company. All stockholders are entitled to share equally in dividends, if any, as may be declared from time to time by the sole director out of funds legally available. In the event of liquidation, the holders of common stock are entitled to share ratably in all assets remaining after payment of all liabilities. The stockholders do not have cumulative or preemptive rights.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are attached hereto:

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.