The accompanying notes are an integral part of these unaudited condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2017
(UNAUDITED)
NOTE 1 – ORGANIZATION
TeleHealthCare, Inc. (the Company) was incorporated under the laws of the State of Wyoming on December 10, 2012. The Company develops platforms in the telehealth industry. Its first platform the Company developed is called CarePanda. Currently, CarePanda set up as a division of TeleHealthCare. CarePanda is an online software that helps people, family members and caregivers manage, share and control their own, their family's or their customers’ healthcare information. CarePanda links people and healthcare information together at the point of care and works on multiple platforms including Internet enabled devices and mobile phones. The Company plans to develop similar platforms for clients.
CarePanda is easy to use and has unique tools and features such as online document library, fax services and text messaging and is not dependent on electronic transfer of health information. CarePanda looks beyond healthcare and focuses on tools that help people manage their lives and care for others including, contact lists, medication lists, home inventory, emergency planning, medical bill management and many other features. CarePanda solves a number of social and healthcare industry problems including changes in healthcare regulations, socio-demographics of an aging population, growing shortage of healthcare workers and impact of "Obama Care".
On Feb 8th, 2017, the company announced its first contract with Mission Treatment and Recovery based in San Juan Capistrano, CA. Mission Treatment and Recovery is TLLT's first pilot program to use the CarePanda App beginning in August 2016 and signed an annual agreement to use the CarePanda platform on full time basis for their entire staff and facility.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a September 30, fiscal year-end.
Revenue Recognition
The Company recognizes revenue when service have been provided or delivered, the monthly subscription fees charged are fixed or determinable. Customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonable assured.
We record deferred revenues when cash payments are received in advance of our performance.
Cash Equivalents
For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with maturity of sis months or less at the time of issuance to be cash equivalents.
Stock-based Compensation and stock warrant expense
The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. Grants of stock to non-employees and other parties are accounted for in accordance with the ASC 505. Stock-based compensation expense is $42,611 and $220,000 for the six months ended March 31, 2017 and 2016, respectively. Stock warrant expense is $2,685,920 and $0 for six months ended March 31, 2017 and 2016, respectively.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company has adopted the provisions of ASC 260.
Loss per Share
The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of options and warrants. The dilutive effect of outstanding options is reflected in diluted earnings per share by application of the treasury stock method. Diluted loss per share are the same as basic earnings loss per share due to the lack of dilutive items in the Company.
Fair Value Measurements and Disclosures
ASC Topic 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company’s adoption of fair value measurements and disclosures did not have a material impact on the financial statements and financial statement disclosures.
The fair value of stock options issued is estimated at the date of issue using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The Black-Scholes-Merton option pricing model requires the input of highly subjective assumptions such as the expected stock price volatility and the expected period until options are exercised.
Income Taxes
Income taxes are provided in accordance with ASC 740,
Income Taxes
. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
No provision was made for Federal or State income taxes.
Long-Lived Assets
Management assesses the carrying values of property and equipment and intangible assets with finite lives. Whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition to the extent possible. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. Additionally, if the Company does not have historical operating experience asset carrying amounts are expensed. For the six months ended March 31, 2017 and 2016, the Company did not recognize any impairments for its long-lived assets. Management believes these intangible assets will continue to be utilized by the Company to generate revenues.
Our intellectual property is comprised of indefinite-lived brand name acquired and have been assigned an indefinite life as we currently anticipate that these brand names will contribute cash flows to the Company perpetually. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. For the six months ended March 31, 2017 and 2016, the Company did not recognize any impairments for intellectual property.
Intangible Assets
Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment. The Company has not started amortizing the intangible asset until the official launch of its website.
Advertising
Advertising will be expensed in the period in which it is incurred. For the six months ended March 31, 2017 and 2016, the Company recognized $5,244 and $0 for advertising expenses, respectively.
Recently Issued Accounting Pronouncements
Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. ASU 2016-02 will be effective for the Company beginning in its first quarter of 2020, and early adoption is permitted. The Company have early adopted this standard in the fourth quarter of 2016.
Stock Compensation
In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which modifies certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards, and classification in the statement of cash flows. The Company will adopt ASU 2016-09 in its first quarter of 2018. Currently, excess tax benefits or deficiencies from the Company's equity awards are recorded as additional paid-in capital in its Balance Sheets. Upon adoption, the Company will record any excess tax benefits or deficiencies from its equity awards in its Statements of Operations in the reporting periods in which vesting occurs. As a result, subsequent to adoption the Company's income tax expense and associated effective tax rate will be impacted by fluctuations in stock price between the grant dates and vesting dates of equity awards.
The Company reviewed all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company's present or future financial statements.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying financial statements, the Company had a negative working capital of $263,751 and an accumulated deficit of $3,454,609 at March 31, 2017. As of March 31, 2017, the Company had not generated any significant revenue and had no committed sources of capital or financing.
