QHSLab, Inc. - Quarter Report: 2016 March (Form 10-Q)

USA Equities Corp.
Notes to Unaudited Interim Consolidated Financial Statements
March 31, 2016
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USA Equities Corp, (f/k/a American Biogenetic Sciences, Inc.) (the "Company", "We" or the "Registrant") was incorporated in Delaware on September 1, 1983. Prior to ceasing its operations in 2002, the Company was engaged in the research, development and production of bio-pharmaceutical products. On September 19, 2002, the Registrant filed for bankruptcy under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court Eastern District of New York. On November 4, 2005, the Company emerged from Bankruptcy Court. On August 13, 2010, the Company's sole officer/director transferred and assigned his control stock position to an unrelated third party but remained as the Company's sole executive officer/director. On April 14, 2015, the Company incorporated a wholly-owned subsidiary in Delaware (USA Equities Trust, Inc.) for the purpose of acquiring real estate.

Note 2. Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses, has negative operational cash flows and has no revenues. The future of the Company is dependent upon Management's success in its efforts and limited resources to pursue and effect a business combination. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.

Note 3. Basis of Presentation

The Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. In the opinion of management, the accompanying audited financial statements include all adjustments, consisting of only normal recurring accruals, necessary for a fair statement of financial position, results of operations, and cash flows. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2015. The accounting policies are described in the "Notes to the Financial Statements" in the 2015 Annual Report on Form 10-K and updated, as necessary, in this Form 10-Q. The year-end balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The results of operations for the three-months ended March 31, 2016 and 2015 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

Accounting Policies

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

Principles of Consolidation:

The financial statements include the accounts of USA Equities Corp and as of April 14, 2015, the accounts of its wholly owned subsidiary USA Equities Trust, Inc. All significant inter-company balances and transactions have been eliminated.

Reclassifications:

Certain reclassification was made to previously reported amounts in the accompanying financial statements and notes to make them consistent with the current presentation format. The Company reclassified its two convertible notes from current liabilities to long-term liabilities.

Cash and Cash Equivalents:

For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents.

Fair Value of Financial Instruments:

ASC #825, "Disclosures about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2016. These financial instruments include accounts payable and accrued expenses. Fair values were assumed to approximate carrying values for these financial instruments since they are short-term in nature and their carrying amounts approximate fair values.

Earnings per Common Share:

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. Dilutive common equivalent shares consist of options to purchase common stock (only if those options are exercisable and at prices below the average share price for the period) and shares issuable upon the conversion of issued and outstanding preferred stock. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented. There were no common equivalent shares required to be added to the basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding as of March 31, 2016 or 2015.

Income Taxes:

The Company accounts for income taxes in accordance with ASC #740, "Accounting for Income Taxes," which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.

ASC 740 also clarifies the accounting for uncertainty in tax positions. This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed "more-likely-than-not" to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. There are no uncertain tax positions taken by the Company on its tax returns. Tax years subsequent to 2005 remain open to examination by U.S. federal and state tax jurisdictions.

Management of the Company is not aware of any additional needed liability for unrecognized tax benefits at March 31, 2016 The Company has net operating losses of about $1,195,177, which begin to expire in 2026. Future utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of NOL and tax credit carry-forwards before full utilization.

Impact of recently issued accounting standards

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"), an amendment to FASB Accounting Standards Codification ("ASC") Topic 205, Presentation of Financial Statements. This update provides guidance on management's responsibility in evaluating whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. This ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The Company provides the disclosures required by ASU 2014-15.

There were no other new accounting pronouncements that had a significant impact on the Company's operating results or financial position.

Note 4. Stockholders' Deficit

Recent Issuances

Common shares issued to acquire future interest in real estate

On July 31, 2015, the Company through, its Delaware wholly-owned subsidiary, USA Equities Trust, Inc., entered into an Asset Purchase Agreement (the "APA") with a formerly unaffiliated third party, Green US Builders, Inc. (the "Seller"), a Delaware corporation, for the purchase of a commercial property located in Bridgeport. At the end of October 2015, the parties decided to rescind the transaction because of the inability to fulfill certain representations regarding the status of the property. The Seller, who was issued 2.4 million shares in consideration for the asset, had been negotiating with the Company to replace the asset with a property of equal value. The shares were valued at $0.27 per share or $648,000, the closing bid at July 31, 2015. The shares have been carried as a common stock subscription receivable December 31, 2015.

On February 1, 2016, the Company and the Seller entered into an Asset Purchase Agreement, as Amended, (the "Amendment"), which provided that the Seller had until March 31, 2016 to replace the asset with a property of equal value, unless the Company and the Seller mutually agreed to extend the Amendment beyond March 31, 2016. In May 2016, the Company determined not to extend the Amendment and the board of directors of the Company approved the cancellation of the 2.4 million shares and the certificate evidencing these shares were returned to the transfer agent for cancellation and canceling the common stock subscription receivable at March 31, 2016.

Note 5. Convertible Notes to Related Party

On October 2, 2009, we issued a convertible promissory with a current principal amount of $73,500 to our sole officer/director. The note bears interest at the rate of 12% per annum until paid or the note and accrued interest is converted into shares of the Company's common stock at a conversion price of $0.001. The maturity date of the note is December 31, 2017. As of March 31, 2016 and December 31, 2015, this note had $58,913 and $56,714, respectively, in accrued interest.

On December 31, 2013, we issued a convertible promissory note in the amount of $255,681 to our controlling shareholder. The note bears interest at the rate of 1% per annum until paid or the note and accrued interest is converted into shares of the Company's common stock at a conversion price of $0.25 per share. On March 30, 2016, the maturity date of the note was extended to December 31, 2017.  As of March 31, 2016 and December 31, 2015, this note had $5,707 and $5,069, respectively, in accrued interest.

Note 6. Related Party Transactions

Due Related Parties: Amounts due to related parties consist of: (i) cash advances received from our controlling shareholder, which items totaled $60,219 at March 31, 2016 and $56,410 at December 31, 2015; and (ii) amounts due to an entity controlled by our CEO and Chairman for SEC compliance services, which totaled $4,500 at March 31, 2016 and $1,500 at December 31, 2015.

Note 7. Commitments and Contingencies

There are no pending or threatened legal proceedings as of March 31, 2016. The Company has no non-cancellable operating leases.

Note 8. Subsequent Events