While the Company is attempting to generate revenues from telehealth platforms, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management believes that the actions presently being taken to further implement its business plan and generate additional products and revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to realize revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – NOTE PAYABLE
On December 31, 2012, the Company issued a note payable to an unrelated party for $45,000. The notes are due on September 30, 2016 and have an interest rate of 6%. The principal $45,000 was paid in July 2016. As of March 31, 2017, there is $6,865 of accrued interest payable balance.
On January 1st, 2016, the Company issued a note payable to an unrelated party for $14,000. The notes are due on September 30, 2016 and have an interest rate of 10%. As of March 31, 2017, the notes are in default, there is $14,000 of principal and $1,745 of accrued interest past due.
On February 1, 2017, the Company issued a note payable to an unrelated party for $36,000. The note is due on February 1, 2018 and have an interest rate of 6%. As of March 31, 2017, there is $500 of accrued interest payable balance.
NOTE 5 – SHARE CAPITAL
The Company is authorized to issue 200,000,000 shares of common stock. On April 12, 2016, the Company amended the article with the Wyoming secretary of state to increase the amount of authorized shares to 500,000,000.
In the year ending September 30, 2013, the Company issued 40,000,000 shares of its common stock to its chairman and treasurer as founder shares and 5,000,000 shares for services valued by the Company at $5,000.
In the year ending September 30, 2014, the Company issued 710,000 shares of our common stock for services with a value attributed to them of $17,750. These vested quarterly over a year.
In the year ending September 30, 2014, the Company issued 2,500,000 shares of our common stock for assets related to CarePanda with a value attributed to them of $62,500.
The Company completed a private placement on September 30, 2014 whereby it sold 1,681,000 shares of common stock for $42,025.
On December 29, 2015, the Company entered into an agreement to issue 400,000 shares of our common stock for services with a fair value attributed to them of $220,000.
On February 11, 2016, the Company partially completed a private placement offering to certain institutional and accredited investors pursuant to which the Company sold an aggregate of 750,000 shares of the Company’s common stock resulting in gross proceeds of $75,000 to the Company. The numbers of shares are restated at 2,250,000 shares to reflect the one-for-three forward stock split filed on June 3, 2016.
On June 3, 2016, the Company filed an Articles of Amendment to the Company’s Articles of Incorporation to effect a one-for-three forward stock split (the “Forward Stock Split”) of the outstanding common stock of the Company. The Forward Stock Split became effective on June 23, 2016 and was retroactively adjusted for all periods presented. As a result of the Forward Stock Split, the number of outstanding shares of the common stock increased to approximately 153,123,000. The Forward Stock Split affected all shareholders of the Company uniformly.
On August 15, 2016, the Company sold an aggregate of 250,000 shares of the Company’s common stock resulting in the gross proceeds of $25,000 to the Company associated with the private placement offering in February 2016. The numbers of shares are restated at 750,000 shares to reflect the one-for-three forward stock split filed on June 3, 2016.
On September 1, 2016, the Company granted a consultant, an option to purchase 1,000,000 shares of common stock at $0.1 per share. The option is exercisable as to 25% on the first quarter of the grant date and as to an additional 25% at the end of each successive fiscal quarter following the grant date. Fair value of the option is calculated using Black-Scholes Option Pricing Model with the following weighted average assumptions. Re-Habit has exercised 7,500,000 common shares as of March 31, 2017.
Black-Scholes Option Pricing Model – Stock Option
Current Stock Price
|
|
$
|
0.10
|
|
Exercise Price
|
|
$
|
0.10
|
|
Risk-Free Interest Rate
|
|
|
0.60
|
%
|
Expected Life of Option
|
|
|
1
|
|
Volatility
|
|
|
289.2
|
%
|
Dividend Yield
|
|
|
0
|
%
|
|
|
$
|
0.09
|
|
Schedule of Stock Options Roll Forward
|
|
Shares Under Option
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Remaining Contractual Life
|
|
|
Aggregate Intrinsic Value
|
|
Outstanding as of September 30, 2015
|
|
|
-
|
|
|
$
|
-
|
|
|
-
|
|
|
$
|
-
|
|
Granted
|
|
|
1,000,000
|
|
|
|
0.1
|
|
|
1 year
|
|
|
|
|
|
Expired / Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of September 30, 2016
|
|
|
1,000,000
|
|
|
$
|
0.1
|
|
|
0.92 years
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Expired / Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of December 31, 2016
|
|
|
1,000,000
|
|
|
|
0.1
|
|
|
0.67 years
|
|
|
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Expired/Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of March 31, 2017
|
|
|
1,000,000
|
|
|
|
0.1
|
|
|
0.42 years
|
|
|
|
-
|
|
Exercisable at March 31, 2017
|
|
|
1,000,000
|
|
|
$
|
0.1
|
|
|
0.42 years
|
|
|
$
|
-
|
|
On October 1, 2016, the Company signed a one-year consulting agreement with Re-Habit LLC as exclusive reseller of the CarePanda App for the rehab industry. Re-Habit LLC was offered exercisable stock warrants of 7,693,650 common shares of the Company, vesting immediately upon signing the agreement. Re-Habit is entitled to additional shares of restricted common stock based on future performance, if total shares received from the Company does not exceed 33.3% of the outstanding company shares at any time. The shares have an exercise price of $0.001 with 6 month lock up from the date the shares were issued. Fair value of the stock warrant is calculated using Black-Scholes Option Pricing Model with the following weighted average assumptions. Re-Habit has exercised 7,500,000 common shares related to the stock warrant as of March 31, 2017.
Black-Scholes Option Pricing Model – Stock Warrant
|
|
|
|
|
|
|
|
Current Stock Price
|
|
$
|
0.35
|
|
Exercise Price
|
|
$
|
0.001
|
|
Risk-Free Interest Rate
|
|
|
0.60
|
%
|
Expected Life of Option
|
|
|
1
|
|
Volatility
|
|
|
260.0
|
%
|
Dividend Yield
|
|
|
0
|
%
|
Call Option Value
|
|
$
|
0.35
|
|
Schedule of Stock Warrant Roll Forward
|
|
Shares Under
Stock Warrant
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Remaining Contractual Life
|
|
|
Aggregate Intrinsic Value
|
|
Outstanding as of September 30, 2016
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Granted
|
|
|
7,693,650
|
|
|
|
0.001
|
|
|
1 year
|
|
|
|
-
|
|
Expired / Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of December 31, 2016
|
|
|
7,693,650
|
|
|
|
0.001
|
|
|
0.75 years
|
|
|
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
7,500,000
|
|
|
|
0.001
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of March 31, 2017
|
|
|
193,650
|
|
|
|
0.001
|
|
|
0.50 years
|
|
|
|
-
|
|
Exercisable at March 31, 2017
|
|
|
193,650
|
|
|
$
|
0.001
|
|
|
0.50 years
|
|
|
$
|
-
|
|
The company recognized stock compensation expenses of $42,611 and $220,000 during the six months ended March 31, 2017 and 2016, respectively, related to stock option awards granted to certain individuals providing service to the company based on the grant date fair value of the awards, net of estimated forfeitures. The company recognized stock warrant expense of $2,685,920 and $0 during the six months ended March 31, 2017 and 2016, respectively, related to stock warrants granted to certain companies providing service to the company based on the grant date fair value of the awards, net of estimated forfeitures.
On March 14, 2017, the company entered into a Share Cancellation/Return to Treasury Agreement (the “Agreement”) with Derek Cahill, the Company’s Chief Executive Officer. Pursuant to the Agreement, Mr. Cahill cancelled 73,000,000 shares of the outstanding common stock held by him. By canceling these shares, Mr. Cahill and the Company’s Board of Directors wat the Company to better positioned to expand and raise capital.
At March 31, 2017, the company had $35,509 of unrecognized compensation expense (net of estimated forfeitures) associated with stock option awards which the Company expects will be recognized through September 2017.
As March 31, 2017, there are approximately 88,373,000 shares outstanding.
NOTE 6 – TRANSACTIONS WITH RELATED PARTIES
Salary payable to related parties as an officer of the Company is $7,500 a month started in April 2016. As of March 31, 2017, salary payable accrued $90,000. Management believes that the terms of the agreements with the related parties are comparable to the terms obtained in arm’s length transactions with unrelated similarly situated officer of the Company.
The company engaged GoBigWeb, owned by the CEO of Telehealthcare Inc, to perform website development services. As of March 31, 2017, the company have made payments $1,800 to the GoBigWeb for services rendered.
NOTE 7 – COMMITMENTS AND CONCENTRATIONS:
Office Sub-Lease – San Clemente, CA
– The Company entered a sub-lease agreement for an office space in San Clemente, CA. The sub-lease period started August, 2016 on a month-to month basis, monthly payment is $700 due on the 1
st
day of each month until terminated by sub-lessor or sub-lessee. Starting February 1st, 2017, rent has been increased to $1,000 each month. In March 2017, the company expanded office space and paid $375 additional payment.
Equisolve – The company entered into investor relations agreement with Equisolve on a month-to-month basis for $495.00 each month due the first day of each month.
NOTE 8 – SUBSEQUENT EVENTS
Management has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. Management has determined that the following reportable subsequent events required to be disclosed:
On May 2, 2017, the Company was notified by Mediprocity, developer of the Company’s CarePanda App, of their intent to cancel their White Label Agreement with the Company. At this time the Company is looking to license or partner with a new company to continue to manage our existing customers. It is unknown at this time how long this will take or whether the Company will be able to do so. The cancellation of the Mediprocity Agreement has a material adverse impact on the Company’s ability to sell the CarePanda app until a new app can be developed or licensed.
On May 4, 2017, the Company was notified by Re-Habit LLC, exclusive reseller of Company’s CarePanda App for the Drug and Detox markets, of its termination their Reseller Agreement. At this time the Company is looking for a new partner to resell Company’s CarePanda App, but that will be dependent on finding a new mobile app developer and/or mobile app company to work with.
On May 7, 2017, James Donahue resigned as member of the Company’s Board of Directors and its Chief Financial Officer.